Settlement agreements – Court of Session rules that settlement agreements can be used to settle future claims
Thursday 22nd February 2024
The Inner House of the Court of Session has ruled that it is possible for a settlement agreement to waive unknown future statutory employment rights claims.
Although Court of Session decisions are not technically binding in England and Wales, they are very persuasive, and act as a good indication of how similar claims may be decided by English employment tribunals.
Facts
The claimant was a Chief Officer on a ship. At the age of 61, he accepted voluntary redundancy. He entered into a settlement agreement with his employer which provided that its terms were in full and final settlement of his complaints and claims, including age discrimination claims.
The claimant later sought to bring a claim for age discrimination following the employer’s refusal to pay him an “additional payment” under a collective agreement that he was entitled to by way of his settlement agreement as the relevant term in the collective agreement did not apply to officers over the age of 60.
Decision
Legislation provides that effective waivers in settlement agreements must “relate to the particular complaint”. The Scottish EAT had ruled that this means that the claimant must have been aware of the existence of that claim at the time of the settlement agreement. The Court of Session took a different view that this simply required the type of claim to be clearly identified and covered. A generic description or reference to relevant statutory provisions would satisfy this requirement, whereas a blanket waiver of “all statutory rights” would not be sufficient. Therefore, it was decided that a settlement agreement to waive future claims which are unknown to both parties at the time of entering into the agreement, including where the cause of action has not yet arisen, is possible provided that the type of claim is clearly identified.
Comment
Although not binding in England and Wales, this is a strong indication that English tribunals may take a similar view. This is a welcomed decision for employers who may consider extending future settlement agreement to waive future claims.
For any advice or support with settlement agreements, please speak to a member of the Employment Team who will be happy to assist.
