Settlement Agreements

The Employment Appeal Tribunal has made an important decision in the case of Bathgate v Technip UK Ltd regarding whether future claims that employees are not aware of can be settled through a settlement agreement.

Settlement agreements are legal contracts that are often used to end a person’s employment on agreed terms. The most common features are that employees receive payment for loss of employment in return for their agreement not to pursue any claims against their employer. Before signing a settlement agreement, employees must receive independent advice on the agreement, particularly on any claims that they may have against their employer.

Mr Bathgate agreed with his former employer to take voluntary redundancy and enter into a settlement agreement. In the agreement, Mr Bathgate waived his rights to pursue many different claims against the company, including discrimination claims. The company agreed to make multiple payments to Mr Bathgate including an ‘’additional payment’’ which would be paid six months after the settlement agreement had been concluded.

The company later decided that the ‘’additional payment’’ would not be paid to employees who (like Mr Bathgate) were 61 years of age or over when their employment ended. Mr Bathgate therefore brought a claim for age discrimination. However, the Employment Tribunal decided that he could not bring such a claim because he had given up the right to bring discrimination claims in the settlement agreement.

Mr Bathgate appealed, and he was successful. The Employment Appeal Tribunal decided that the agreement did not prevent Mr Bathgate from bringing an age discrimination claim, as the events giving rise to the claim did not take place until after he had signed the agreement. He could not therefore have been aware of the (alleged) discrimination when he entered into the agreement.

This decision is in stark contrast to the current practice (in many cases) of settlement agreements stating that they settle all claims, including future claims of which the employee is unaware. It is therefore important for employers to be aware of their actions post-settlement, as it is very unlikely a settlement agreement will provide protection from claims which did not exist when the agreement was entered into.

If you have any questions about settlement agreements, we are able to advise on this and many other aspects of employment law. You can contact us on 0141 221 4488 or visit our homepage.