This is the second occasion that my son in law's previous employer has demanded the return of the settlement. On the first occasion he claimed that my son in law had offered another employee a job but when we asked for the evidence everything went quiet. It may be helpful to mention that to this day my son in law is struggling to get the business off the ground and still has not appointed a member of staff. Now a year later his previous employer claims that my son in law passed the nomination to a third party and is now trying to get the settlement back on this basis.
The compromise agreement contains the clause you mention and expands it to remind my son that under his contract of employment in law he still owes his former employer a duty of confidentiality in respect of employer confidential information.
I have set out below my son in law's proposed response and I would be grateful if you could read it through and let me know of any final comments you may have:
With reference to your letter of 18th December 2012 I have now had an opportunity to consider the issues and to seek appropriate advice.
In essence the allegation is that I passed a document belonging to [ ] to a third party. The document in question is a completed Nomination Form that I submitted nominating [ ] for the Operator of the Year Award under the Innovation Awards 2010 scheme run by [ ].
The nomination is set out on a pro forma prepared and issued in electronic format by [ ] for use by anyone nominating a firm for one of the annual awards available. Numerous firms are mentioned in the nomination, all of whom agreed to their name being used and many of whom contributed information used in the nomination. Before it was submitted the nomination was sent to the firms involved for comment and all comments received were reflected in the final version.
I confirm that with the exception of [MD], who I informed that the nomination had been submitted, no one at [ ] had any involvement in the nomination. For the avoidance of doubt, I also confirm that I was not asked to write the nomination, that doing so was not part of my job and that I prepared the nomination of my own volition and in my own time. The document was not considered confidential by anyone involved; all the information contained therein was already in the public domain and submitting it for the award ensured that it reached a wider audience. [ ] was aware of the existence of the nomination, particularly as it won the award. If [ ] felt that the information contained in the nomination was confidential it would have raised the issue with me at the time.
[ ] will be aware the property I handed over before I left the company was checked by the five director/managers it was relevant to. Despite this no one mentioned the absence of the nomination. Furthermore I specifically asked [A,B and C] if I had handed over everything and they agreed that I had. The notes of the handover meeting held on 18th March 2011 refer. If [ ] believed that it owned the nomination, that it contained confidential information and considered it to be of material value, surely it would have raised its absence from the property handed over at this meeting or soon thereafter.
In light of the foregoing and advice received I do not believe that [ ] owns the nomination nor do I believe that the contents include Employer’s confidential information.
The next issue to address is the reasonableness of your demand for the return of the full settlement for such a trivial matter. Case law now suggests that employers are only entitled to recover a sum equal to their loss. As I believe that [ ] has not suffered a loss, the demand for the return of the full settlement is wholly unreasonable.
The compromise agreement is silent with regard to how much is repayable if the agreement is breached. Moreover case law has shown that where employers have introduced a clause that requires the return of the full settlement for an immaterial breach the clause has been deemed to be an unenforceable penalty clause.
In any event Brian in particular will be aware that [ ] delayed my departure from the firm and limited my ability to obtain alternative employment by asking me to be available for the equivalent of ten days as required up to the end of July 2011. Consequently the settlement included pay for the period 30th April to 31st July 2011 which under any reasonable scenario should not be refundable. [ ] letter of 5th April 2011 refers.
A fundamental pre-requisite for the use of a compromise agreement is that there must be a dispute and that this dispute relates to the particular complaint listed in the agreement. Notwithstanding the wording of Clause 7.5.1, which incorrectly implies that I complained about wrongful, unfair or constructive dismissal, for the avoidance of doubt I confirm that I did not raise wrongful, unfair or constructive dismissal with [ ] and that at the time I signed the compromise agreement I was not in dispute with [ ] in this regard. Therefore a key requirement of the Act has not been satisfied.
In summary, it is clear that [ ] does not own the nomination, that the nomination is not Employer’s confidential information, that there has not been a material breach of the compromise agreement and that the agreement is flawed.