February 2024


When parties enter into a settlement agreement, they want to have certainty that they have effectively drawn a line under the matters that have been addressed. However, a decision of the Employment Appeal Tribunal (EAT) in October 2022 created significant legal uncertainty over the question of whether settlement agreements could be used to settle unknown future claims.


This uncertainty has now been significantly reduced following the recent reversal of the EAT decision by the Court of Sessions in Bathgate v Technip Singapore PTE Ltd [2023] CSIH 48. 


* Court of Sessions decisions are binding in Scotland, but only highly persuasive in England & Wales (though we anticipate future Tribunals in England & Wales will follow this latest judgment rather than the overturned EAT authority).


The facts


  • Mr Bathgate (B) was employed by Technip Singapore PTE Ltd (Technip) from April 1997.


  • B’s employment was terminated by reason of redundancy in January 2017 and he signed a settlement agreement, which settled his claims against Technip.


  • The settlement terms included a specific waiver of certain claims (including age discrimination under section 120 of the Equality Act 2010 (EqA) and a general waiver of claims which included any future claims B might have against Technip.


  • The redundancy payment under the settlement agreement comprised of an “enhanced redundancy and notice payment” plus a further “additional payment” which was stated to be calculated by reference to a collective agreement.


  • B’s understanding was that he would receive this additional payment. However, the terms of the collective agreement stated that the additional payment only applied to individuals who were under 61 years old. B was 61 years old at the date of his termination.


  • Technip eventually decided that B was not eligible for the payment because he was not under 61 years old. B subsequently brought a claim of age discrimination alleging that Technip’s decision amounted to direct and/or indirect discrimination on the grounds of age.


  • There were several issues considered by the Tribunal in this case, but our focus has been on the central question: was B blocked from bringing his claim for age discrimination because it had been waived by the general waiver of future claims included in the settlement agreement with Technip?


The law


The key legislative provision in question here is section 147(3)(b) EqA, which sets out one of the conditions for a valid settlement agreement, which is that “the contract relates to a particular complaint”.


The decision


An employment tribunal originally decided that B had lawfully settled his claim in the settlement agreement and therefore could not bring his new claim for age discrimination. 


However, on appeal, the EAT found that s147 EqA did not permit the waiver of unknown future claims as the settlement agreement needed to relate to a “particular complaint”. It held that these facts, where the circumstances giving rise to the claim had not arisen before the settlement agreement was signed were distinguished from previous case law on this issue. This involved claims that were not in the contemplation of the parties at the time of the agreement, but which did relate to circumstances that had arisen at the time the settlement agreement was signed.


The Court of Session overturned the EAT’s decision and held that the waiver in the settlement agreement was valid and so B’s claim for age discrimination could not proceed. In particular, the Court found:


  • The words “the particular complaint” do not introduce any timing barrier to waiving post-employment claims. It simply requires an evaluation of whether a claim is or is not covered by the terms of the settlement agreement.


  • Past case law accepted that if the wording of the waiver is plain and unequivocal, then an unknown future claim could be settled by a settlement agreement. All that mattered was whether the complaint was sufficiently identified.


  • In the previous case of Hinton, the court had held that the particular complaint had to be adequately identified, either by a generic description such as "unfair dismissal" or by reference to the section of the statute giving rise to the claim. This level of particularity had been met in this claim due to the reference to age discrimination under s120 EqA in B and Technip’s settlement agreement.


Key takeaways


This is a welcome development for employers that provides clarity on whether a settlement agreement can validly waive future claims. Employers should remember that:


  • The other statutory requirements for settlement agreements must still be met, such as the employee obtaining legal advice.


  • The waiver must specifically identify the relevant claims by a generic description or by including a reference to the section in the statute. It should not be a general waiver of all / any claims.


  • The waiver must be "absolutely plain and unequivocal" in relation to future claims.


The decision does also raise a question as to whether, employers should continue to provide for the agreement to be signed for a second time on or around the date of termination where there is a break between the date the settlement agreement is signed and the termination date. The usual rationale for this approach, from an employer’s perspective, is to ensure that any possible claims that arise between the date on which an agreement is first signed and the termination date are effectively waived following termination. 


One reading of Bathgate suggests that this may not be strictly necessary – if future claims can be settled by a settlement agreement, then what is the benefit of a second signature? Our view is that it’s still worth including this as a matter of good practice. There’s still some uncertainty about the application of Bathgate in every situation as there has been speculation that future claims waivers may only be enforceable in a ‘clean-break’ scenario. In any event, employees are generally not aware of the legal nuance here and an obligation to sign an agreement a second time when termination takes effect is an effective way to ensure good behaviour during the intervening period.