July 2024


Earlier this year, in the claim Bathgate v Technip Singapore PTE Ltd [2023] CSIH 48 ('Bathgate'), the Scottish Court of Session concluded that settlement agreements can validly waive future claims provided certain conditions were met (see our update here). This judgment was welcome news to employers, but not binding on tribunals in England and Wales; it only had “highly persuasive” weight.


However, around six months later, the Employment Appeal Tribunal ('EAT') has applied the (non-binding) Bathgate decision in deciding whether to strike out a claim for disability discrimination in Clifford v IBM United Kingdom Ltd [2024] EAT 90. The previous uncertainty in this area has now finally been addressed; future claims can be waived by settlement agreements, provided certain conditions are met.


Background

The Claimant was an employee of the Respondent and had been on sick leave for a number of years when, in 2012, he raised a grievance. The grievance included a complaint about the Respondent’s failure to transfer him to its disability plan.


The parties entered into a settlement agreement in 2013, following the outcome of the grievance. The terms of that settlement included that:

  • The Claimant would move to the disability plan, but remain in the Respondent’s employment, and receive disability salary payments at a specified level.
  • The Claimant would waive his right to bring various specified claims (including disability discrimination) whether or not the claims were or could be in the contemplation of the parties at the date of the agreement.
  • There was an exception to the waiver in respect of claims arising after the date of the agreement, but this expressly did not apply to claims connected to the grievance or his transfer to the disability plan.


Nine years later in February 2022, the Claimant brought claims for disability discrimination against the Respondent, which related to his transfer to the disability plan and lack of annual salary reviews since the transfer.


Following an application by the Respondent, the Employment Tribunal struck out the claims on the basis that the settlement agreement precluded them and the claims had no reasonable prospects of success. The Claimant appealed.


Decision

The EAT dismissed the appeal and upheld the Tribunal’s decision to strike out the claim on the basis that the claims had been settled by the settlement agreement.


The decision centred on section 147 of the Equality Act 2010, which sets out the conditions for a valid settlement agreement and, in particular, that the contract must relate “to a particular complaint.” On this issue, the EAT upheld the decision in Bathgate and found that:

  • The Claimant’s pleaded discrimination claims came within the terms of the waiver in the settlement agreement (though this was not a point of appeal).
  • The circumstances were indistinguishable from the Bathgate case (even though the employment relationship was continuing in this case, unlike in Bathgate where employment had terminated) because they both concerned future claims that had not arisen at the time of the settlement agreement.
  • The Court of Session’s reasoning in Bathgate was cogent and the case was correctly decided.
  • The statutory provisions introduce no temporal limitation on the kinds of claims that can be settled.
  • Nothing in the statutory language precludes the settlement of future claims provided appropriately clear language is used.

(There were other grounds of appeal raised by the Claimant in his appeal, but the EAT found that they were academic following the above finding, so we have not covered them here). 


Key takeaways

This case provides further comfort on the issue of waiving future claims via settlement agreements and we reiterate the reminders in our previous article 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 also clarifies that a future waiver of claims may be enforceable in circumstances where employment is continuing, with the caveat that this employee was not in active employment (as he was on the disability plan), so it does not provide complete certainty moving forwards for employers agreeing a settlement with an employee who will continue to perform their duties after signing.