Settlement Agreements and Personal Injury

Many employees believe that personal injury claims cannot be waived or settled under a settlement agreement at all and carve out all personal injury claims from the waiver. However, this is not the case. This alert is designed to clarify exactly when and to what extent an employee’s personal injury claims can be waived. Personal injury claims fall into several different categories:  

• Injuries of which the employee is aware but where no claim has been brought. There appears to be no reason why these should not be waived by a settlement agreement. However, the agreement should make it clear that personal injuries are meant to be covered. There was a case in 2001 between Bank of Credit and Commerce International SA v Ali and others where there was some debate as to whether a general waiver of "all and any claims" was sufficient to cover personal injury without clear words being used. This debate is unresolved and so best practice is to expressly refer to personal injury claims.

 

• Potential claims of which the employee is not aware. These are sometimes referred to as ‘latent personal injury claims’. Again, there would appear to be no reason why such claims cannot be waived. However, the House of Lords in the case of Bank of Credit and Commerce International SA v Ali BCCI v Ali held that a general release or waiver would not normally cover claims of which the employee is unaware and could not be aware. Consequently, clear and unambiguous wording will be needed.

 

• Personal injury claims that have already been brought in the civil courts. If a claim as this is to be settled by the settlement agreement then a draft consent order should ideally be agreed and annexed to the settlement agreement.

 

• Personal injury (usually psychiatric) arising as a result of unlawful discrimination or harassment in employment. These claims derive from the Equality Act 2010. Such claims would be subject to the special rules on settlement agreements, and would normally be covered by waiving the right to bring discrimination and harassment claims.

 

• Claims that have not yet arisen. These are claims for future injuries. These claims cannot be settled due to the Unfair Contract Terms Act 1977 – due to this a waiver of such claims would generally not be effective in law.

  At PARTNERS EMPLOYMENT LAWYERS, we are experts in settlement agreements. We regularly draft them for employers and regularly advise employees as to their terms. We have extensive experience and can assist you in negotiating and dealing with employees and are listed as recognised advisors for around 50 companies. For further information please contact Hina Belitz on 020 7374 6546 or email her at hina@partnerslaw.co.uk