Friend v Institution of Professional Managers and Specialists [1999] IRLR 173
Bank of Credit and Commerce International v Ali

Since the Employment Rights (Disputes Resolution) Act 1998 came into effect in August that year trade union officials have been able to sign off Compromise Agreements which terminate employment or bring an Employment Tribunal claim to an end. These new powers must be exercised carefully as two recent cases confirm.

The BCCI case is another part in the long running saga following the collapse of BCCI in 1991.

Former employees of BCCI signed ACAS COT3 agreements in settlement of "all and any claims whether under statute, common law, or in equity" arising out of their employment and they received compensation.

Later during the course of the liquidation of BCCI, the bank tried to recover loans made to the employees and the employees in turn claimed damages for breach of their employment contract for stigma damages (see Malik v BCCI, in Issue 14 of LELR).
BCCI argued that the employees were not able to pursue breach of contract claims due to the COT3s signed by them.

The High Court held that the COT3 together with the compensation settled claims whether the parties were aware of them or not. The employees could not pursue their breach of contract claims. The Court rejected the employees' argument that BCCI were under a duty of disclosure.

This case means that where trade union officers are negotiating settlements in unfair dismissal and other employment law disputes they should be wary of sweeping compromise agreements or COT3s. As a matter of course it is wise to exclude personal injury claims and claims for accrued pension rights.

The duties of a trade union and its officer when advising their members were also considered by the High Court in Friend v IPMS.

Captain Friend was employed by the Civil Aviation Authority and was a member of the IPMS. He had a long running dispute with his employer which eventually led to his dismissal. Throughout he was advised and assisted by his trade union.

After his dismissal, his union instructed solicitors to represent him in his claim for unfair dismissal. His unfair dismissal complaint succeeded on procedural grounds but the Tribunal held there should be no award of compensation because of his contribution to his dismissal. He appealed to the EAT and the appeal failed.

Captain Friend later issued separate proceedings against the union and the solicitors engaged on his behalf.

The action against the solicitors was struck out and the writ against the union was struck out and the action dismissed.

Captain Friend appealed to the High Court who dismissed his appeal. In giving judgment it was said that a trade union has a duty in tort to use ordinary skill and care in advising and/or acting for a member in an employment dispute.

However once solicitors have been engaged "any duty that there might previously have been on the union to advise in relation to the conduct of the claim falls away". Any failings in the advice then lie at the door of the solicitor.

The judge said that the case had no realistic prospect of success and struck it out. He said: "The plaintiff is attempting to pin on his advisers the fact of his original dismissal and the failure of the unfair dismissal proceedings".

Employers are increasingly using Compromise Agreements which have far reaching implications for the employee who is thereby excluding her right to pursue a range of claims.

Trade union officials can only sign off Compromise Agreements under ERDRA 1998 if they have been certified in writing by the trade union as competent to give advice and are authorised to do so by the union.

It is also necessary for the union to have an insurance policy in place to cover the risk of a negligence claim against the adviser.