Settlement Agreements and future claims
Settlement agreements and future claims
This case ruled that unknown future discrimination claims cannot be compromised by a settlement agreement, which is restricted to complaints known to the parties at the time of settling.
It was found that employers and employees can settle statutory claims, such as claims for unfair dismissal and discrimination, by entering into a settlement agreement complying with the necessary statutory requirements. These include that the agreement must relate to ‘the particular complaint’ and that the employee must have received independent legal advice on the terms and effect of the agreement.
Settlement Agreement and Facts
Mr Bathgate worked as a Chief Officer for 20 years on various foreign-flagged ships outside the UK. In the final six months of his employment he had worked onshore in Scotland. Mr Bathgate took voluntary redundancy by way of Settlement Agreement in January 2017. Within the terms of this Settlement Agreement there was a term that provided for a future payment, to be calculated in accordance with the terms of a collective agreement which had been compiled prior to the introduction of age discrimination legislation.
Nevertheless, under the terms of the collective agreement, payments were prohibited to those aged 61 and over, provisions which self-evidently breached the age discrimination regulations. Those that were responsible for compiling the collective agreement had failed to update it to take account of this.
Mr Bathgate was unaware of the discriminatory provisions at the time of signing the Settlement Agreement. When the decision not to make the additional payment was communicated to him in June 2017, Mr Bathgate sought to bring an age discrimination claim. Although his employer accepted that age was the reason he was not paid the sum, it said that by signing the Settlement Agreement, Mr Bathgate had compromised his right to pursue any further claim. The Settlement Agreement stated that it constituted full and final settlement of the claims that Mr Bathgate ‘intimates and asserts’ against Technip, and listed various types of claim, including age discrimination claims under the Equality Act. The agreement also included a general waiver of ‘all claims … of whatever nature (whether past, present or future)’. The tribunal held that Mr Bathgate’s claim was precluded by the agreement. He appealed.
The appeal was allowed.
The fact that the age discrimination complaints had been referred to in the long list of claims being waived by Mr Bathgate did not mean that the particular age discrimination complaint had been identified in the Settlement Agreement.
The EAT was reinforced in this view by the fact that when similar Settlement Agreement provisions were introduced by s. 203 of the Employment Rights Act 1996, Parliament had indicated that Settlement Agreements should only be able to settle a particular complaint that has already arisen between the parties. In this instance, Mr Bathgate had signed away his right to claim age discrimination before he knew whether he had a claim or not. This is not permitted under the Equality Act. The words ‘the particular complaint’ do not encompass a potential future complaint. While such an interpretation may be inconvenient where both parties wish to avoid future claims, Parliament did not consider that a settlement of the sort seen in this case was desirable and it had legislated to prevent it.
Although this case is unusual on its facts, the fact is that Mr Bathgate did not know he had a claim for age discrimination until after he signed the Settlement Agreement and the payment was refused on the grounds of his age and therefore he was not prevented from bringing the claim.
If he had known he would not be paid it, then this would have been a different matter.
If you need assistance with creating Settlement Agreements in the right way, or understanding the total implications of signing a Settlement Agreement and the impact on your future obligations or choices, please contact Lawson-West Solicitors. Contact Us.View all