In more detail
In Bathgate v Technip UK Ltd, the claimant (relevantly, aged 61) had entered into a settlement agreement to settle all claims which he had or may have against Technip. In addition to notice pay and an enhanced redundancy payment, the agreement provided for a further payment calculated by reference to a collective agreement, to be paid at a later date. Subsequently, Technip decided not to make the additional payment, because the collective agreement stated that it was not payable to people who had reached age 61. Mr Bathgate alleged that this was directly age discriminatory.
The question therefore arose whether this claim had been validly settled; the EAT decided that it hadn't. In short, the EAT concluded that the restrictions on settling statutory employment claims (such as discrimination or unfair dismissal) precluded settlement of claims which were not known and had not yet arisen. This was because of the statutory requirement that settlement agreements must relate to the "particular proceedings" being settled.
Earlier case law had suggested that it is possible to settle future statutory claims of which an employee does not and could not have knowledge, but that to do so effectively the agreement must be absolutely plain and unequivocal. However, in Bathgate, the EAT said that this was a misreading of other judgments and their factual context, and did not apply to statutory employment claims.
The EAT also expressed the view that clauses which list "a variety of possible claims by reference to their nature or section number" are no different from a general waiver clauses and will not be effective. Its opinion on this point was not binding and previous cases have suggested that such clauses could be effective, even though they were not best practice.
On the face of it, this judgment means that a settlement agreement will not be effective to settle future statutory claims before their existence is known. However, it should be noted that this case concerned events that had not yet occurred. It does not determine the position in relation to settlement of claims which have already arisen, even if the claimant does not yet realise. The position there may be addressed in future litigation.
The case highlights the difficulty in guaranteeing an entirely clean break under a settlement agreement. The EAT recognises that its decision might be inconvenient where the parties wished to avoid future claims and end an employment relationship permanently, but considered that the legislation prevents that. In practical terms, when an employer is entering a settlement agreement significantly in advance of the termination of employment or is aware that an event could occur following a settlement that might give rise to a claim, it is already common practice to structure the settlement to require re-execution of the agreement after the event in question in order to ensure that you have a valid settlement in relation to that later event. Given the conflicting case law, it is unlikely that the practice of including long lists of possible claims will end, although there may be an increased focus on tailoring the list and ensuring the most likely claims are separately identified. In some cases it may also be worth settling claims with the involvement of ACAS under a COT3 agreement. ACAS settlements do not have to relate to "particular proceedings" and so may give scope for a wider waiver.
