Did you know that future claims can be settled under a settlement agreement?
The Employment Appeal Tribunal has recently upheld a decision that future claims can validly be settled under a settlement agreement. This follows the decision of the Court of Session in Bathgate v Techniq Singapore which found that an employee had validly settled a discrimination claim of which he was not aware at the time he signed a settlement agreement.
In the case of Clifford v IBM, Mr Clifford was employed by IBM and had been on extended sickness absence since 2008. In 2012, Mr Clifford raised a grievance and alleged disability discrimination in relation to his treatment whilst on sick leave. In April 2012, the parties entered into a settlement agreement to settle the dispute.
The settlement terms confirmed that Mr Clifford would remain employed as an inactive employee and he would be placed on IBM’s disability plan, which meant he would be paid 75% of his salary until retirement. The terms also confirmed that Mr Clifford would waive his rights to bring claims, including disability discrimination, whether or not the claims were or could be in contemplation of the parties at the date of the agreement. This waiver was specifically stated to include the settlement of any future claims connected to Mr Clifford’s grievance (and related appeal), and his transfer to IBM’s disability plan.
Fast forward nine years later and Mr Clifford brought a disability discrimination claim in the Employment Tribunal against IBM. He alleged that IBM had failed to increase his salary whilst he was on the disability plan, which amounted to disability discrimination when compared to other employees who were not on the plan. The Tribunal struck out Mr Clifford’s claim on the basis that the wording of the settlement agreement was sufficiently clear in that Mr Clifford had agreed to waive his right to pursue these claims in the future and so he was precluded from doing so. The fact that Mr Clifford remained an employee of IBM made no difference. This decision was upheld by the Employment Appeal Tribunal.
Whilst this claim is fact-specific and blanket waivers may not be sufficiently clear to settle future claims, the decision is encouraging for employers as a step in the right direction towards achieving finality under settlement agreements. To be able to argue that future claims have been settled under a settlement agreement, we would always recommend that any waiver wording is carefully tailored to the facts of the matter. If you would like us to review your company’s settlement agreement wording or if you require any advice on an employment dispute likely to result in the use of a settlement agreement, please contact a member of our team.