EAT agrees that a settlement agreement can settle future claims

Background

The claimant had been employed by the respondent since July 2001 but had been continuously absent from work as a result of ill-health from September 2008. In 2012 he filed a grievance relating to various matters including the lack of salary increases and failure to transfer him to the respondent’s Disability Plan. Under the terms of a compromise agreement, signed on 10 April 2013, the respondent agreed to move the claimant to the Disability Plan on 6 April 2013. This meant that the claimant would receive disability salary at a specified level with discretionary increases. The claimant would remain an employee but with no obligation to work. Only people unable to work could be transferred to the Plan. Under the compromise agreement, the claimant waived the right to bring various specified claims, including disability discrimination claims, whether or not they were or could be in the contemplation of the parties at the date of the agreement.

Employment Appeal Tribunal

The Employment Appeal Tribunal (EAT) held that the Employment Tribunal was right to conclude that the compromise agreement precluded the disability discrimination claims. It was accepted that they came within the terms of the waiver. The issue was whether the agreement met the statutory prerequisites for a qualifying settlement agreement within the meaning of sections 144(1) and 147 of the Equality Act 2010 and, in particular, whether section 147(3)(b) was satisfied in that the parties’ contract related “to the particular complaint”.

The claimant had argued that the Employment Tribunal was wrong not to follow the EAT’s decision in Bathgate v Technip UK Ltd [2023]. The claimant submitted that section 147(3)(b) did not extend to claims that arose after the compromise agreement was entered into. However, by the time of the EAT hearing in Clifford, the Scottish Court of Session had overturned the EAT’s decision in Bathgate (which we have previously written about here.

The Court of Session held that future claims could be validly compromised by a qualifying settlement agreement if the preconditions were met. The claimant in Clifford argued that this decision was both wrong and distinguishable from the circumstances in his case as the parties had remained in a continuing employment relationship after the compromise agreement. In contrast, in Bathgate, there was a “clean break” involving the termination of employment. This argument was rejected, the EAT deciding that the material facts and circumstances in Clifford were indistinguishable from Bathgate.

The EAT held that the pleaded discrimination claims came within the terms of the waiver in the compromise agreement, with the agreement applying to claims “whether or not they are or could be in contemplation” at the time of signing. The claimant acknowledged the agreement constituted a full and final settlement of such claims.

The disability discrimination claims were therefore held to be precluded by the compromise agreement, and so the other grounds of appeal were academic. In any event, the EAT dismissed these grounds on their merits. It was apparent from the Employment Tribunal’s judgment that the Plan provided the claimant with a “very substantial benefit” that amounted to more favourable treatment than he would have received had he not been disabled. The claimant’s treatment did not become unfavourable or disadvantageous simply because he regarded the benefits as not being favourable enough.