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EAT Confirms Settlement Agreements Cannot Settle Unknown Future Claims

on Friday, 04 November 2022.

In a recent case, the Employment Appeal Tribunal (EAT) considered whether a settlement agreement could be said to have waived an age discrimination claim which arose at a later date.

What Were the Facts of the Case?

In the case of Bathgate v Technip UK Ltd, Mr Bathgate was made redundant by Technip in January 2017. He signed a voluntary redundancy agreement which included a waiver of a number of claims, including age discrimination and a general waiver of future claims. Under the agreement, Mr Bathgate received an enhanced redundancy and notice payment, and was to receive a further sum (the Additional Sum) in June 2017, which was to be calculated by reference to a collective agreement. However, that collective agreement stated the Additional Sum would be paid only to officers who had not reached the age of 61. Mr Bathgate was 61 at the time.

Technip decided it was not under an obligation to pay the Additional Sum to Mr Bathgate and he brought a claim of age discrimination. Technip agreed Mr Bathgate had not been paid the Additional Sum due to his age. It argued that by entering into the settlement agreement, he had compromised his right to pursue an age discrimination claim. The Tribunal agreed, and Mr Bathgate appealed to the EAT, arguing that section 147 of the Equality Act does not allow for claims to be settled before they had arisen. The Scottish EAT allowed the appeal.

What Does the Act Say?

Section 147(2) of the Equality Act 2010 that a qualifying settlement agreement is a contract which meets each of the following conditions:

  • It is in writing.
  • It relates to "the particular complaint".
  • The employee has received advice about its terms and effect from a suitable independent advisor.

The EAT considered what is meant by the words "the particular complaint" in these circumstances.

What Did the EAT Decide?

The EAT found that Mr Bathgate had not settled this age discrimination claim through entering into the settlement agreement. 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 taken place by the time the agreement is entered into.

Learning Points

Whilst the facts of this case are relatively unusual the decision highlights the care that must be taken to waive potential future claims effectively under a settlement agreement. If circumstances giving rise to a potential future claim have arisen, then with the right wording in the agreement those claims can be waived even if the employee has not yet brought proceedings. However, if the facts giving rise to the potential future claim have not arisen at the time the agreement is entered into, the position is less certain and we may see future litigation on the point.  

Further protections can also be added to protect employers if attempts are made to bring claims after signing a settlement agreement, for example indemnity protection.

It is also worth remembering that this case concerns the extent to which statutory rights can be waived under a settlement agreement. It does not address contractual terms which, with careful drafting can also be incorporated into an agreement in order to protect the employer's position in the event of a future claim.

For more information on the Act, please contact Sian Knight-James in our Employment team on 0117 314 5331, or complete the form.

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