Unknown future claims cannot be settled

The EAT has confirmed in Bathgate v Technip that provisions in the Equality Act 2010 mean that unknown future claims cannot be compromised in a settlement agreement. 

In January 2017, Mr Bathgate entered into a voluntary redundancy agreement which provided for enhanced redundancy, notice payments and an additional pension payment to be calculated by reference to a maritime collective agreement.  He signed a settlement agreement in full and final settlement of claims.  The agreement included a list of claims including age discrimination and a general waiver of all claims: past, present or future.   Three months later his employer concluded that under the terms of the collective agreement, as he was over 61 at time of dismissal, he was not entitled to the pension payment.  He was informed of this in June 2017, six months after he had signed his settlement agreement.  He brought a claim of age discrimination and his employer argued that he was precluded from bringing this claim because of the terms of the settlement agreement. 

The EAT held that to validly settle a claim under the Equality Act it must relate to the “particular complaint” which had to be identified in the agreement either by a generic description or by reference to the statutory provision giving rise to the claim.  However, a “particular complaint” did not include a complaint that may or may not occur at some point in the future.  In reaching this decision, the EAT took into account case law and an excerpt from Hansard which showed that the equivalent provision in the Employment Rights Act 1996 was intended only to be available in the context of a complaint that had already arisen. There was a public policy concern about the employer’s construction that future claims could be covered which would allow employees to sign away their rights without a proper understanding of what they were doing.  To decide otherwise would mean that Mr Bathgate had signed away his right to sue for age discrimination before he knew whether he had a claim. 

Practical considerations

This decision shows the importance of ensuring that the “particular complaint” is identified in any settlement agreement and confirms that it is not possible to settle future claims that are unknown at the time of signing whatever wording is included.

Employers should also ensure that the quantum of any compensation paid to the employee reflects the nature of the particular complaint(s) only, given that only the particular complaint(s) are being settled.