442: Scottish Court of Session rules that settlement agreements can waive unknown future claims

In order to be valid, a settlement agreement must state each particular complaint to which it relates. This requirement is straightforward in relation to existing or potential claims which the parties are aware of. However, there has been some debate about whether settlement agreements can waive future claims which the parties are not yet aware of. This has now been clarified by the Scottish Court of Session in the case of Bathgate v Technip Singapore PTE Ltd.

In January 2017, Mr Bathgate signed a settlement agreement after taking voluntary redundancy. This contained a clause settling all claims against Technip, including age discrimination claims, and a general waiver which included ‘all claims… of whatever nature (whether past, present or future).’ Under the terms of the settlement, Mr Bathgate was to receive an additional payment in June 2017 calculated according to a maritime collective agreement. After the settlement agreement had been signed, Technip informed Mr Bathgate that he was not entitled to this additional payment because it did not apply to employees who were over 60 at their termination date, as he was.

Mr Bathgate brought a claim in the Employment Tribunal alleging that failure to make the additional payment amounted to post employment age discrimination. Technip argued that he could not bring this claim because the settlement agreement had compromised age discrimination claims and any and all future claims which he might have.

The Tribunal agreed that the waiver was effective to cover all potential future claims, whether or not they were known at the time the agreement was signed. However, this decision was overturned by the EAT which held that the intended meaning of the legislation was to cover causes of action that had already arisen, not any possible future claims which were not known to the parties.

Technip appealed to the Scottish Court of Session which has now ruled that settlement agreements can waive unknown future claims provided the waiver is plain and unequivocal, and the objective meaning of the words used encompasses settlement of the relevant claim. In this case, the waiver mentioned the age discrimination claims specifically and clearly covered future claims. The words ‘particular complaint’ did not mean that the complaint must have been known of at the time of the agreement, provided the employee properly understood the claims being waived. Mr Bathgate could not therefore pursue his claim for age discrimination.

The decision will be welcomed by employers. Although technically not binding on tribunals in England and Wales, it will be highly persuasive and is very likely to be followed here. We now have clarification that settlement agreements can be used to waive future claims if they are clearly identified by a generic description or by reference to the relevant statutory provisions. A general ‘blanket’ waiver of all claims will not be effective. This highlights the importance of careful and comprehensive drafting of settlement agreements, including as much detail as possible of specific claims. It should be noted that a waiver of future claims is likely to be enforceable only where employment is ending, not for a settlement of claims where employment is continuing.