Important reminder on settlement agreements – they cannot settle future claims or claims which the employee is unaware at time of signing

The EAT has recently held that a claimant was not prevented from bringing his discrimination claim, despite having signed a settlement agreement.  In this case, Mr Bathgate had been employed by ship operator Technip for almost 20 years when he was made redundant.  He was age 61 at the time.  He was offered enhanced redundancy terms under a settlement agreement, and accepted them.  Unknown to Mr Bathgate at the time he signed, Techip decided not to pay an additional sum to those aged 61 and over being made redundant.  Mr Bathgate claimed this amounted to age discrimination.  Although Technip accepted that age was the reason he wasn’t paid the sum, it said that by signing the settlement agreement, he had waived his right to pursue any claim.  The EAT held that he could not sign away his right to bring an age discrimination claim before he knew whether he had a claim or not.

This case potentially opens the door to someone bringing a claim, when they later become aware of facts unknown at the time of signing the settlement agreement.

What should employers do?  COT3 agreements do operate as full and final settlement of all claims, including future claims.  Therefore, if there is a dispute which could go to a tribunal, consider using ACAS to conciliate instead of using a settlement agreement.  If it is not appropriate to use a COT3 agreement, be aware that if an employee later becomes aware of facts which raise the potential for a claim, the settlement agreement may not prevent them from pursuing that claim.  However, a settlement agreement will still operate to settle all claims which were within the claimant’s awareness at the time of signature.

If you would like to discuss this case, or any other employment matter, please do get in touch.