Employment Law Cases

Bathgate v Technip UK Ltd

Unknown future claims arising under the Equality Act 2010 may be waived in a settlement agreement provided that the types of claims are clearly identified.

Employers and employees can settle statutory claims, such as claims for unfair dismissal and discrimination, by entering into a settlement agreement complying with the necessary statutory requirements. These include that the agreement must relate to ‘the particular complaint’ and that the employee must have received independent legal advice on the terms and effect of the agreement.

Background

Mr Bathgate worked as a Chief Officer for some 20 years on various foreign-flagged ships outside the UK. In the final six months of his employment however he worked onshore in Scotland. He 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. Mr Bathgate was unaware of the discriminatory provisions at the time of signing the settlement agreement. When the decision not to make the additional payment was belatedly communicated to him in June 2017, Mr Bathgate sought to bring an age discrimination claim. Although his employer accepted that age was the reason he was not paid the sum, it said that by signing the settlement agreement, Mr Bathgate had compromised his right to pursue any further claim. The settlement agreement stated that it constituted full and final settlement of the claims that Mr Bathgate ‘intimates and asserts’ against Technip, and listed various types of claim, including age discrimination claims under the Equality Act. The agreement also included a general waiver of ‘all claims … of whatever nature (whether past, present or future)’.

The tribunal held that Mr Bathgate’s claim was precluded by the agreement and he appealed. The EAT allowed his appeal. The fact that age discrimination complaints had been referred to in the long list of claims being waived by Mr Bathgate did not mean that the particular age discrimination complaint had been identified in the settlement agreement. In this instance, Mr Bathgate had signed away his right to claim age discrimination before he knew whether he had a claim or not. This is not permitted under the Equality Act. The words ‘the particular complaint’ do not encompass a potential future complaint. While such an interpretation may be inconvenient where both parties wish to avoid future claims, Parliament did not consider that a settlement of the sort seen in this case was desirable and it had legislated to prevent it. Technip appealed.

Court of Session decision

The appeal was allowed.

The requirement that a settlement agreement must relate to a ‘particular complaint’ does not mean that the complaint must have been known of, or its grounds at least in existence, at the time of the agreement. There was no logical or principled basis upon which to conclude that a waiver would only settle future claims based on facts and circumstances in existence at the time of entering into the settlement agreement. It also made no sense to maintain that a potential future claim could be settled by way of a COT3 agreement (to which no ‘particular complaint’ requirement applies), but not by way of settlement agreement, to which provisions regarding independent legal advice and insurance applied.

A future claim of which the employee does not, and could not, have knowledge would not be effectively waived by a blanket-style waiver. To be effectively waived, a future claim must be identified by either a generic description (e.g. unfair dismissal) or a reference to the section of the statute giving rise to the claim. Provided that the wording used is ‘plain and unequivocal’ an unknown future claim may be settled. In Mr Bathgate’s case, the settlement agreement waiver had referred to future age discrimination claims. That being the case, the tribunal did not have jurisdiction to hear the claim.

Comment

This case restores some certainty for employers when signing settlement agreements, knowing that future claims that neither party may know about at the time, can be settled. It also removes the rather odd contradiction between COT3s and settlement agreements. 

This is a Court of Session decision – the Scottish equivalent of the Court of Appeal - and so isn’t technically binding in England and Wales. However it has since been followed in Clifford v IBM where the EAT held that a tribunal had been correct to strike out the Mr Clifford’s claim of disability discrimination as it had been validly settled by a prior compromise agreement entered into some years previously. Under the terms of the agreement, Mr Clifford waived the right to bring various specified claims, including disability discrimination claims, whether or not they were or could be in the contemplation of the parties at the date of the agreement. It made no difference that Mr Clifford remained in employment (whereas in the above case the employment relationship had come to an end). It was a future claim but was clearly barred by the terms of the compromise agreement.