Making a Claim After a Settlement Agreement

It is a general rule that an employee is unable to settle a future statutory claim if the claim has not arisen at the date of the settlement agreement. However, in a recent case, the Employment Tribunal allowed an employee to raise an age discrimination claim after they had signed their settlement agreement.

What is a Settlement Agreement in Employment Law?

A settlement agreement is a decision between you and your employer to stop and settle a dispute. This stops you from making a claim or taking the existing claim any further. The aim is to create a resolution that both you and your employer are satisfied with.

A settlement agreement can involve your employer promising to pay you a sum of money and/or stop treating you unlawfully.

A settlement agreement is a legal contract between you and your employer. This means both parties must abide by it and not break the agreement. It is likely that your employer will want to keep your agreement confidential.

It is recommended that you seek independent legal advice before signing a settlement agreement. This is because without signing a settlement agreement you are still able to be taken to an employment tribunal.

If you do not want to negotiate with your employer, you can go to an employment tribunal instead. You will need to start early conciliation in order to do this.

How to Assure a Valid Settlement Agreement

For the agreement to be valid, it must comply with the statutory requirements. One of these requirements is that the employee must have received independent legal advice on the terms and effect of the agreement and the agreement must refer to the complaints of proceedings that it is intending to diffuse. When making a settlement agreement it cannot diffuse a blanket statement of claims and the issues must be clearly written into the agreement.

Is it Possible to Make a Future Claim After Signing a Settlement Agreement?

There has been much uncertainty as to whether an employee can make a future claim after signing a settlement agreement. This is if the future claim is not contemplated by the employee and employer in the settlement agreement. In the past, it has been considered possible to make a future claim. This is if the terms of the agreement were ‘plain and unequivocal.’

Bathgate v Technip UK Ltd and others

In the case of Bathgate v Technip UK and others, Mr Bathgate was not allowed to make a future claim even though the claim was not addressed or known to his employer or himself when writing their settlement agreement.

In this case, Mr Bathgate was made redundant. Upon his termination, he and his employer entered into a settlement agreement which referred to the possibility of an “Additional Payment” being paid to Mr Bathgate. This payment was to be calculated in line with the terms of a collective agreement in place between the National Maritime Agency and a trade union. When the settlement agreement was made it predated age discrimination legislation. The terms of the agreement stated that the payment would only be made to employees who had not yet reached the age of 61.

Expectations of an Additional Payment

Although Mr Bathgate was 61 at the time of his dismissal, he had expected to receive the additional payment. However, over a month after the date of the settlement agreement, his employer decided due to his age, they were not required to pay him the additional payment that was contemplated in the terms of his settlement agreement. Mr Bathgate argued this was age discrimination and therefore brought the claim to the Employment Tribunal.

The Employment Tribunal decided that the settlement agreement terms were in full and final for Mr Bathgate’s complaints against his employer. This included waiving claims for direct and indirect age discrimination under the Equality Act 2010. Additionally, the wording of the agreement contained a general waiver of all claims that Mr Bathgate had or may have arising out of or connected to his termination. This is regardless of whether they are past, present, or future claims. Therefore, his employer argued his age discrimination claim had been already settled under the terms of the agreement and therefore the claim should fail. The Employment Tribunal agreed with this notion.

Results of the Appeal

As a result, Mr Bathgate appealed the Employment Tribunal’s decision, arguing the reference to a ‘particular complaint’ is required for a claim to be validly settled. He stated he did not know of the age discrimination complaint at the date of the agreement. Therefore, he was not able to waive the right to bring this future claim to the Employment Tribunal. The Employment Tribunal agreed with Mr Bathgate and confirmed that the general waiver of age discrimination claims did not satisfy the requirement for identifying a ‘particular complaint’. Therefore, they stated that to decide any differently would be contrary to the legislation’s purpose. This would allow employees to sign away their statutory rights, irrespective of whether they had a proper understanding that this is what they were doing.

What to Be Aware of When Considering a Future Claim After Signing a Settlement Agreement

The Employment Tribunal allowed Mr Bathgate to make a claim for age discrimination after his settlement agreement. However, this might not always be the case for future claims. It is worth noting that although an employer might put a long list of waived claims in the settlement agreement this might not be sufficient to stop future claims. In some cases, this element of the judgement is not binding on future decisions. This is because it does not always relate to the specific facts of the case.

Considerations for Employers

Employers should be aware that a settlement agreement does not always equate to a clean break with an employee. To prevent an employee from making a claim after signing the agreement, an employer may be tempted to tailor the agreement, outlining the explicit facts and circumstances relating to the claims needing to be settled. However, this leaves employers suspectable to claims outside of these explicit facts.

As it stands, it’s unlikely for imminent changes in practice regarding the drafting of settlement agreements. However, there are some steps an employer can take in the meantime to aid in a ‘clean break’.

Obtain a Form of Warranty

In some cases, it is advisable to obtain a form of warranty from the employee, stating they are unaware of any further claims and that they have no intention of making a further claim.

Deal with Issues Before the Settlement Agreement is Drafted

If there are any outstanding issues between the employer and employee, they should be resolved before the agreement. As a result, this can help an employee avoid an employee making a claim after a settlement agreement.

Set Out Details of Payments or Benefits

Any details of payments or benefits should be laid out clearly in the agreement. This helps to avoid future confusion and disputes.

Get the Employee to Sign a Reaffirmation Letter if There’s a Delay in Signing the Agreement

If there is a long break between signing the agreement and the employee’s termination date, it’s recommended to have the employee sign a reaffirmation letter on or shortly after the termination. This is to waive the claims detailed in the settlement agreement.

Expert Employment Law Solicitor Advice

If you have been offered a settlement agreement, time is of the essence to accept or reject the offer. Upon instructing Cartwright King, our solicitors can get to work on the same day or within 24 hours. Your solicitor will open negotiations with your employer on your behalf to secure an agreement within a matter of days.

For advice from our team of employment law solicitors, get in contact here.

To read more about settlement agreements and how our solicitors can help, read more here.