Can Settlement Agreements settle claims against the Employer which have not yet arisen?

In a typical Settlement Agreement you will see a clause listing out a number of potential statutory claims that are being settled, plus claims in common law, contract or tort (including negligence and defamation). Settlement agreements will also include a provision settling claims, whether or not the employee is aware of them at the time of signing. This is because a general ‘full and final settlement’ provision is not sufficient to settle statutory claims arising, and all claims settled need to be listed out.

In Bathgate v Technip UK Ltd [2023] , the Employment Appeal Tribunal in Scotland held that a settlement agreement cannot compromise a discrimination claim that has not yet been made. S 147 Equality Act 2010 provides that it is a condition of a qualifying settlement agreement that “the contract relates to the particular complaint”, but that that does not cover a potential future complaint. Mr Bathgate had only discovered he had a potential age discrimination claim in relation to circumstances arising after he had signed the settlement agreement.

This decision presents potential problems for employers, and careful drafting is required. Generally speaking, if the Settlement Agreement is signed off prior to the Termination Date, the employer will require the employee to reaffirm the settlement agreement again on or after the termination date. Employers will also sometimes impose repayment provisions in case the employee brings legal action in breach of the agreement. Employees who wish to bring a claim after signing a settlement agreement will need careful legal advice, but this decision may assist them in doing so. Such a claim though would still be quite unusual.

At Reculver Solicitors, we provide expert legal advice on Settlement Agreements. Call us today on 0207 118 0950 to speak to an employment solicitor.