Key takeaways

• The EAT's decision provides further welcome clarity for employers that future claims can be validly waived under a settlement agreement. Whilst the Court of Session's decision in Bathgate arrived at the same outcome, it was not technically binding on courts in England and Wales, although likely to be highly persuasive.
• The drafting in the settlement agreement will need to make clear, in plain and unequivocal language, of the types of claims being waived, and be very explicit that the intention is to waive unknown future claims. A blanket waiver of claims will not be sufficient and we would recommend including a separate, tailored list of the most likely claims in the settlement agreement.
• The Employment Tribunal in this case had commented that a waiver which prevented an employee from bringing claims in relation to future acts of sexual harassment (for example) would be contrary to public policy. The EAT did not comment on this and did not identify any limit on the ability to waive future claims. However, on the facts of this case the waiver was limited to future claims arising out of the settlement of a previous dispute and it may be that future cases do identify such limitations.
• We expect that claimants and their representatives will, as a result of this decision, be likely to push back on widely drafted waivers of future claims where employment is continuing and both parties will need to give careful consideration to the matter. 

Clifford v. IBM United Kingdom Ltd. EAT

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In more details

Facts

Mr. Clifford has been continuously absent from work due to ill-health since 2008. In 2012, he submitted a grievance against his employer (IBM) claiming among other things that he had not had a salary increase or received holiday pay since 2008 and that IBM had failed to transfer him to its long term disability benefits plan ("Disability Plan"). Following the conclusion of the grievance process, he was transferred to IBM's Disability Plan and the parties also entered into a settlement agreement.

The settlement agreement provided for a waiver of claims including those relating to discrimination, failure to make reasonable adjustments, and annual leave entitlements. Mr. Clifford was not, however, precluded from bringing any "claims which arise after the date of [the] Agreement and which: (i) are not connected to the matters set out in the Grievance or Appeal; or (ii) do not arise out of [Mr. Clifford's] transfer to the Plan."

In 2022, Mr. Clifford brought disability discrimination claims in the employment tribunal arguing that he had been treated less favourably because (i) he had not had an annual salary review/increase in the same way as employees not on the Disability Plan; and (ii) he would have been paid a lower rate for annual leave pay than employees not on the Disability Plan.

Mr. Clifford's claims were struck out by an employment tribunal judge in a preliminary hearing on the basis they had been validly waived under the settlement agreement. He appealed to the EAT.

EAT decision

The EAT dismissed Mr. Clifford's appeal. The main question for the EAT was whether Mr. Clifford's tribunal claims were precluded by the settlement agreement and this turned on whether the agreement satisfied the condition of relating "to the particular complaint" as required under the Equality Act 2010.

The EAT noted that whilst the Court of Session's decision in Bathgate was not binding on it, it would ordinarily be expected to follow the decision "where the point confronting them is indistinguishable from what was there decided". It considered that the circumstances in Bathgate, which was also about the ability to waive future claims that had not arisen at the time of the settlement agreement, was indistinguishable from this case and that the Court of Session had made the correct decision.

The EAT also rejected the argument that a distinction should be drawn in this case as employment was still continuing compared to Bathgate where employment had terminated. Neither the wording in the statute nor how the wording had been interpreted in the case law had drawn such a distinction.

The rationale for the agreement to "relate to the particular complaint" was to avoid a situation where an employee could sign away their rights against their employer under a blanket waiver without appreciating the significance of what they were doing. It does not prevent the waiver of all future claims; if that was what Parliament had intended, then it would have made that clear when drafting the statutory provisions. The EAT appeared to accept that the condition would be satisfied provided the claims or potential claims being waived are identified by a generic description e.g., unfair dismissal, or by reference to the section of the statute giving rise to the claim, in the settlement agreement.