Ex gratia payments are typically discretionary payments made by an employer to an employee, often as part of a settlement agreement. These payments go beyond the employee’s contractual entitlements and are usually either made to resolve a dispute or simply to maintain a positive relationship between the employer and a departing employee.
One of the key features of an ex gratia payment is that, in return for it, the employee will need to agree to give up any rights they have to bring an employment tribunal claim related to their employment. This would include the most common types of tribunal claims for unfair dismissal, constructive dismissal, discrimination and whistleblowing detriments.
Excluded tribunal claims that an ex gratia payment could not prevent an employee from bringing (i.e. an employee could still bring even after they have signed a settlement agreement) would include claims for breach of the settlement agreement itself, personal injury claims for any injuries the employee was not aware they had at the time of accepting the ex gratia payment, and any accrued pension rights claims. Other general exceptions where an employee may still be able to pursue a claim after accepting an ex gratia payment include:
- Non-Disclosure: If the employee was not fully informed about the nature of the claim or the potential consequences of signing the agreement, they may be able to challenge the validity of the settlement.
- Misrepresentation: If the employer made false or misleading statements that induced the employee to sign the agreement, the employee may be able to rescind the agreement.
- Undue Influence: If the employer exerted undue pressure or coercion on the employee to sign the agreement, the employee may be able to challenge its validity.
- Unconscionable Bargain: If the terms of the settlement agreement are so unfair or one-sided that it amounts to an unconscionable bargain, the employee may be able to challenge the agreement.
- Public Interest Disclosure: If the employee is making a claim related to a protected disclosure (whistleblower protection), they may be able to bring a claim even after signing a settlement agreement.
It’s important to note that these are general exceptions, and the specific circumstances of each case will determine whether an employee can successfully challenge a settlement agreement. If you believe you may have a claim that falls within one of these exceptions, it’s essential to seek legal advice from a qualified professional as soon as possible.
This article is written by Garvey Hanchard, Partner at Bloomsbury Square Employment Law. If you have any questions or issues relating to topics discussed in here, please get in touch and arrange a free consultation with us.
