Employer Breaches COT3: Care Home Liaison Director Victimised and Denied Settlement Payout

In Ms Deborah Clocherty v Triangular Care Services Ltd and Others, a liaison director won her victimisation claim after her employer failed to provide a settlement payout, which was previously agreed upon in a COT3 agreement.

Below, we examine the facts surrounding the settlement agreement with her employer and how the tribunal reached its decision. Read on to learn what a COT3 settlement is, including its typical use within the workplace.

If you have any questions about employment settlements or want help with your own, consider contacting Redmans Solicitors today. As employment law specialists, we can answer your queries and provide expert advice. All you have to do to begin your journey with us now is:

The Facts in Ms Deborah Clocherty v Triangular Care Services Ltd and Others

Settlement Payout Background

Ms Deborah Clocherty (“the Claimant”) began working as a liaison director for Triangular Care Services Ltd (“the First Respondent”) on 1 April 2005. Ms Maxine Lockley (“the Second Respondent”) and Mr George William Spikesley (“the Third Respondent”) are directors of the First Respondent.

Previously, after her employment ended on 18 April 2022, the Claimant brought claims for constructive dismissal and disability discrimination against the First Respondent. However, after the parties entered into an employment settlement agreement, she withdrew her claims on 21 November 2023.

Respondent Fails to Provide Settlement Payout

The COT3 agreement stipulated that the Claimant would receive £30,000 within 28 days after she withdrew her claims. Yet, following her withdrawal, the First Respondent failed to adhere to the terms and provide the settlement payout.

Enforcement proceedings were subsequently brought by the Claimant, leading to an agreed payment schedule. The First Respondent provided £13,000 in April 2024, with the remaining £17,00 due to be paid in £100 monthly installments until the debt is settled.

Unfortunately, the Claimant never saw the remaining monies owed, causing her to bring a further claim on 20 February 2024. She alleged the First Respondent deliberately didn’t provide the settlement payout, amounting to victimisation.

The Employment Tribunal’s Judgment

Settlement Payout Failure Amounted to Detriment

Following proceedings, the employment tribunal began by outlining the requirements that must be satisfied to bring a successful victimisation claim. Those being that a claimant must be able to show:

  • They have been subjected to a detriment; and
  • They were subjected to that detriment because of a protected act.

The tribunal then established that the Second and Third Respondents were responsible for the First Respondent entering into the COT3 settlement agreement with the employee (the Claimant).

While the Respondents accepted that the withdrawn claims constituted a protected act, they believed the payment failure was not a detriment. However, the tribunal disagreed with the latter.

Under Shamoon v Chief Constable of the Royal Ulster Constabulary 2003, “a detriment exists if a ‘reasonable worker’ would or might take the view that the treatment was in all the circumstances to his or her disadvantage.” In this case, the tribunal felt the Claimant’s claim showed that the Respondent’s failure to make the settlement payout “changed her position for the worse.” Consequently, it held that a detriment existed.

Detriment Resulted Following Protected Act

Following the above finding, the tribunal then turned to whether said detriment occurred because of a protected act. In this case, the protected act concerned the Claimant’s original claims.

The Second and Third Respondents argued that the First Respondent faced financial difficulties after entering into the settlement agreement. An apparent “loss of council contracts and several service users” was the reason for said difficulties.

Furthermore, on the day the employment settlement agreement was entered into, the Third Respondent took a director’s loan from the First Respondent. This was allegedly for a private hip replacement and amounted to £17,000—the same amount owed to the Claimant. The Second and Third Respondents claimed these were the reasons for failing to provide the settlement payout, not her protected act.

However, during the proceedings, the tribunal wasn’t presented with any evidence regarding a loss of council contracts or service users. Therefore, it determined this wasn’t the reason for the breach. Moreover, it found it a coincidence that exactly £17,000 was taken from the First Respondent’s account on the date the employment settlement agreement was entered into. This was held to be no more than a means of making it look like the First Respondent couldn’t pay the Claimant.

With that said, the tribunal then considered one of the Third Respondent’s comments. In the hearing, he said, “It hurts that someone has gone to that length to pull one over on you.” The tribunal believed the Claimant’s protected act was in his mind when he took the director’s loan to create “sham” financial difficulties. Consequently, it concluded that her protected act was the reason she wasn’t provided with her settlement payout, upholding her victimisation claim.

What is a COT3 Agreement?

A COT3 agreement is a legally binding employment settlement agreement used to resolve disputes between an employer and an employee. It’s facilitated by ACAS, the Advisory, Conciliation and Arbitration Service, which acts as an independent mediator. Unlike standard employment settlements, these don’t require employees to seek independent legal advice, although doing so can still be beneficial.

COT3 agreements are commonly used after an employment tribunal claim has been issued, though they can sometimes be reached beforehand. The process typically begins when ACAS conciliators assist both parties in negotiating terms. Once an agreement is reached, both sides must confirm their acceptance with ACAS, making it legally binding.

A key benefit of a COT3 agreement is that it saves time and legal costs. Plus, the process is often quicker than litigation, allowing both parties to resolve their dispute efficiently and confidentially.

However, there are potential risks. Unlike standard settlement agreements, employers aren’t required to contribute to an employee’s legal fees. Additionally, because ACAS remains neutral and doesn’t provide legal advice, employees might not fully understand their rights or whether they’re receiving a fair settlement.

If you have any questions about this type of settlement agreement with your employer or want advice about a settlement payout, contact Redmans Solicitors now. As sector specialists, we can provide expert advice and discuss your possible next steps.

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