Labour Court affirms employment waiver despite employee not taking legal advice

The Labour Court recently determined that it did not have jurisdiction to hear an appeal of a decision made by the Workplace Relations Commission (WRC). The case concerned a former employee of Accenture Limited (Accenture), who claimed that she had been unfairly dismissed. She further alleged that she had signed a waiver agreement under duress and without legal advice.

The decision of the Labour Court in Accenture Limited v Sejal Tandel [1] provides a useful reminder of the key points employers should bear in mind when entering into a waiver agreement with an employee.

Waiver agreements under Irish law

A number of Irish employment law statutes (including the Unfair Dismissals Act 1977 (the Act), the Payment of Wages Act 1991 and the Protection of Employees (Part-Time Work) Act 2001) provide that a provision in an agreement is void insofar as it purports to exclude or limit the application of, or is inconsistent with, any provision of the relevant statute. On this basis, it is no surprise that the validity of waiver agreements can be construed quite strictly.

However, despite provisions such as these in certain Irish employment statutes, the superior courts have held waiver agreements to be enforceable where certain factors are met (described below under Key takeaways for employers).

Background

The complainant in this case commenced employment with the respondent, Accenture, on 6 December 2021. On 23 May 2023, the complainant was given notice of dismissal by reason of redundancy. She was provided with a waiver agreement setting out terms of an ex-gratia payment, which she signed on 5 June 2023. The complainant’s employment with Accenture was terminated by reason of redundancy on 15 June 2023.

The complainant then brought a claim to the WRC under the Act.   In the WRC, the Adjudication Officer held she lacked jurisdiction as the complainant had waived her right to bring a claim under the Act. The complainant appealed the Adjudication Officer’s decision to the Labour Court.

What did the Labour Court decide?

The Labour Court decided not to proceed directly to a full hearing of the substantive appeal. Instead, it proposed to address first, as a preliminary matter, whether it had jurisdiction to hear the appeal. This question arose as the parties had entered into an agreement which, according to Accenture, barred the complainant from bringing her claim.

The Labour Court noted that an employee may waive their statutory rights, if done so on an informed basis and of the employee’s own free will.

In this case, the Labour Court noted that the complainant’s written submissions about signing the waiver agreement under duress were contradicted by her own evidence. In her evidence, she said that she signed the document of her own free will, without duress from Accenture. Further, her evidence was that she understood the relevant terms of the waiver agreement before signing it; she understood that she was consenting to waive her statutory rights and, by accepting a sum of money, she could not take a case against Accenture. She also understood that she did not have to sign the document.

The Labour Court found that the complainant had been given adequate time to consider the waiver agreement and take legal advice before signing it. She had possession of the document for two weeks before signing it on 5 June 2023, four days in advance of the cut-off date. The Labour Court was of the view that the agreement of the complainant to waive her statutory rights was supported by adequate consideration. The Labour Court also noted that Accenture had made adequate efforts to ensure that the complainant could give informed consent, by advising her to take legal advice, giving her time to do so, and contributing towards the cost of this advice.

For these reasons, the Labour Court found that the complainant had validly waived her right to take a complaint under the Act and, as a result, it had no jurisdiction to hear the appeal.

Key takeaways for employers

The decision of the Labour Court highlights several points employers should bear in mind when entering into a waiver agreement with an employee. The Labour Court referred to one of the seminal decisions relating to the waiver of employment rights, being Sunday Newspapers Limited v Kinsella and Bradley [2], where the High Court referred to four factors which should be present in circumstances where an employee waives their statutory rights to take a claim against their employer:

1. Agreement in writing

The agreement which purports to waive an employee’s rights to take a claim against their employer (which may be referred to as a compromise agreement, waiver agreement, severance agreement etc.) should be in writing.

2. List the claims/acts being waived

The waiver agreement should call out the specific claims, statutes, statutory instruments and other laws in respect of which the employee is waiving their right to take a claim.

It is noteworthy that while the Act was not identified in the waiver agreement as legislation in respect of which the complainant waived her rights, the Labour Court nonetheless found that the waiver was valid for the purposes of the Act. However, best practice, and our strong recommendation, is that each statute, statutory instrument etc. should be specifically called out in the agreement. It is also prudent to include ‘catch-all’ wording should an employee seek to take a claim under a statute which is not specifically called out in the agreement.

3. Consideration

The waiver should be supported by consideration – usually, this is in the form of money.

4. Informed in writing about the opportunity to take appropriate advice

The employee should be advised in writing to seek appropriate advice as to their rights and should be given adequate time to consider the waiver agreement and take appropriate advice before signing it. It is common for employers to contribute to the cost of obtaining such advice; the Labour Court noted that Accenture had offered a financial contribution to the complainant in this case. Ideally, the employee should obtain this advice, but they cannot be forced to do so.

The Labour Court decision refers to “legal advice” throughout, but Sunday Newspapers refers to “appropriate advice”. While legal advice would be the most common type of advice, appropriate advice from other professionals, such as trade union officials, may also be sufficient.

For further information in relation to this topic please contact Jeff Greene, Partner, Seán Gunning, Solicitor, or any member of the ALG Employment team.