Settlement agreements are used in high-value Jersey employment departures, executive carve-outs, and redundancies.
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Settlement Agreements and Employment Disputes
High-value employment disputes can come before both the JEDT and the Royal Court of Jersey.
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What makes a Jersey settlement agreement binding
A settlement agreement only stops an employee bringing a claim to the Jersey Employment and Discrimination Tribunal if it meets the conditions set by statute. Article 79 of the Employment (Jersey) Law 2003 makes any contract term void in so far as it tries to exclude the Law or prevent Tribunal proceedings. There are two exceptions.
- The agreement was reached after a JACS conciliation officer took action under the Jersey Advisory and Conciliation (Jersey) Law 2003.
- The agreement meets the statutory "conditions regulating compromise agreements".
The Law still uses the term compromise agreement. "Settlement agreement" is the everyday name for the same document.
The six statutory conditions
Under Article 79(3), a compromise agreement must:
- be in writing;
- relate to the particular proceedings;
- follow advice to the employee from a relevant independent adviser on its terms and effect, and in particular on its effect on the employee's ability to pursue Tribunal claims;
- be backed by insurance or a professional indemnity covering the adviser when the advice is given;
- identify the adviser by name;
- state that the conditions regulating compromise agreements under the Law are satisfied.
If any one condition is missing, the protection may fail. A missing adviser's name or a missing statement of compliance is the kind of drafting slip that can reopen a claim the employer thought was closed.
Who can give the independent advice
Article 79(4) lists who can act as the relevant independent adviser:
- a qualified lawyer;
- a trade union officer, official, employee or member certified in writing by the union as competent to advise;
- an advice centre worker certified in writing by the centre;
- a person of a description specified by Ministerial Order.
Article 79(5) disqualifies anyone who is, works for or is acting for the employer or an associated employer. In practice, the employee needs their own adviser, not the employer's.
Discrimination claims sit under a separate Law
Discrimination complaints are brought under the Discrimination (Jersey) Law 2013, not the Employment Law. Article 40 of that Law has its own bar on contracting out. It is lifted only where conciliation has resolved the complaint, or where the agreement satisfies the Employment Law's compromise agreement conditions.
A well-drafted agreement therefore refers to both Laws. An agreement that waives only "employment claims" may leave a discrimination complaint open.
The JACS1 route
JACS offers a pre-claim settlement document called a JACS1. According to JACS's employer guidance, JACS drafts it from information the employer provides. It sets out the terms offered for the employee to leave and, if the employee agrees, prevents a Tribunal claim on the same matters. JACS states that a JACS1 can only cover claims under the employment and discrimination legislation that the Tribunal can hear.
The route an employer chooses depends on what needs settling. Contract claims the Tribunal cannot hear may need separate treatment.
Claims the Tribunal cannot hear
Some executive-level issues fall outside the Tribunal. Article 86(3) of the Employment Law excludes from the Tribunal's jurisdiction claims for breach of a contractual term that:
- is a covenant in restraint of trade;
- imposes an obligation of confidence;
- relates to intellectual property;
- concerns living accommodation.
Personal injury claims are also excluded. These are matters for the courts. A settlement covering restrictive covenants, confidentiality or IP has to deal with them as ordinary contract terms, not as waived Tribunal claims.
Article 80(2) also lets either party sue in the courts for breach of a contract of employment. If they do, any Tribunal proceedings are discontinued, and the party going to court must indemnify the other side's costs of the discontinued Tribunal claim.
Deadlines keep running during negotiations
Negotiating a settlement does not stop the clock. Under Article 76 of the Employment Law, an unfair dismissal complaint must normally reach the Tribunal within 8 weeks of the effective date of termination. Article 37 of the Discrimination Law sets 8 weeks from the act complained of. In both cases the Tribunal can extend the time only where presenting the complaint in time was not reasonably practicable.
Before speaking to an advocate, have these ready:
- the draft agreement;
- the contract of employment;
- any bonus or share scheme rules;
- the termination date;
- any correspondence that sets out the dispute.
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Settlement Agreements Asked Questions
Is a settlement agreement legally binding under Jersey employment law?
A Jersey settlement agreement is a legally binding contract requiring independent legal advice from a regulated Advocate. It formally resolves disputes before the JEDT or Royal Court, which protects your position and prevents future claims.
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