Is it possible to settle future tribunal claims?
21 November 2022
The Employment Appeal Tribunal (EAT) has considered whether a settlement agreement had settled a future claim for age discrimination that was unknown to the claimant at the time he signed it.
Bathgate v Technip UK Ltd  EAT 155
Facts of the case
The claimant was a seafarer who was made redundant by his employer after 20 years of employment. He signed a settlement agreement in January 2017, under which he was paid an enhanced redundancy payment. It also provided for payment of an ‘additional payment’ in June 2017, calculated by reference to the terms of a separate collective agreement. This made it clear that the payment was only payable to those who were aged 60 or under at the date of termination. The claimant was 61 at the time, but nevertheless believed that he would receive the additional payment. His employer subsequently decided not to make the payment to the claimant, so he brought a claim for age discrimination.
The settlement agreement signed by the claimant included a general waiver, which was worded to include all claims “whether past, present or future”, it also included a long list of individual claims by reference to the appropriate statutory provision, including age discrimination. The employment tribunal held that the wording of the settlement agreement was sufficiently wide to settle a future claim of age discrimination, so it dismissed the claim. The claimant appealed against the tribunal’s decision to the EAT. His employer cross-appealed on the grounds that the tribunal did not have jurisdiction to hear the claim, due to the claimant’s status as a seafarer working outside of UK territorial waters.
The EAT upheld the claimant’s appeal relating to the ambit of the settlement agreement, but it also upheld the employer’s appeal, finding that the tribunal did not have the jurisdiction to hear the claim. This meant that the claimant’s case ultimately failed.
After considering previous case law that dealt with the ambit of settlement agreements, the EAT decided that a claim cannot be settled before its existence is known. A settlement agreement can only be used to settle a ‘particular complaint’ under the Equality Act 2010 (or ‘particular proceedings’ under the Employment Rights Act 1996), and this does not include a claim that may or may not occur at some point in the future. The EAT therefore held that the prospect of a future age discrimination claim, such as that in the claimant’s case, was insufficiently certain to come within the ambit of a qualifying settlement agreement.
The EAT also considered that including a claim in a settlement agreement just by reference to its legal character or section number does not satisfy the requirement for settlement of a ‘particular complaint’. There must be an actual complaint or circumstances where the grounds for a complaint existed.
The Birketts view
This decision confirms that a settlement agreement cannot be used to settle an unknown future claim, based on facts that have not yet arisen. It was only after the claimant had signed the settlement agreement that the employer took the discriminatory decision to withhold the payment; it would be unjust to settle such a claim. The EAT’s decision is therefore not wholly unsurprising, and reflects what the position in relation to settling personal injury claims is already. A settlement agreement can still be used to settle existing claims, and claims arising from facts that are already in existence at the time it is signed, providing the settlement agreement is clearly drafted.
The EAT’s decision does raise questions over the drafting of settlement agreements and in particular, the need to carefully tailor the document to the particular circumstances of the case. We already knew that a general waiver of claims in a settlement agreement cannot be relied upon, but including a long list of potential claims might now also be open to challenge. In some cases it might be advisable to consider making staged payments, contingent on the individual signing a second settlement agreement.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2022.