Settlement agreements can waive unknown future claims

Background

In order to be legally binding, settlement agreements must meet certain statutory requirements. One of these requirements is that the agreement must relate to 'the particular complaint'.

The key question here is: 'Is it possible to enter into a settlement agreement that waives the employee's right to bring a future claim - even when the events leading to that claim had not taken place at the time of the agreement?'

Facts

In the case of Bathgate v Technip UK Ltd Mr Bathgate was made redundant by Technip in January 2017. He entered into a settlement agreement which stated that it was in full and final settlement of the claims Mr Bathgate "intimates and asserts". It listed various claims that were to be settled under the agreement, including age discrimination. The settlement agreement also contained a general waiver of "all claims… of whatever nature (whether past, present or future)".

After the settlement agreement had been signed, Technip decided it did not need to make an additional payment to Mr Bathgate under a collective agreement, as he was over the age of 60. Mr Bathgate brought an Employment Tribunal claim for post-employment age discrimination in response.

Technip argued that by entering into the settlement agreement, Mr Bathgate had waived his right to pursue the age discrimination claim. The Tribunal agreed, and Mr Bathgate appealed to the EAT. He argued that the Equality Act does not allow claims to be settled before they have arisen.

EAT decision

The Scottish EAT allowed the appeal on this point. It held that whilst it is possible for an appropriately worded settlement agreement to settle certain future claims, the facts giving rise to those potential future claims must have occurred by the time the agreement is entered into. Technip appealed to the Court of Session.

Court of Session

The Court allowed the appeal, holding that Mr Bathgate had waived his right to bring the age discrimination claim when he entered the settlement agreement. Nothing in the underlying legislation prevents the waiver of future claims, and there is no requirement that the facts prompting those claims must have taken place by the time the settlement agreement is entered into. 

Learning Points 

This decision confirms that settlement agreements under the Equality Act 2010 can be used to waive unknown future claims as long as the types of claim are clearly identified and the wording in the agreement covers the relevant claim. The fact that the agreement must “relate to the particular complaint” does not mean that the complaint must have existed or been known of at the time of the agreement.

The decision underlines the importance of clearly particularising claims in settlement agreements, as well as the intention to waive future claims that have not yet arisen. Only properly particularised claims will be effectively waived under the agreement.

For more information, please contact Michael Halsey in our Employment team on 020 7665 0842, or complete the form below.