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08 July 2020
The Western High Court recently ruled that an employee who had entered into a severance agreement – and was represented by her professional organisation during this process – was barred from claiming compensation under the Anti-discrimination Act.
According to established Supreme Court case law, severance agreements in full and final settlement are valid in the public sector. However, how must provisions in full and final settlement be interpreted? That was the question before the Western High Court in this case.
The case concerned a job consultant for a municipality who was fully or partially absent for a long time due to illness. As a consequence of the operational strain caused by the employee's absence, the municipality dismissed her. The employee's professional organisation subsequently requested consultation on the dismissal in accordance with the applicable collective agreement.
During the consultation, the municipality and the employee's professional organisation agreed various severance terms. This agreement specified, among other things, that the employee:
According to the summary of the consultation, "there were no outstanding issues in relation to the matter after that".
The day after the consultation, the employee signed the agreement, which had been made subject to the employee's acceptance. However, approximately two years after the consultation, the employee's professional organisation issued proceedings against the municipality alleging, among other things, that the dismissal had contravened the Anti-discrimination Act.
During the proceedings, the municipality claimed that the employee was barred from making claims under the Anti-discrimination Act in connection with the dismissal, as the agreement constituted the full and final settlement of any claims against the municipality. The issue of whether the employee could raise such a claim was listed for a separate hearing.
The employee's professional organisation stated that the wording "there were no outstanding issues in relation to the matter after that" was unclear and could not be deemed to imply that the employee was barred from raising a claim under the Anti-discrimination Act, since such a claim had not been discussed during the consultation. In addition, the professional organisation alleged that the agreement did not represent a reasonably balanced solution to the parties' interests.
After the district court decided that the employee was not barred from claiming compensation under the Anti-discrimination Act because of the agreement, the case proceeded to the Western High Court.
The Western High Court considered that the collective agreement's provision regarding consultation on termination concerned the issue of whether a dismissal could be considered reasonably justified. Following this, the court noted that the fairness of the employee's dismissal had not been disputed during the consultation. The court further stated that the employee, as a result of the agreed terms, had been provided better rights compared with her statutory rights.
Citing the contents and background of the agreement, the Western High Court found that it should be interpreted as being in full and final settlement of any objections or claims arising out of the termination of the employment. Consequently, the employee was barred from claiming compensation under the Anti-discrimination Act based on the termination.
Further, since both the employee and her professional organisation had been aware of the circumstances surrounding the employee's illness, which formed the basis of the claim pursuant to the Anti-discrimination Act, the Western High Court found no basis for setting aside the agreement under Section 36 of the Contracts Act. Therefore, the court found in favour of the municipality.
Pursuant to this ruling, employers should bear in mind the following:
For further information on this topic please contact Elsebeth Aaes-Jørgensen at Norrbom Vinding by telephone (+43 35 25 3940) or email (email@example.com). The Norrbom Vinding website can be accessed at norrbomvinding.com.
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