Settlement agreements are used to resolve disputes between employers and employees efficiently and effectively. A settlement agreement usually results in a compromise by both parties, most commonly by the employer offering the employee a certain sum of money in return for the employee waiving their right to bring a claim against the employer.
Bathgate v Technip [2023] was a case heard by the Scottish Court of Session (SCS). Here, the Claimant brought a claim for age discrimination against their former employer after having entered into a legally binding settlement agreement which purported to waive such a claim. The Employment Tribunal and Employment Appeal Tribunal (EAT) both took the view that the settlement agreement entered could not validly waive this claim as it was an unknown future claim.
The SCS took an opposing view and confirmed that if the settlement agreement clearly identifies what types of claims are to be waived and there is no ambiguity, then it is possible to waive unknown future claims. As this decision was made by the SCS, there it was unclear as to whether the precedent would be followed, given that the Tribunals of England and Wales are not legally bound by SCS decisions.
However, the recent EAT case of Clifford v IBM [2024] provides some welcome clarity for employers. Here the EAT followed the approach of the SCS in Bathgate and found that the tribunal had been correct to strike-out the Claimant’s claim of disability discrimination on the basis that it had been validly settled by a prior compromise agreement.
Clifford serves as a reminder to employers to ensure that wording around the waiver of any future claims in a settlement agreement is clearly drafted. It is important that the drafting is tailored to the facts of the matter as trying to include every possible unknown claim would likely be seen as unreasonable and could mean that the employer loses its ability to rely on the waiver.
If you would like any advice regarding this area, or any other employment law matter, please contact the Employment team at employment@glaisyers.com.
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