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Bathgate v. Technip: Case law update

Future, unknown discrimination claims cannot be waived under a settlement agreement

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Published 2 December 2022

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Background

The Claimant was employed by Technip Singapore PTE Limited (the Respondent) as a Chief Officer for some 20 years before agreeing to take voluntary redundancy and enter into a settlement agreement.

The settlement agreement waived the Claimant’s rights to bring past, current and future claims against the Respondent and provided for, among other things, an “additional payment” to be calculated by reference to a collective agreement.

After the settlement agreement was executed, the Respondent decided that the additional payment need not be paid to employees who were 61 or over at the time of dismissal. The Claimant brought a claim alleging that the decision not to pay him this sum constituted either direct or indirect age discrimination.

The Respondent sought to defend the claim on the basis that, by signing the settlement agreement, the Claimant had compromised his right to pursue any further claim.

Post-termination Discrimination

It was undisputed that the discriminatory act took place after the Claimant’s employment had ended.

Section 108 of the Equality Act 2010 (the Act) permits a former employee to bring a claim if the former employer engages in conduct that would be discriminatory if it had occurred during the employment relationship.

A discrimination claim must normally be brought within three months of the discriminatory act. This time limit applies both during and after employment. However, if an individual does not discover an act of discrimination until well after the event, the Tribunal may extend the deadline on just and equitable grounds.

Employment Tribunal Decision

The Employment Tribunal found that the Claimant had signed away his right to sue for age discrimination under the settlement agreement.

The Claimant appealed against this decision on the ground that s. 147 of the Act prevented the settlement of claims before their existence was known.

Appeal

For a settlement agreement to validly settle claims under the Equality Act 2010, the agreement must relate to “the particular complaint” (s. 147 of the Act).

The Employment Appeal Tribunal (EAT) held that the statutory meaning of “the particular complaint” did not permit the settlement of a claim whose existence was unknown at the time the Claimant left employment.

In this case, the Respondent’s decision not to pay the additional sum because of the Claimant’s age had not been made when the agreement was signed. Although the settlement agreement referred to a “long list of claims”, this was not sufficient to settle any future complaint of age discrimination.

It would be contrary to parliamentary intention, in the view of Lord Summers, to enable parties to settle a complaint under the Act that may or may not occur at some point in the future.

The EAT also suggested that the common practice of including in a settlement agreement a waiver “which lists a variety of possible claims by reference to their nature or section number” may also be incompatible with the language of s. 147.

While noting that this conclusion may be “inconvenient” where there is a mutual desire to avoid future claims and to end the employment relationship permanently, the EAT found that to allow settlement of the sort seen in this case would run contrary to Parliament’s intention.

However, as the Claimant worked outside UK and EEA waters on a Bahamas registered ship, the EAT ultimately decided that the Claimant’s claim could not succeed because he was not subject to the Act’s jurisdiction. Since the Claimant had no right to claim for age discrimination during employment, he did not acquire that right after his employment ended.

Implication

The ability to settle unknown future claims and the practice of waiving potential claims by way of generic description or statutory reference has been cast into some doubt by the EAT’s decision in Bathgate v. Technip.

Employers should be aware of the potential litigation risk relating to the scope of a settlement agreement waiver. It would be advisable to explicitly set out, in as much detail as possible, the specific complaints being settled to ensure they are captured by the settlement agreement. It may also be prudent to include some form of warranty that the employee is unaware of, and has no intention of bringing, any additional claims.

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Longer Reads

Bathgate v. Technip: Case law update

Future, unknown discrimination claims cannot be waived under a settlement agreement

Published 2 December 2022

Associated sectors / services

Authors

Background

The Claimant was employed by Technip Singapore PTE Limited (the Respondent) as a Chief Officer for some 20 years before agreeing to take voluntary redundancy and enter into a settlement agreement.

The settlement agreement waived the Claimant’s rights to bring past, current and future claims against the Respondent and provided for, among other things, an “additional payment” to be calculated by reference to a collective agreement.

After the settlement agreement was executed, the Respondent decided that the additional payment need not be paid to employees who were 61 or over at the time of dismissal. The Claimant brought a claim alleging that the decision not to pay him this sum constituted either direct or indirect age discrimination.

The Respondent sought to defend the claim on the basis that, by signing the settlement agreement, the Claimant had compromised his right to pursue any further claim.

Post-termination Discrimination

It was undisputed that the discriminatory act took place after the Claimant’s employment had ended.

Section 108 of the Equality Act 2010 (the Act) permits a former employee to bring a claim if the former employer engages in conduct that would be discriminatory if it had occurred during the employment relationship.

A discrimination claim must normally be brought within three months of the discriminatory act. This time limit applies both during and after employment. However, if an individual does not discover an act of discrimination until well after the event, the Tribunal may extend the deadline on just and equitable grounds.

Employment Tribunal Decision

The Employment Tribunal found that the Claimant had signed away his right to sue for age discrimination under the settlement agreement.

The Claimant appealed against this decision on the ground that s. 147 of the Act prevented the settlement of claims before their existence was known.

Appeal

For a settlement agreement to validly settle claims under the Equality Act 2010, the agreement must relate to “the particular complaint” (s. 147 of the Act).

The Employment Appeal Tribunal (EAT) held that the statutory meaning of “the particular complaint” did not permit the settlement of a claim whose existence was unknown at the time the Claimant left employment.

In this case, the Respondent’s decision not to pay the additional sum because of the Claimant’s age had not been made when the agreement was signed. Although the settlement agreement referred to a “long list of claims”, this was not sufficient to settle any future complaint of age discrimination.

It would be contrary to parliamentary intention, in the view of Lord Summers, to enable parties to settle a complaint under the Act that may or may not occur at some point in the future.

The EAT also suggested that the common practice of including in a settlement agreement a waiver “which lists a variety of possible claims by reference to their nature or section number” may also be incompatible with the language of s. 147.

While noting that this conclusion may be “inconvenient” where there is a mutual desire to avoid future claims and to end the employment relationship permanently, the EAT found that to allow settlement of the sort seen in this case would run contrary to Parliament’s intention.

However, as the Claimant worked outside UK and EEA waters on a Bahamas registered ship, the EAT ultimately decided that the Claimant’s claim could not succeed because he was not subject to the Act’s jurisdiction. Since the Claimant had no right to claim for age discrimination during employment, he did not acquire that right after his employment ended.

Implication

The ability to settle unknown future claims and the practice of waiving potential claims by way of generic description or statutory reference has been cast into some doubt by the EAT’s decision in Bathgate v. Technip.

Employers should be aware of the potential litigation risk relating to the scope of a settlement agreement waiver. It would be advisable to explicitly set out, in as much detail as possible, the specific complaints being settled to ensure they are captured by the settlement agreement. It may also be prudent to include some form of warranty that the employee is unaware of, and has no intention of bringing, any additional claims.

Associated sectors / services

Authors

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