Settlement agreements typically contain a provision whereby the employee agrees not to pursue any tribunal claims in return for a severance payment from their employer. In Bathgate v Technip UK Ltd and ors, the Employment Appeal Tribunal (EAT) held that, whatever the terms agreed, they cannot trump the employee’s right to bring a future discrimination claim that had not arisen when they signed the agreement.
Basic facts
Mr Bathgate worked for about 20 years as chief officer for Technip UK Ltd on a number of vessels which mainly operated outside UK and EEA waters. From late 2016 until his dismissal by reason of redundancy in January 2017, he worked in a variety of onshore roles.
After taking legal advice, Mr Bathgate signed a redundancy agreement with the company at the end of January. This stated that he was entitled to an enhanced redundancy and notice payment, as well as an Additional Payment (AP). It also stipulated that he could not bring any claims for direct or indirect discrimination related to age, among other things, and contained a general waiver of “all claims … of whatever nature”, whether from the past, the present or in the future. A month later, the company decided that anyone over the age of 61 at the time of dismissal was not eligible for the AP.
When Mr Bathgate was told a few months later that he was not eligible for the AP, he lodged claims for direct and/or indirect age discrimination under the Equality Act. Whilst accepting that the reason he was not paid the AP was because of his age, the company defended his claim, arguing firstly that the tribunal did not have jurisdiction to hear it; secondly, that by signing the redundancy agreement Mr Bathgate had compromised his right to pursue any future claim; and thirdly, that as someone who had mainly worked outside UK and EEA waters, he was a seafarer and could not, therefore, bring a claim under the Equality Act.
Tribunal decision
The tribunal agreed with the company that when Mr Bathgate signed the settlement agreement bringing his employment to an end, he simultaneously settled a claim for age discrimination along with any other claims he might have.
Mr Bathgate appealed on the ground that section 147 of the Equality Act 2010 did not permit settlement of claims before they had arisen and that the words “the particular complaint” in section 147(3) of the act limited settlement to claims that were known to the parties at the time of signing the agreement. The company cross appealed on the basis that the tribunal did not have jurisdiction to hear the complaint of age discrimination.
EAT decision
The EAT judge allowed Mr Bathgate’s appeal, holding that he had “signed away his right to sue for age discrimination before he knew whether he had a claim or not”. The words “the particular complaint” indicated that parliament anticipated the existence of an actual complaint or circumstances where the grounds for a complaint existed. The EAT judge did not, therefore, consider that the words “the particular complaint” could refer to a potential future complaint.
However, the judge then went on to allow the company’s cross appeal, holding that as Mr Bathgate had worked on vessels outside UK and EEA territorial waters for most of his working life, he had not lost his status as seafarer simply because he had worked on shore towards the end of his career. Since he had no right to claim for age discrimination during employment, he could not acquire that right after his employment ended.
Comment
Section 147 of the Equality Act 2010 states it is not possible to settle or compromise claims before they have arisen. Therefore, any clause in a settlement agreement to waive the employee’s right to claim age discrimination is of no effect if the circumstances giving rise to the claim (such as the failure to make a pension payment) arose after that agreement.
According to settled case law, only actual or potential claims that have been raised between the parties at the time the settlement agreement was reached can be validly settled. If the claims are not yet the subject of proceedings, it is good practice to include a brief factual and legal description of the nature of the allegations and of the statute under which they are made or the common law basis for them in the agreement. This case clarifies that potential future claims cannot be validly settled if they are not known to the employee, meaning that a brief factual and legal description of them could not be given.