Under the terms of a settlement agreement, employees typically accept a payment in return for their employment coming to an end and in settlement of certain legal claims they may have against their employer. These agreements cover a very broad range of legal claims and can include settlement of any existing and future legal claims that the employee may have.
The Employment Appeal Tribunal (EAT) held in the recent case of Bathgate v Technip UK Limited that the Equality Act 2010 does not allow future unknown discrimination claims to be settled under the terms of a settlement agreement, and any contractual clause attempting to do so is legally unenforceable.
For almost 20 years Mr Bathgate was employed by Technip as a Chief Officer on several of their vessels, before being made redundant in January 2017. Mr Bathgate signed a voluntary redundancy agreement, which was in effect a settlement agreement, that settled all ‘past, present or future’ claims against his employer.
One of the payments payable to Mr Bathgate under the terms of the agreement was an ‘Additional Payment,’ which was to be calculated at a later date in accordance with the terms of a collective agreement that was in place with the National Maritime Agency and Nautilus Trade Union.
After the agreement was signed, Technip decided not to pay the Additional Payment to any employees who were over the age of 61 at the time of their dismissal, including Mr Bathgate.
Mr Bathgate brought direct and indirect age discrimination claims against his former employer. Technip accepted that it didn’t pay the Additional Payment to Mr Bathgate because of his age, but defended the claim on the basis that Mr Bathgate should not be allowed to pursue his claim because the signed agreement was in settlement of all future claims against Technip.
The Employment Tribunal agreed and held that Mr Bathgate was unable to continue with his age discrimination claims because he had already settled them (as well as many other claims) under the terms of the settlement agreement.
Mr Bathgate appealed to the EAT .
The EAT overturned the Employment Tribunal’s decision and held that Mr Bathgate was able to pursue his age discrimination claims.
Under Section 147, claims under the Equality Act 2010 can only be settled under a settlement agreement where the agreement ‘relates to a particular complaint.’ The EAT held that the words ‘particular complaint’ requires the existence of an actual complaint or circumstances where the grounds for a complaint existed.
The EAT therefore determined that an unknown future discrimination claim cannot be settled under the terms of a settlement agreement. In this case, the court concluded that Mr Bathgate could not settle his age discrimination claim before the act of discrimination had even taken place and before there were any grounds for the claim.
This decision has implications for employees and employers alike. Individuals who have left employment under the terms of a settlement agreement may still be able to bring certain discrimination claims against their previous employer where they were unaware of the claim at the point they signed the agreement.
Likewise, employers should be aware that a signed settlement agreement does not give them carte blanche to treat employees however they wish. Employers who use template settlement agreements should review them before using them in future and be aware that any clauses attempting to restrict or settle future unknown discrimination claims are likely to be legally unenforceable.
If you have any queries arising in relation to the enforceability of settlement agreements, or any potential claims under the Equality Act 2010, please contact a member of the Employment Team.