Settling future claims
12 January 2024
The Scottish Court of Session has recently considered the important question of whether a settlement agreement can be used to settle a future (unknown) claim under the Equality Act 2010.
Facts of the case
The claimant, Mr Bathgate, was made redundant from his job as a seafarer and signed a settlement agreement under which he waived his right to bring any claims in relation to the termination of his employment. The settlement agreement included a general waiver of all claims “whether past, present or future” as well as making express reference to individual claims being settled, including age discrimination under the Equality Act 2010.
The employer subsequently refused to make an additional payment to Mr Bathgate under the terms of a separate collective agreement, as he was over the age of 60. The terms of the collective agreement stated that it was payable only to those aged 60 or under.
An employment tribunal held that the wording of the settlement agreement was sufficiently wide to settle a future discrimination claim, so it dismissed Mr Bathgate’s claim for age discrimination. He successfully appealed this decision to the Employment Appeal Tribunal, which held that the settlement agreement could not settle a future age discrimination claim, as such a claim was not sufficiently certain to be regarded a “particular complaint” under the applicable provisions for settling claims under the Equality Act 2010. This decision threw doubt on whether future claims, not in the mind of the parties at the time a settlement agreement is signed, were capable of being settled under such an agreement.
The employer appealed the EAT’s decision to the Court of Session (the claimant also appealed on the EAT’s finding that as a seafarer, he was not protected by the Equality Act 2010).
Court of Session decision
The Court upheld the employer’s appeal, finding the claimant’s age discrimination claim to have been validly settled under the terms of the settlement agreement.
The Court was satisfied that future claims of which an employee does not have knowledge may be settled if the wording of the relevant waiver is “plain and unequivocal”. The Court held that “it was clear that the agreement was intended to cover claims of which the parties were unaware and had not accrued” at the time of signing. It disagreed with the EAT’s conclusion that only complaints that had already arisen between the parties were capable of being settled in accordance with the provisions of the Equality Act 2010.
The Birketts view
The Court’s judgment is binding on all lower courts and tribunals in Scotland but is not officially binding on employment tribunals (including the Employment Appeal Tribunal) outside Scotland. However, decisions by the Court of Session are regarded as highly persuasive and in practice will almost certainly be followed by tribunals in England and Wales.
Subject to any further appeal, this is a helpful decision for employers and serves to clarify some of the uncertainty around the settlement of future claims. It should be noted that the decision specifically relates to claims under the Equality Act 2010. It is unlikely, however, that a different conclusion would be reached in relation to the settlement of future claims under the Employment Rights Act 1996. The Court expressly noted that the law promotes the settlement of disputes, so a decision that placed limits on the ability of parties to reach settlement would go against this principle.
Employers should still make sure that the wording of settlement agreements is carefully tailored to the specific individual and the circumstances of their dispute, to minimise the chances that any future claim can be pursued.
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 January 2024.