Employment claims under the Equality Act 2010 can only be validly settled either via: (a) a COT3 agreed via Acas or (b) a binding settlement agreement upon which the employee has received independent legal advice. The EAT has recently considered whether a settlement agreement can be used to settle a ‘future’ equality claim, which had not yet arisen at the time the agreement was signed. 

B, a seafarer, worked as a chief officer on various vessels for his Singapore registered employer. In January 2017, when B was aged sixty-one, he agreed to voluntary redundancy terms and signed a settlement agreement. Under the agreement, B was entitled to receive an enhanced redundancy and notice payment, and an ‘additional payment’ payable in June 2017 (which was to be calculated by reference to a collective agreement). The collective agreement stated that the additional payment would only apply to officers who had not reached the age of sixty-one but because it was mentioned in his settlement agreement B was under the impression that he was due to receive it. However, in March 2017, after the agreement was signed, it was decided that employees like B who were aged sixty-one or above at the time of their dismissal would not receive the additional payment. After B was informed of this decision, he sought to bring a direct and/or indirect age discrimination claim. The employment tribunal held that B’s claim could not proceed because it was precluded by the settlement agreement he had signed, which was drafted in broad terms to include a waiver of all claims ‘of whatever nature’ and ‘whether past, present or future’. 

On appeal, the EAT held that the settlement agreement B had signed did not preclude his age discrimination claim. To be valid in this context, a settlement agreement must among other requirements relate to ‘the particular complaint’ (s147 Equality Act 2010). The EAT noted that the Court of Appeal has previously held that a ‘particular complaint’ must be identified in the agreement (University of East London -v- Hinton [2005] ICR 1260) and that the EAT has previously held that ‘future’ claims may be settled by settlement agreement (Hilton UK Hotels Ltd -v- McNaughton [2005] EAT 0059/04). 

However, having considered records of the relevant parliamentary debates, and the underlying purpose of the statutory provision (which aims to protect workers from unwittingly signing away their rights), the EAT decided to disregard the Hilton decision. The EAT went on to hold that s147 only permits the settlement of pre-existing equality claims – it is not possible to settle an equality claim which was unknown at the point the settlement was signed.

This leaves us with two conflicting EAT decisions – Hilton which held that future claims can be settled, and Bathgate which held that a future equality claim cannot be settled. Whilst this uncertainty remains, this may lead to an increased use of Acas-negotiated COT3 agreements (where this is practicable) because COT3’s fall under s144 of the Equality Act 2010 (which does not contain the ‘particular complaint’ wording that the EAT held could only be retrospective) and the EAT recently held that a future equality claim could be settled via a COT3 (Arvunescu -v- Quick Release (Automotive) Ltd [2022] EAT 26).

(Bathgate -v- Technip UK Ltd and ors [2022] EAT 155)