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Settlement with one Respondent did not release others
In Tamang and another v ACT Security Limited and another the EAT has held that an Employment Judge was wrong to conclude that a settlement agreement which sought to settle with one Respondent should be construed as settling with all of them. The agreement related to a claim for failure to inform and consult under TUPE, for which all three Respondents were jointly and severally liable. It is a general principle that the release of one joint tortfeasor from liability, releases them all. However the EAT held that, properly constructed, the agreement was not intended to be an unqualified release of all the Respondents but instead a covenant not to sue the Respondent with whom the agreement was made.
This case makes it clear that Claimants need to be careful about entering into agreements where they may not wish to settle a case against all Respondents. This is likely only to happen in TUPE cases for failure to inform and consult although it may also occur in discrimination cases where an individual is named as co-Respondent. Claimants should also note that where a case settles against one Respondent but continues against the others, any sums recovered as compensation will be less any amount paid by the Respondent who has settled its part of the case.
This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.
For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.
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