Can a settlement agreement waive unknown future claims?

The Employment Team at Sintons regularly advises on settlement agreements for both employers and employees. A settlement agreement aims to waive any existing or potential Employment Tribunal claims which an employee may have grounds to bring against their employer. It is typical for an employee to receive a compensation payment from their employer in exchange for signing the agreement.

In the case of Bathgate v Technip Singapore PTE Ltd [2023] CSIH 48, Mr Bathgate signed a settlement agreement on 29 January 2017 as part of a redundancy exercise. The agreement provided that various Employment Tribunal claims would be settled. In exchange, Mr Bathgate would receive an enhanced redundancy payment, a notice payment and an “Additional Payment” to be paid in June 2017.

The Additional Payment was calculated by a collective agreement. Clause 3 of that collective agreement stated that the Additional Payment would only apply to employees who had not reached the age of 61. Mr Bathgate was 61 on the date his employment terminated, however, he was under the impression that he would still receive the payment.

Technip later decided that the Additional Payment did not need to be paid to Mr Bathgate due to his age and he was notified of this in June 2017. Mr Bathgate submitted that this decision amounted to age discrimination. Whilst admitting that the conduct was because of his age, Technip stated that Mr Bathgate had settled his right to pursue the claim under the terms of the settlement agreement.

To successfully waive a claim, a settlement agreement must refer to a “particular complaint”. For that reason, most settlement agreements include a list of the statutory claims being settled. Mr Bathgate’s agreement was no exception, most importantly, within his list it stated that he was settling claims for direct or indirect discrimination related to age.

Regardless, Mr Bathgate brought a claim for discrimination related to age. He argued that a settlement agreement could not waive a claim which he was not aware of (and could not possibly be aware of) when he signed the agreement.

After being unsuccessful in the Employment Tribunal, Mr Bathgate succeeded in 2022 within the Employment Appeal Tribunal (“EAT”). The EAT held that, because the claim was unknown when the agreement was executed, the waiver could not and did not refer to a particular complaint. To satisfy that definition, the EAT concluded that grounds for a complaint must exist at the date of execution.

This decision was subsequently appealed by Technip to the Court of Session in Scotland (the “Court”) in December 2023. Technip were successful, preventing Mr Bathgate from proceeding with his claim for age discrimination.

The Court concluded that the agreement clearly intended to cover claims which the parties were unaware of and which had not accrued. The Court believed that the purpose of a settlement agreement would be undermined if parties could not achieve a negotiated binding agreement which sufficiently resolved matters. Given that age discrimination claims were specified as being waived, the Court was satisfied that the terms of the settlement agreement were sufficiently clear to amount to a “particular complaint”.

Whilst the Court’s judgment is not binding in England and Wales, it could be highly persuasive, subject to any appeal by Mr Bathgate to the Supreme Court. It shows that there is the potential for unknown future claims to be covered by a waiver where these are clearly particularised. Given the impact any judgment could have on the future of settlement agreements, it is important that we continue to pay close attention to this matter.

If you have any questions relating to this bulletin or any employment law related matter, please contact Samuel Scott or another member of the Employment Team.

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