Gwenan White | Trainee Solicitor

Can unknown future claims be compromised by a settlement agreement?

In Bathgate v Technip UK Ltd and others [ 2022] EAT 155 the Employment Appeal Tribunal (EAT) has held a settlement agreement cannot compromise a future claim that has not yet arisen.

The Claimant accepted voluntary redundancy that was formalised in a settlement agreement with advice from a solicitor. A term in the agreement provided for a future payment to employees under the age of 61.  The Claimant was over 61 but was unaware of the discriminatory provisions at the time of signing the settlement agreement. He went on to sue the Respondent for age discrimination after the agreement was signed. 

The Employment Tribunal initially found against the Claimant on the basis that in its view, the claim has been compromised by signing the agreement.

The Claimant appealed to the Employment Appeal tribunal (EAT).

On appeal to the EAT, the EAT referred to Section 144(3) of the Equality Act 2010 which provides that for a settlement agreement to be valid, it must relate to a “particular complaint”.

The EAT concluded that:  “While the prospect of a future age discrimination complaint was more than an “off chance”, […], it was insufficiently certain to come within the ambit of a qualifying legal settlement. I therefore conclude that the Agreement could not settle the Claimant’s claim of age discrimination.

The decision of the EAT confirmed that a settlement agreement cannot compromise unknown future claims.

In confirming that a general waiver of unknown future claims is unenforceable, the EAT also asserted that the standard list of claims that is incorporated in most settlement agreements these days, none the less does not meet the conditions for a qualifying settlement agreement.

Lord Summers asserted: “[T]he inclusion of a claim in a [settlement] agreement defined merely by reference to its legal character or its section number does not satisfy the language of [the Equality Act]. The words “the particular complaint” suggest that Parliament anticipated the existence of an actual complaint or circumstances where the grounds for a complaint existed. I do not consider that the words “the particular complaint” are apt to describe a potential future complaint.”

Bathgate v Technip UK Ltd and others highlights the importance to both employers and employees of considering the impact a Settlement Agreement may or may not have on future claims.  All employers and employees should ensure they seek up to date legal advice when negotiating a Settlement Agreement. Our team regularly draft Settlement Agreements for employers and advise both employees and employers on the terms of Settlement Agreements in relation to their particular circumstances. If you are an employee currently negotiating a settlement agreement and are concerned about waiving you right bring a future claim or an employer concerned about an employee brining future claims, get in touch with our Employment Team at Jackson Boyd for bespoke legal advice. Should you have another employment matter you are seeking advice on, our Employment Team at Jackson Boyd would be happy to meet with you to discuss.

Gwenan White

Gwenan White

Employment Law Team

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