Allma Construction v Bonner
Once the parties to a dispute have reached a settlement, Acas (the conciliation service) generally draws up a written agreement using a COT3 form. The Employment Appeal Tribunal (EAT) held in Allma Construction v Bonner that a settlement was binding when the employer's representative offered £1000 and the claimant's solicitor accepted it, even though other terms were not agreed under a COT3 form.
Basic facts
Mr Bonner, who worked as a plant operator for Allma Construction, was dismissed for misconduct on 12 September 2008. He did not appeal the decision to dismiss him, but lodged a tribunal claim for unfair dismissal, among other things.
On 20 February 2009, a few days before the hearing was due to take place, Mr Bonner accepted an offer from the company of £1000. His solicitor then informed Acas (the conciliation service) of the details of the offer and confirmed his client’s acceptance of it.
However, over the weekend that followed Mr Bonner changed his mind. Both sides agreed to postpone the hearing date to facilitate further discussions.
Mr Bonner then indicated he would settle for £5000 but the company said the case had already been settled for £1000 and referred the matter to the tribunal.
Tribunal decision
At a pre-hearing review in September 2009, the employment judge stated that as normal contractual rules applied, the parties had not come to a settlement. The company’s "proposal to settle" was only an 'invitation to treat' and not an actual 'offer'.
The judge went on to say that to constitute a settlement, other usual COT3 terms would also have been included. In addition, the fact that the negotiations were ongoing indicated that a binding settlement had not been reached.
EAT decision
The EAT, however, disagreed. It pointed out that for a settlement to be binding, one party just had to make a reasonably definite offer to the other which they then accepted.
Where litigation was concerned (as in this case) the EAT said that could consist of an agreement to pay a sum of money to bring the litigation to an end. It was irrelevant whether other terms might be included in the contract at a later date.
It was also irrelevant that the Acas conciliator had not spoken directly to both parties and that communication had continued after Mr Bonner changed his mind.
The EAT found that there was nothing in this communication to vary or depart from the original agreement to settle the claim for £1,000.
The EAT said there was only one conclusion open to the judge - that a contract to settle Mr Bonner’s claim had been concluded on 20 February. It was clear that the company had offered him £1000 in order to bring the litigation to an end and he had accepted that offer.