‘Tis the season to be agreeable…

Employers cannot now use settlement agreements to stop any future case against them, according to a new tribunal decision.

In November 2022, when reviewing the case, Technip Singapore PTE Limited (Technip) v Bathgate, an Employment Appeal Tribunal (EAT) ruled that a settlement agreement had to specify a particular claim in order to prevent an employee in the future making that particular claim.

Technip provided a settlement agreement to their 61-year-old chief officer, Mr. Bathgate rather than redundancy. But a dispute led to an employment tribunal claim that backed Technip when it had refused to add to the settlement agreement a special payment given to other employees.

Mr. Bathgate complained to the tribunal that the refusal was down to age discrimination yet he had already signed the settlement agreement promising not to lodge any legal claims.

The tribunal ruling was appealed, and judges decided Mr. Bathgate could not waive his right to sue the company for age discrimination when it was not a concern at the time he signed. Judges found that the specific circumstances had changed after the settlement agreement was signed.

Seasonal settlements and redundancies

Employers and employees can use a settlement agreement to mutually end an employment contract and also prevent any future claims by the employee.

This recent legal decision could shake up employers’ approaches to settlement agreements, and result in an increase in tribunal claims.

In Mr. Bathgate’s case, the EAT considered signing away age-related rights contradicted the 2010 Equality Act. Appeal judges were also concerned about employees signing away statutory rights before they knew whether or not they had a claim.

The EAT noted that “the Claimant had the benefit of advice from a solicitor” when signing the settlement agreement. Mr. Bathgate had good employment law advice and judges commented that this turned out to be a very good decision by him.

Christmas is a notoriously busy time for settlement agreements as companies sort out redundancies and let staff go. With this new ruling giving more protection to employees, HR will have to pay very close attention to detail to prevent future claims by unhappy former staff.