The Employment Appeal Tribunal (EAT) have ruled that in some circumstances, a “future claims” waiver in a settlement agreement may be enforceable where employment is continuing.
Background
Section 147 of the Equality Act 2010 (“EqA 2010”) sets out requirements for a qualifying settlement agreement. Among those is a condition that a settlement agreement must relate to a “particular complaint”, in order to be binding. Ian Machray’s article in February considered the decision made by the Scottish supreme court (“Court of Session”) in Bathgate v Technip Singapore PTE Ltd [2023] CSIH 48, which held that a settlement agreement could validly settle unknown future claims, provided the claims concerned are clearly identified in the agreement in compliance with the EqA. That decision overturned an earlier EAT decision made where it had previously been found that s147 did not apply to future claims and that a settlement agreement could not, accordingly, settle future claims under the EqA 2010. All change once again.
As set out in Ian’s article, while employment law judgments made in the Court of Session are not binding on employment tribunals in England and Wales, they can be considered persuasive.
The Court of Session decision in Bathgate has recently been brought into the spotlight in Clifford v IBM United Kingdom Ltd [2024] EAT 90 where the Employment Appeal Tribunal (the “EAT”) upheld a decision made by the employment tribunal (the “ET”) to strike out Mr Clifford’s claims for direct, indirect and disability related discrimination on the basis that he had entered into a settlement agreement with his employer in 2013 which precluded him from bringing such claims under the EqA 2010.
Facts
Mr Clifford had been continuously absent from work due to ill-health from September 2008. In 2012, Mr Clifford raised a grievance that amongst other things, IBM had failed to transfer him onto their disability plan. Mr Clifford subsequently entered into a settlement agreement with IBM under which he was moved onto the disability plan, allowing him to remain employed and receive disability salary payments. Any increase to those payments was at the discretion of IBM.
In return, Mr Clifford waived his right to bring specified claims, including disability discrimination claims whether or not they were, or could be in contemplation of the parties at the date of the agreement. The exception in relation to future claims did not apply to matters connected to the grievance, its appeal or arising from Mr Clifford’s transfer to the disability plan.
Some years later, Mr Clifford bought claims in the ET arising from the fact that, since his transfer to the disability plan, he had not received annual salary reviews and the level of payments he received had not increased.
Decisions
Mr Clifford’s claims were initially struck out by the ET on the grounds that they had no reasonable prospects of success, given that Mr Clifford was precluded from bringing such claims under the settlement agreement he entered into in 2013.
Mr Clifford appealed to the EAT, citing the earlier EAT decision in Bathgate that s147 EqA did not extend to claims which arose after the settlement agreement was entered into. Unfortunately for Mr Clifford, by the time of the appeal hearing, the Court of Session had overturned the EAT decision as above. Mr Clifford then attempted to argue that the Court of Session’s decision was wrong, and the EAT should not follow it in this matter. He also contended that this situation differed to that in Bathgate, on the basis that he had remained employed following entering into the settlement agreement.
The EAT rejected Mr Clifford’s appeal and found that the ET hadn’t erred in finding that Mr Clifford’s claims fell within the ambit of the waiver in the settlement agreement. In particular, the EAT found that there was no basis for suggesting that Mr Clifford’s situation was different to that in Bathgate by virtue of his continuing employment, given that both cases concerned future claims that hadn’t arisen at the time the agreement was signed and there was nothing in the wording of s147, nor its subsequent interpretation in case law that would suggest that continuous employment should be a defining factor. The EAT also considered the wording of the settlement agreement itself and held that the wording complied with the requirements set out in s147 of the EqA.
Commentary
Not only is the EAT’s decision in Clifford useful in clarifying the common law position that settlement agreements can be used to settle future claims (provided they meet the relevant criteria), but it also provides clarity on whether continuing employment affects the validity of a future claims waiver. This finding will offer employers comfort when seeking to reach a compromise with employees who will remain in employment after signing a settlement agreement.
Any waiver seeking to exclude future claims must continue to satisfy the relevant statutory requirements as well as complying with the relevant case law. In short, a waiver should:
- contain a general description or a reference to the statute giving rise to the claim;
- be absolutely plain and unequivocal.
Any ambiguity could affect the validity of any waiver in respect of future clams.
For employers, a key ‘take away’ point from this case was that IBM clearly applied its mind to the claims being waved. Mr Clifford’s grievance raised specifically envisaged certain claims which the parties intended to settle both in the present time and future when entering into the settlement agreement, and the agreement that was produced reflected a number of appropriate exclusions in light of that.
Where employers specifically intend to waive future claims, they must ensure that the settlement agreement is properly drafted to provide sufficient protection in this regard. We would recommend reviewing any settlement agreement templates used on a regular basis and seeking legal advice as required to avoid any potential arguments of invalidity.
If you require our help with a settlement agreement (whether as employer or employee), please get in touch at [email protected].
