In January this year, we reported on a decision from the Scottish Court of Session which held that employers can settle future claims which are unknown at the time of entering into a settlement agreement, even if the basis for the claims has not yet arisen (Bathgate v Technip Singapore Pte Limited):

The English employment tribunals are not obliged to follow Scottish decisions and so it was unclear whether they would or not.  Last month, that uncertainty was removed when the English Employment Appeal Tribunal (EAT) adopted the same position in the case of Clifford v IBM United Kingdom Limited.

In this case, Mr Clifford had been on long-term sickness for a period of years.  In 2012, he raised grievances about IBM’s failure to put him onto its permanent health insurance (PHI) scheme and his lack of salary increases during his absence.  He claimed his treatment amounted to disability discrimination.  The grievances were resolved in 2013 and a settlement agreement was entered into, as part of which Mr Clifford was put onto IBM’s PHI scheme.  The settlement agreement provided that it settled all of Mr Clifford’s claims arising in connection with his employment, “whether or not they are or could be in the contemplation of you or IBM at the date of this Agreement”.  The agreement also included a long list of employment claims that were being settled, which included “any claim for discrimination, harassment or victimisation related to disability, failure to make adjustments or any other claim under the Disability Discrimination Act 1995 or the Equality Act 2010”.  There was a carve-out for claims arising after the date of the settlement agreement but only in relation to claims that were not connected to the matters set out in the grievance or which did not relate to Mr Clifford’s transfer to the PHI scheme.

In 2022, Mr Clifford issued proceedings in the Employment Tribunal, complaining that, during his participation in the PHI scheme, he had not received salary reviews or increases, which he claimed amounted to disability discrimination.  IBM took the position that Mr Clifford’s claims were covered by the terms of the settlement agreement, given the wording referred to above.  They referred in particular to the Bathgate case.  Mr Clifford argued that Bathgate was wrong (and so the EAT should not follow it) and that, even if it was correct, the facts here were different because Mr Clifford’s employment had continued whereas Mr Bathgate had been made redundant.

The EAT decided to follow the Bathgate decision and held that Mr Clifford’s claims in relation to lack of pay rises were covered by the settlement agreement he entered into in 2013.  The fact that his employment was continuing made no difference, they said.  All that is required is for the settlement agreement to contain clear wording that future claims are within its scope and for the claims in question to be identified clearly enough – which can be done by way of a generic description of the claim in question (as had been done in Mr Clifford’s agreement – see above) or by referring to the section number in the relevant statute.  Most commentators had considered it likely that the English courts would follow the Bathgate decision, notwithstanding that it was a decision of the Scottish courts, and that has indeed proved to be the case.  It is unclear whether it made a difference that Mr Clifford’s claims in 2022 were very similar to his 2012 grievance – i.e. a lack of pay rises.  The employment tribunal took that into account in its first instance decision but it does not appear to have been part of the EAT’s reasoning.  Either way, the current trend across the recent cases in this area is that future claims can be settled, provided the wording in the settlement agreement is clear enough.  Employers should review the wording of their template agreements, to the extent they have them, to make sure that they are drafted appropriately on this particular point.

If you have any questions on this, or any other topic, please contact your usual Mayer Brown contact or Christopher Fisher