The Future is Unwritten – Settling Unknown Employment Claims
In Bathgate v Technip UK Ltd, the Employment Appeal Tribunal held that parties cannot settle unknown future claims under the Equality Act.
Section 147 of the Equality Act 2010 sets out conditions for a qualifying settlement agreement, including that the contract must relate to the particular complaint being settled. Blanket waivers are therefore prohibited – although caselaw has determined that a waiver will be lawful provided it identifies a potential claim by a generic description of a section of statute. It has previously been held that parties can agree that a settlement agreement covers future claims of which an employee does not and could not have knowledge, but the terms of the agreement must be plain and unequivocal on this point for them to effectively bind the employee. This latest case has challenged that understanding.
In Bathgate v Technip UK Ltd, Mr Bathgate was employed by Technip UK Ltd from August 2008 until January 2017, when he was made redundant. Mr Bathgate signed a voluntary redundancy agreement, which included a specific waiver setting out a list of claims he was settling, including age discrimination under the Equality Act 2010, and a more general waiver of all future claims. The agreement provided for an “Additional Payment” to be paid in June 2017, calculated by reference to a collective agreement. Unknown to Mr Bathgate at the time, this collective agreement had a clause stating that only officers under the age of 61 would be eligible to receive the “Additional Payment”. He was 61 at the date of his dismissal.
When it came to June 2017, the company looked through the paperwork to determine what payment was due and told Mr Bathgate that he was not eligible. He brought a claim for direct and indirect age discrimination in the Scottish Employment Tribunal. Technip accepted that Mr Bathgate’s age was the reason he had not received the Additional Payment but argued that he had waived his right to bring a claim for age discrimination by signing the settlement agreement. The Employment Tribunal agreed that Mr Bathgate had lawfully settled his claim. Mr Bathgate appealed to the Employment Appeal Tribunal (‘EAT’).
The EAT allowed Mr Bathgate’s appeal, on the grounds that section 147 of the Equality Act 2010 does not allow for the settlement of claims before their existence is known. The EAT rejected Technip’s argument that the settlement agreement’s reference to age discrimination and the relevant statute meant that the particular complaint had been identified.
Following the case of Hinton v University of East London, the EAT highlighted that the broad purpose of section 147 was to “protect claimants from the danger of signing away their rights without a proper understanding of what they are doing”. Here, Mr Bathgate had signed away his right to bring a claim for age discrimination without knowing that he had one – allowing this to happen would be contrary to the intention of section 147 of the Equality Act 2010. The EAT also considered statements made in the House of Lords when the relevant legislation was drafted that the settlement of claims should only operate “in the context of an agreement which settles a particular complaint that has already arisen between the parties to the complaint”. The wording “already arisen” indicated that it was Parliament’s intention that future causes of action be excluded. Section 147 itself refers to “the particular complaint”. The EAT took the view that this wording does not include the settlement of unknown future claims, on the basis that it cannot be said that an unknown future complaint is “the particular complaint”.
The EAT’s judgment confirms that, while a potential claim can be waived, the facts of this potential claim must be known to the parties. There has always been a question around whether future claims not existing or in contemplation at the time of the settlement could be validly waived; this EAT decision has clarified that it is not possible for discrimination claims. In most circumstances where employment has terminated this is unlikely to give rise to concern, as there are unlikely to be new claims arising after signature of the settlement. Mr Bathgate’s case was quite unusual in having a payment being determined at a future date. This is more likely to be of concern where future discretionary payments are envisaged – for example, relating to a bonus, LTIP or commission scheme – or where employment is continuing after the settlement agreement is finalised.
To take a belt and braces approach, employers may want to explore all possible claims an employee may have against them and ensure that any identified potential claims are included in the settlement agreement before signing. It is also important to ensure the list of claims being waived relates only to the specific and relevant concerns and possible claims known to the parties at the time of the settlement and isn’t just a blanket waiver of all claims possible in an employment relationship. For these reasons we would always recommend an employer gets advice on the precise wording of a settlement agreement before making an offer.
If you would like us to draft a settlement agreement or require independent legal advice on a settlement agreement produced by your employer, please get in touch at [email protected]