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05 November 2024

465: EAT confirms that unknown future claims can be waived in a settlement agreement

In the 2023 case of Bathgate v Technip Singapore PTE Ltd, the Scottish Court of Session held that unknown future claims can be waived under an appropriately worded settlement agreement. This principle has now been confirmed in Clifford v IBM United Kingdom Ltd, where the EAT upheld a Tribunal’s decision to strike out an employee’s claims for disability discrimination because they were precluded by a waiver in an earlier settlement agreement.

Mr Clifford worked for IBM but had been absent for four years on sick leave. He brought a grievance alleging that IBM’s failure to increase his sick pay and to pay holiday pay during his absence amounted to disability discrimination. In 2013, IBM and Mr Clifford entered into a settlement agreement under which he would remain as an inactive employee and be placed on IBM’s disability plan, giving him 75% of his salary per year until retirement plus pension contributions based on his full salary. In return, Mr Clifford agreed to waive his rights to bring a long list of claims, including any future claims about the matters raised in his grievance and his transfer to the disability plan. The waiver also stated that it would not include future claims arising after the date of the agreement that were unconnected to his grievance or transfer to the plan.

Nine years later, Mr Clifford brought disability discrimination claims, including claims for compensation arising from receiving only 75% of his salary while on the disability plan, as well as IBM’s failure to award him pay increases and full holiday pay. He argued that future unknown claims cannot be waived in a settlement agreement. However, the Employment Tribunal held that any future claims about matters raised in his grievance or transfer to the plan had been validly waived in his settlement agreement, including future disability discrimination claims. 

The EAT has now dismissed Mr Clifford’s appeal, confirming the decision in Bathgate. His claims clearly fell within the terms of the waiver and were therefore excluded. In any event, even if the waiver had not been valid, his claims would have had no reasonable prospect of success because failing to increase an already very generous benefit was not discriminatory. 

This is a helpful decision that is binding on Employment Tribunals, unlike the Scottish decision in Bathgate, which only had persuasive authority in England and Wales. Employers now have confirmation that a settlement agreement can waive unknown future claims that have not arisen at the date of the agreement, provided the waiver is sufficiently clear and precise in scope. It is vital to tailor each agreement to the precise circumstances by particularising the claims being settled. Careful drafting will be particularly important where employment is continuing, even on an inactive basis, since this will increase the likelihood of future claims. 

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