EMPLOYMENT LAW

Future employment claims can be validly waived under a settlement agreement

Employers who offer settlement agreements to employees typically want to compromise as many claims as possible. This often includes future employment claims. There has been doubt as to whether future claims could be validly waived under a settlement agreement, particularly if they were not in the reasonable contemplation of the parties at the time of entering into the settlement agreement.

In a helpful decision for employers, the Court of Session in Scotland confirmed in the recent case of Bathgate v Technip Singapore PTE Ltd that settlement of a ‘particular complaint’ could include unknown future claims under the Equality Act 2010 provided they were clearly identified. They do not have to be known, or in existence, at the time the settlement agreement is signed.

Facts

Mr Bathgate was employed as a chief officer of Technip Singapore PTE Limited. He worked for the company for just shy of 20 years on ships as a seafarer. The final six months of his employment were spent ashore.

Mr Bathgate was made redundant in January 2017 and signed a settlement agreement which included an enhanced redundancy package. The agreement also provided for a further ‘additional payment’ to be paid in June 2017 which was to be calculated by reference to a collective agreement, which stated that the payment would only apply to officers who had not reached the age of 61. Mr Bathgate was 61 at the time of his redundancy but expected to receive the additional payment.

The company decided not to pay Mr Bathgate the additional payment on account of his age. Mr Bathgate subsequently raised a claim of age discrimination. The company defended the claim on the grounds that he could not bring a claim because he had signed the settlement agreement.

What were the terms of the settlement agreement and were they ‘clearly identified’?

Mr Bathgate’s settlement agreement included that its terms were in full and final settlement of various identified claims, which included claims under the Equality Act 2010, and listed age discrimination.
The Agreement also included a general waiver of  “…all claims, demands, costs and expenses of whatever nature (whether past, present or future and whether under contract, statute, regulation, pursuant to European Union Law or otherwise)…”

There was, therefore, a particularised claim and a waiver that included future claims.

Will the decision change the approach to the drafting of settlement agreements?

It continues to be the case that blanket waivers in settlement agreements, such as ‘all statutory rights’, will be insufficient to waive future claims. In order to be effective, the particular proceedings or complaint must 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 (such as s111 Employment Rights Act 1996).

Although a Scottish case, and not binding on tribunals and appeal tribunal in England & Wales, the case will be highly persuasive and reinforces the importance of carefully drafting waivers within settlement agreements. Employers should seek to ensure particular complaints or claims are given a sufficient description and identified with reference to the statute to which they relate to.

If you would like assistance with drafting your settlement agreement waivers please contact your usual DMH Stallard employment contact.

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