It is common practice for employers to require departing employees to sign a statutory settlement agreement in order to waive statutory employment claims in return for a compensation sum.  Unfortunately, it has never been possible to guarantee an entirely clean break in this way, as illustrated by a recent EAT ruling in Bathgate v Technip UK Ltd. The claimant in that case sought to bring an age discrimination claim based on facts occurring after the settlement agreement had been signed, ie a future claim which was therefore inevitably unknown to the parties at the time of entering into the agreement.  The settlement agreement included a waiver of a list of claims referred to by generic description and statutory reference, including age discrimination, but the EAT held that this was ineffective to prevent the claim arising from events taking place after the agreement was signed.  The statutory requirement that a settlement agreement identify the “particular complaint” could not be satisfied in relation to future claims which had not yet “arisen”, ie where the right of action had not yet emerged.

The ruling appears to render ineffective waivers based on future acts, even if they are fully anticipated by both parties but will post-date settlement.  Although not entirely clear, parts of the reasoning may also suggest (obiter) that it is not possible to waive any statutory claims solely by using a list of types of complaint by generic type or statutory reference.  Previous cases seemed to suggest that, although a list is not best practice, it might nevertheless work, certainly for claims the employee has actually intimated but also for those where the facts occur pre-settlement but the parties are unaware of the potential legal claim, and potentially even future claims which have not yet accrued if the waiver is sufficiently express. (The EAT here considered that those cases should be understood in context as much more limited.)

In the face of this continuing uncertainty, employers should ensure that where specific claims have been intimated, these are set out in detail in the settlement agreement waiver, separately from an additional and severable waiver of a list of types of claim, and should bear in mind that the latter maybe ineffective.  Options which may deter but cannot prevent statutory claims could include including warranties or representations, or clawback clauses (given that waivers of unknown claims, save for personal injury claims, may still be still valid from a contract law perspective).  Where there is a period between signing and termination, reaffirmations of waivers may be appropriate.  And in some cases it may be worth considering the use of a COT3 agreement conciliated through Acas, where broader waivers can be effective (although note that the Court of Appeal is due to hear a case on this, Arvunescu v Quick Release, shortly).

Anna Henderson
Anna Henderson
Professional Support Consultant, London