Can a Settlement Agreement signed in 2012 prevent an employee from bringing a discrimination claim a decade later? The Employment Appeal Tribunal (EAT) say yes.
In June 2024, the EAT considered whether an employee was prevented from bringing a disability discrimination claim that arose after he signed a Settlement Agreement ten years earlier. This case is a significant development for employers, clarifying that future claims can be waived in Settlement Agreements.
Background
Mr Clifford was employed by IBM but had been on continuous sick leave due to ill health since 19 September 2008. In 2012, he filed a grievance that included several complaints, notably IBM's failure to move him to the company's ‘Disability Plan'.
In 2013, Mr Clifford and IBM entered into a Settlement Agreement under which IBM agreed to:
- Retain Mr Clifford as an inactive employee;
- Place Mr Clifford on the Disability Plan, which resulted in him receiving disability salary payments at a specified rate (£72,037.44 per year); and
- Pay employer pension contributions based on his full salary.
In return for these benefits, Mr Clifford agreed to:
- Waive his rights to bring claims related to the matters raised in his grievance or any other existing claim against IBM;
- Waive his rights to bring any future claims that he may later have in connection with issues related to his initial grievance and the transfer to the Disability Plan; and
- Waive his rights to bring any other current or future employment related claims.
The claims
In February 2022, Mr Clifford was still an employee and issued a claim in the Employment Tribunal. He alleged, among other things, that he had been discriminated against because he had not benefitted from annual salary reviews or increases in line with other employees.
IBM argued that the Tribunal had no jurisdiction to hear Mr Clifford's claim as he had waived all future claims in the original Settlement Agreement.
Employment Tribunal's decision
The Employment Tribunal agreed with IBM and dismissed Mr Clifford's claim on the basis that it was prohibited by the Settlement Agreement and had no reasonable prospect of success.
Mr Clifford subsequently appealed the decision.
Employment Appeal Tribunal's decision
The EAT followed the decision of the Scottish Court of Session in Bathgate v Technip UK and dismissed Mr Clifford's appeal. It determined that the claims were clearly covered by the waiver in the Settlement Agreement. The EAT emphasised that Mr Clifford's claim fell within the scope of the waiver, regardless of whether the parties were aware of these claims when the agreement was signed.
Implications for Employers?
This case clarifies that future waivers can be effective but underlines the importance of careful drafting in Settlement Agreements.
The key point is that the wording must be clear, precise and unequivocal, explicitly defining the types of future claims being waived and specifically stating the intent to waive unknown future claims.
Employers should avoid relying on broad, general waivers, as these remain unenforceable.
As a result, negotiations around the scope of the waiver are likely to become more prevalent, particularly in ongoing employment scenarios where the potential for new claims is heightened. Where the waiver of future claims is key, it is important to seek legal advice to ensure that the Settlement Agreement is effective.
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