Validity of settlement agreement

09 November 2016

Mr Dahhan entered into a settlement agreement with his employer, Glasgow City Council, after issuing various race-related claims against it. That agreement purported to draw a line under his claims; in signing it, Mr Dahhan was giving up all claims arising from his employment.

Glasgow City Council v Dahhan

Mr Dahhan entered into a settlement agreement with his employer, Glasgow City Council, after issuing various race-related claims against it. That agreement purported to draw a line under his claims; in signing it, Mr Dahhan was giving up all claims arising from his employment. He withdrew his race claims and they went on to be dismissed by the tribunal.

However, he then asked for that to be reconsidered. He said that he had lacked mental capacity and therefore wasn’t equipped to sign the settlement agreement. The question for the Tribunal was whether it could set aside the agreement for being invalid on that basis.

Yes, the Tribunal said, and the Employment Appeal Tribunal agreed. Where a party argues incapacity, the tribunal must look carefully into that. If that incapacity is found to have existed, the agreement must be unenforceable.

A cautionary tale for employers, keen to ensure that a settlement agreement does its job. Any hint of mental incapacity should ring alarm bells, not least because it could scupper the deal and the certainty that settlement is supposed to achieve.

 


News
Request a callback