Can settlement agreements settle ‘future’ unknown claims?

No – according to the Scottish employment appeal tribunal (EAT) in the recent case of Bathgate v Technip UK Ltd.

Mr Bathgate was a seafarer who worked aboard a ship called Deep Blue as a chief officer until June 2016. From June 2016, and until his voluntary redundancy in January 2017, he worked in a variety of onshore roles for Technip.

Additional payment not finalised when settlement agreement signed

The terms of the Mr Bathgate’s voluntary redundancy provided for an enhanced redundancy payment and notice pay that was to be paid with his final salary payment. The terms of the offer also provided for an ‘additional payment’ payable to him in June 2017, but the additional payment was to be calculated with reference to a separate union negotiated collective agreement that had not been finalised by the time Mr Bathgate signed his settlement agreement.

Additional payment then not available to employees over 61

The redundancy terms were agreed and settled by way of a settlement agreement which referenced the additional payment. However, it was subsequently decided that any employees aged 61 and over would not receive the additional payment. As Mr Bathgate had reached that age he was advised he would not receive the payment.

Age discrimination claim

The settlement agreement waived several specific claims and included a general waiver for future claims. This included claims for age discrimination. When Mr Bathgate found out that he would not receive the additional payment, he presented a claim for age discrimination. Technip argued that this was a future claim that had expressly been waived by Mr Bathgate within the settlement agreement.

EAT decision

The EAT, however, held that it had not been waived because it was not Parliament’s intention to allow unknown or future claims to be settled where they had not arisen at the time of signing a settlement agreement.

Commentary

This case appears to go against some other established cases that have suggested the terms of a settlement agreement can settle future unknown claims in some circumstances. This case suggests that a valid settlement agreement will need to relate to a particular complaint where the actual claim or the circumstances for it exist already at the time the agreement is signed.

Given the uncertainty with the volume of case law in this area, we may see a higher appellate court address the issue in due course. For now, settlement agreements are likely to still be cast wide enough to encapsulate future unknown claims, and with a view to reaching finality between employee and employer.

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