This question was recently considered by the Scottish Court of Session, Scotland’s supreme civil court, in the recent case of Bathgate v Technip Singapore PTE Limited, who held that yes, unknown future claims can be waived by a settlement agreement.
Settlement agreements and future claims clauses
Settlement agreements are typically entered into to facilitate the exit of an employee from the business, in which the employee agrees to waive or settle any claims against the employer in return for payment.
Employers offering employees a settlement agreement are typically seeking to waive as wide a range of known and unknown claims as possible. Usually, future claims are included in the list of claims that are waived.
Since the introduction of settlement agreements, there has been debate amongst practitioners about whether future claims, especially where these claims cannot be said to be in the reasonable contemplation by the parties at the time the agreement is entered into, can be waived.
This matter concerned Mr Bathgate, who had been employed as Chief Officer by Technip Singapore PTE Limited, on several ships in the UK. Mr Bathgate took voluntary redundancy, as part of which he signed a voluntary redundancy agreement, which was essentially the same as a settlement agreement.
As part of the arrangements, Technip agreed to make an additional payment, to be calculated as provided for under a collective agreement. This stated that the additional payment was to be paid to workers under the age of 61. Mr Bathgate was 61 years of age at the date of his signature of the agreement. However during redundancy discussions he was led to believe that would receive the additional payment.
Following the termination of his employment, Mr Bathgate was informed by Technip that he would not in fact be receiving the additional payment. Mr Bathgate then brought a claim on the basis that the failure to make this payment amounted to age discrimination. Technip defended the claim on the basis that the settlement agreement, which Mr Bathgate had entered into, included a clause waiving his right to bring any future claims.
The settlement agreement included wording that its terms were in full and final settlement of the various claims listed, including age discrimination. The agreement also included a general waiver relating to ‘all claims, demands, costs and expenses of whatever nature (whether past, present or future and whether under contract, statute, regulation)’.
Mr Bathgate argued that because of the statutory requirement for settlement agreement waivers to relate to “the particular complaint”, a waiver of future known claims cannot be waived.
The Court held that an unknown future claim, that the employee does not and could not be said to have knowledge of when the settlement agreement is entered into, may be covered by a waiver so long as it is clear that ‘the parties intended to cover claims of which the parties were unaware, and which had not accrued’.
Although a Scottish authority, the case is a useful decision for employers that will likely influence the approach of Tribunals in England and Wales to this question.
Employers should still ensure that waiver provisions in settlement agreements are carefully worded to meet all of the statutory requirements. Such as the requirement that claims that are being waived are explicitly named, either by a general description (e.g. unfair dismissal) or by reference to statute (e.g. section 98 Employment Rights Act 1996). If an employer wants the waiver to cover future unknown claims, then it must be clear it is the intention of the parties to waive unknown future claims. If this is done, then English employers can take comfort that this is likely to be upheld if challenged.
If you have any questions about settlement agreements, or any other employment law issue, please do contact a member of the Employment team.