Background
In 2022, the Employment Appeal Tribunal (EAT) held that a settlement agreement could not waive future claims which had not arisen between the parties at the time the settlement agreement was entered into.
Facts
Mr Bathgate, who was employed by Technip Singapore Ltd (Technip) for twenty years, accepted voluntary redundancy and entered into a settlement agreement in January 2017. The agreement stated that he would not bring any claims waived within it, including any claim for age discrimination under s.120 of the Equality Act 2010 (EqA).
As part of his voluntary redundancy package, Mr Bathgate was under the impression that he would receive both an "enhanced redundancy and notice payment" and an "additional payment". However, the additional payment was calculated in accordance with a collective agreement, which meant that he was not eligible as he was aged 61 at the time he entered into the settlement agreement. Shortly after learning this in June 2017, he brought an age discrimination claim in the Employment Tribunal (ET).
ET and EAT decisions
Mr Bathgate argued that under s.147 of the EqA, the "particular complaint" to which a valid settlement agreement must refer, could not include post-settlement claims. The ET disagreed and found that the waiver covered claims whether they were known at the time of entering into the settlement agreement or not. Although the age discrimination claim was a future claim, it had been identified in clear and unequivocal terms in the settlement agreement. The EAT however, held that the legislation did not allow any future claims to be waived under the settlement agreement.
Court of Session decision
The Court found that the EAT's interpretation of the legislation was incorrect, as it would render any settlement of all claims and potential claims impossible. They differentiated this case from an earlier case (University of East London v Hinton [2005] ICR 1260) because in Hinton, the settlement agreement attempted to settle "all claims in all jurisdictions", which was not specific enough to meet the requirements of a "qualifying compromise contract" under s147 EqA. However in this case, the settlement agreement specifically referred to age discrimination and the relevant legislation and therefore met the requirements under s147 EqA. The Court of Session upheld Technip's appeal on the grounds that the jurisdiction of the tribunal was excluded by the terms of the settlement agreement.
What does this mean?
Although this decision is not binding on ETs and the EAT in England and Wales, it will be viewed as very persuasive and we can expect tribunals to follow it. It has now given clarity for employers on the position of relying on settlement agreements to waive future claims, which will be welcomed. General waivers of all claims continue to be ineffective, but settlement agreements which are clearly drafted detailing possible future claims which the employer wants to exclude can be enforceable.
Next Steps
UK employers should ensure that they continue to include specific descriptions of the claims which they are seeking employees to waive in their settlement agreements, ideally including references to the specific legislation under which those claims can be brought. This applies to both current claims and any future claims of which the parties may not yet be aware.
