In the case of Bathgate v Technip UK Ltd (2022), the Employment Appeal Tribunal (EAT) has held that unknown future claims cannot be compromised by a settlement agreement.
Background
The background to the case is that the Claimant had spent almost 20 years working outside of the UK on foreign flagged vessels. Accordingly, such employment during this period was not subject to the provisions of the Equality Act 2010
Nevertheless, for the final 6 months of his employment, the Claimant had worked onshore in Scotland. He then took voluntary redundancy by way of settlement agreement in January 2017. Included within the settlement agreement was a term which provided for a future payment, to be calculated in accordance with the terms of a collective agreement which had been compiled prior to the introduction of age discrimination legislation
Nevertheless, under the terms of the collective agreement, payments were prohibited to those aged 61 and over, provisions which self evidently breached later age discrimination regulations. Those who were responsible for compiling the collective agreement had failed to update it to take account of this. The Claimant was unaware of the discriminatory provisions at the time of signing the settlement agreement.
Employment Tribunal
The Claimant instigated Employment Tribunal proceedings for age discrimination. However, the Employment Tribunal found against the Claimant on the basis that in its view, the claim had been compromised by the settlement agreement.
Accordingly, the Claimant appealed to the EAT
Employment Appeal Tribunal (EAT)
The EAT determined that the settlement agreement had not compromised the age discrimination claim, as a settlement agreement cannot compromise unknown future claims.
Section 147(3)(b) of the Equality Act 2010
Section 147(3)(b) of the Equality Act 2010 (hereafter referred to as the "the Act"), provides that for a settlement agreement to be valid, it must relate to a "particular complaint".
In focusing upon this requirement, the EAT held that: "In Lunt v Merseyside TEC Ltd [1999] ICR 17 Morison J sitting in the EAT was asked to consider a compromise agreement that purported to settle a variety of claims. These claims had been the subject of correspondence and a settlement agreement prior to tribunal proceedings being commenced. Morison, J considered s. 203(3)(b) of the ERA96 which like s. 147 of the Act stated that a compromise agreement 'must relate to the particular complaint'." Morison, J stated:
"A compromise agreement cannot, therefore, seek to exclude potential complaints that have not yet arisen on the off-chance that they might be raised; it cannot, in other words, be used to sign away all the employee's tribunal rights, as can be done in the case of a negotiated settlement drawn up with the assistance of a conciliation officer."
The EAT therefore concluded that: "These remarks relate to the wording of the ERA96 s. 203(3)(b) and support the interpretation of s. 147 set out above. While the prospect of a future age discrimination complaint was more than an “off chance”, to use the language of Morison, J 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."
Hence, the decision of the EAT confirmed that a settlement agreement cannot compromise unknown future claims
The Claimant's Case Fails
Nevertheless, despite having succeeded on the issue of whether the age discrimination claim was compromised by the settlement agreement, the Claimant's case failed overall.
The Respondent had argued that as the Claimant was a seafarer, under section 81 of the Equality Act 2010 the protections afforded by the Act did not extend to the Claimant. The Employment Tribunal at first instance had found in favour of the Claimant however on this point, holding that as the age discrimination claim was covered by section 108 of the Act (i.e. post-employment discrimination which "arises out of and is closely connected to a relationship which used to exist between [the parties], and conduct of a description constituting the discrimination would, if it occurred during the relationship, contravene this Act"), the Claimant was covered by the Act, as section 81 did not apply to section 108 claims in its view.
However, the EAT disagreed with the Employment Tribunal on this issue. The Respondent had cross appealed on it, and the EAT held that a Claimants post termination rights under section 108 hinge upon what those rights were during their employment. Hence, as a seafarer excluded from the scope of the Equality Act 2010, the Claimant's case failed as section 81 does apply to section 108 claims.
Settlement Agreement Impact
As stated, the EAT confirmed that a settlement agreement cannot compromise an unknown future claim.
Nevertheless, in confirming that a general waiver of unknown future claims is unforceable, Lord Summers (who heard the EAT case) also asserted that the standard list of claims that is deployed in most settlement agreements these days, also does not meet the conditions for a qualifying settlement agreement.
Lord Summers stated that: "The Act uses the definite article in combination with the words “particular complaint”. I consider this does not permit clauses that list a series of types of complaint by reference to their nature or section number."
Lord Summers added: "It does not seem to me that there is any difference in principle between a “rolled up” waiver and a waiver which lists a variety of possible claims by reference to their nature or section number. Both are general waivers. All that distinguishes them is the particularity with which they have been drafted. I do not consider that one provides any more protection than the other. I consider that both approaches fall foul of the guidance given by Mummery LJ and Smith LJ in Hinton."
Whilst Smith LJ did not reach the same conclusion in Hinton as Lord Summers has in Bathgate, with Smith LJ stating only that a list was not "good practice", it would be advisable for practitioners to factor in the comments of Lord Summers when drafting settlement agreements, as the issue he raises is a very pertinent one which is likely to be pursued in cases / appeals down the line.
