UK: Termination: Settlement agreements
Mr. Bathgate, the Chief Officer on a ship, accepted voluntary redundancy at the age of 61 and entered into a settlement agreement with Technip UK Limited which provided that its terms were in full and final settlement of his complaints and claims, including age discrimination claims. The agreement entitled him to an “additional payment” calculated by reference to a particular collective agreement, but Technip later refused to pay the “additional payment” because the relevant term in the collective agreement only applied to officers aged under 61.
Mr. Bathgate alleged that this refusal to pay the additional payment was age discriminatory. An employment tribunal held that his age discrimination claim had been settled lawfully, but on appeal, the EAT found that this claim could proceed because Mr. Bathgate couldn’t compromise his right to bring a claim for age discrimination when he didn’t know of the existence of that claim at the time of the settlement agreement.
However, the Court of Session has now held that a settlement agreement that meets the relevant statutory requirements can be used to settle unknown future employment rights claims under the Equality Act.
Key Action Points for Human Resources and In-House Counsel
Decisions of the Court of Session are not technically binding in England and Wales, but are highly persuasive, so this case provides a good indication of how such claims will be decided by English employment tribunals and the EAT.
Employers will welcome this decision which provides greater clarity on relying on settlement agreements to waive future claims. That said, it is advisable for employers to include as much detail as possible in settlement agreement about the specific complaints being settled, and to include some form of warranty to the effect that the employee has no intention of bringing future claims.
