News & Insights

Writing the Future – Settling Unknown Employment Claims

Scotland’s supreme civil court has ruled on whether unknown future claims can be settled under the Equality Act.

Back in 2022, I wrote about the Employment Appeal Tribunal’s decision in the case of Bathgate v Technip UK Ltd – you can read more about that here.

To summarise, Mr Bathgate had signed a settlement agreement with Technip. Under this agreement, he specifically waived a list of employment-related claims (including age discrimination under the Equality Act 2010) as well as generally waiving all future claims against his former employer. Circumstances later arose giving Mr Bathgate the grounds for an age discrimination claim, but Technip argued that this claim had been waived by Mr Bathgate under the general waiver of all future claims in the settlement agreement.

The matter went to the Employment Appeal Tribunal (EAT). Mr Bathgate argued that section 147 of the Equality Act 2010, which sets out the conditions for a settlement agreement to be legally binding, requires for a particular claim to be identified in order for it be waived – therefore he could not have settled claims he did not know about. Technip’s counterargument was that the settlement agreement specifically identified age discrimination and the relevant statutory provisions, and therefore complied with the requirements of section 147.

The EAT preferred Mr Bathgate’s argument. They held 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”. Allowing Mr Bathgate to sign away his right to bring a claim for age discrimination, without him knowing that he had such a claim, would be contrary to the intention of section 147. They also pointed to the use of the wording “the particular complaint” as evidence that section 147 does not permit for the settlement of future unknown claims.

Technip appealed to the Court of Session, the highest Scottish civil court. The EAT’s view had been that it was Parliament’s intention that section 147 not allow for the settlement of unknown future claims, but the Court of Session’s position was that one would expect a Parliamentary intention to limit parties’ freedom to contract to be expressed clearly and unequivocally in the legislation – which, in their view, was not true of section 147.

The Court of Session found that the “particular complaint” requirement does not require the complaint to be known by the parties or even for its grounds to be in existence at the time of the agreement – instead, it just requires that the complaint be covered by the terms of the agreement. A rolled-up waiver, such as of “all statutory rights”, as in Hinton v University of East London, would not meet the requirements of section 147, as it did not identify the particular complaint – but a waiver of age discrimination claims identifying the relevant legislation, as in this case, provided the required level of specificity.

The Court of Session therefore concluded that section 147 does not prohibit the settlement of future unknown claims – provided that the type of claim is clearly identified, and the wording of the agreement encompasses settlement of the claim in question.

While employment law judgments made in the Court of Session are not binding on the employment tribunals of England and Wales, they may be considered persuasive. This judgment may therefore offer some relief to employers looking to sign settlement agreements with departing employees, as it suggests that future unknown claims under the Equality Act can be settled – a position which had been confused by the EAT’s earlier judgment in this case. However, employers should still take caution in the drafting of their settlement agreements, to ensure that the wording is sufficient to cover future unknown claims to the standards required by section 147. There is a risk when using older settlement agreement templates that these may be out-of-date, and not provide sufficient protection against future unknown claims. We would always recommend obtaining legal advice when looking to reach a settlement with an employee, to avoid these and other pitfalls.

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]