The Employment Appeal Tribunal (EAT) has delivered a recent judgment which reinforces the principle that employees can validly waive their rights to bring future claims against their employer under a settlement agreement, even if employment continues after the agreement is signed.

In the relevant case, where the respondent was a large technology company, the EAT held that a waiver of future claims in settlement agreements can be enforceable, even if the employee remains employed. This decision aligns with a previous ruling by the Scottish Court of Session in Bathgate v. Technip Singapore Pte Ltd. In that case, it was held that Mr Bathgate was not able to raise a new age discrimination claim against his former employer, after signing a waiver of future claims in a settlement agreement. The EAT's decision in this new case has now set a binding precedent for tribunals in England and Wales, removing any uncertainty that the Court of Session's decision in Bathgate would not be binding across the border.

In the EAT case, the employee had been off sick since 2008. In 2012, he raised a grievance related to various matters, including his employer's failure to transfer him onto their disability plan. After a grievance appeal, a settlement agreement was entered into whereby the respondent agreed to move the claimant onto the disability plan so that he could begin receiving disability salary payments. In return, under the terms of the agreement, the claimant waived his right to bring all employment claims against his employer. Importantly, the waiver of future claim clause confirmed that the claimant would still be able to raise claims against his employer after signing the agreement, as long as they were not connected to his grievance or his transfer to the Disability Plan. In 2022, the claimant raised claims against his employer, alleging discrimination because he did not receive salary reviews or increases under the disability plan. The Employment Tribunal (ET) held that the settlement agreement precluded the claimant from raising disability discrimination claims on those grounds.

The claimant appealed against the ET's decision. He initially argued that it was not possible to settle future claims at all in a settlement agreement, but this was before the Bathgate decision. After Bathgate, the claimant tried to distinguish his case, arguing that his situation was different because his employment continued, unlike in Bathgate where employment had ended. The claimant also suggested that the Bathgate decision was wrongly decided. However, the EAT found that the claimant's new claims were within the scope of the waiver in the settlement agreement and that there were no significant differences between his case and Bathgate. The EAT upheld the validity of the waiver for future claims.

Ultimately, the EAT concluded that the settlement agreement in question complied with the statutory requirements and covered the discrimination claim that the claimant brought, as it was connected to the grievance or arose from his transfer to the disability plan. Therefore, his claim was precluded. Additionally, the EAT dismissed the other grounds of appeal, stating that even if the claim were not precluded by the settlement agreement, it had no reasonable prospects of success. The EAT reasoned that the claimant's comparator for direct discrimination and his indirect discrimination claim were invalid. The claim did not constitute indirect discrimination as it involved differential treatment rather than a common policy affecting all employees. Further, the claim of disability-related discrimination was unfounded as it improperly separated the lack of salary reviews from the overall beneficial treatment the claimant received under the disability plan.

The decision is significant for employers as it confirms that settlement agreements can effectively waive future claims, provided the language is clear and the agreement pertains to the particular complaint. The case suggests that employers may want to consider having employees sign settlement agreements before moving onto long-term disability schemes to preclude future claims. However, the scope of such waivers should be carefully tailored to the circumstances, especially when the employment relationship is ongoing and there is a higher likelihood of new claims arising. The EAT's decision also implies that, while broad waivers are enforceable, public policy consideration may still limit their scope in certain situations, such as waiving the right to bring claims for future acts of harassment.