Background

In this case the Claimant was made redundant and left under a settlement agreement in 2017. The Claimant was a man over the age of 60. The Respondent was his employer, Technip, who the Claimant accepted voluntary redundancy from and the parties entered into settlement agreement. The Claimant had worked for the Respondent for 20 years.

The settlement agreement contained a clause which related to an additional payment due to the Claimant, which had formed under a maritime collective agreement. This agreement stated the payment applied to those under the age of 61. The Claimant at the time of signing the settlement agreement and leaving his employment, was already 61, so the Respondent decided not to make the payment to him.

The Claimant then pursued a claim for age discrimination against the Respondent. The settlement agreement contained a standard waiver clause which sets out all employee claims against the company. The Claimant signed the agreement, which included waiving claims under the Equality Act 2010, therefore waiving claims for direct or indirect age discrimination.

The waiver stated that it applied “whether or not, at the date of this Agreement, the Employee is or could be aware of such claims or have such claims in his express contemplation”

The question for the courts was whether the settlement agreement had effectively settled the age discrimination claim asserted by the employee.

What did the courts rule?

The claim made its way through the Employment Tribunal, the Employment Appeal Tribunal and finally to the Court of Session (the Supreme Civil Court in Scotland). It was held by the Court of Session that the Claimant could not pursue his claim for age discrimination under the Equality Act 2010. It was ruled that the agreement in this case was sufficient to waive the claim as it fell within the general waiver clause and this claim in particular had been validly settled by the agreement. The Court of Session stated that the Equality Act 2010 did not prevent claims that are unknown to the parties at the time of signing being settled by a settlement agreement. The agreement stated it was a full and final settlement of the claims the Claimant intimates and asserts, as well as including a waiver of claims as discussed previously.

The Court stated:

“it was clear that the agreement was intended to cover claims of which the parties were unaware and which had not accrued”.

The intention of the parties when entering into the agreement had to be clear and unequivocal. In this case, the terms of the agreement achieved this. In this case, the Court of Session found that future unknown claims under the Equality Act 2010 are capable of being settled as long as the agreement achieves the following: “types of claims are clearly identified and the objective meaning of the words used is such as to encompass settlement of the relevant claim”.

It therefore did not matter whether the claim existed at the time of the agreement.

Take away point

The Court of Session’s decision is not binding on ET’s and the EAT but is very persuasive and likely to be followed in England and Wales. This case also only concerned the Equality Act 2010, but other claims are capable of being settled.

It is important to note the significance of drafting settlement agreements carefully. In the case of Bathgate, if the waiver of claims had not been drafted sufficiently then the claim may have succeeded. It is crucial that agreements contain sufficient detail about future claims unknown to both the employee and employer, when the agreement is signed.

If you require any assistance with drafting or advising on settlement agreements, whether you are an employer or employee, please get in touch with a member of our team today.