Waiver of future claims possible in Settlement Agreements

Clifford -v- IBM United Kingdom Ltd

In this case Mr. Clifford worked for IBM he was absent from work due to ill health from 2008. In 2012 he had raised a grievance against IBM which included a failure to transfer him to the Company’s Disability Plan.

Subsequently the parties entered into a Settlement Agreement in April 2013, and it was agreed that Mr. Clifford be moved to the Disability Plan and receive his salary payments. It was also agreed that he would continue in his employment with the Company.

As a part of the Settlement Agreement Mr Clifford had waived his right to bring claims including disability discrimination, whether or not the claims were or could be in contemplation by the parties at the date of the Agreement.  The claimant was permitted to pursue future claims other than claims relating to the grievance or the claimant’s transfer to the Disability Plan.

Tribunal Claim

Several years later Mr. Clifford pursued a disability discrimination claim against IBM.  It was his case that following the transfer to the Disability Plan, his salary had not been increased compared to other employees not on the Disability Plan and that he had not received annual salary pay reviews.

Mr Clifford’s claim was struck-out on the basis that the Tribunal lacked jurisdiction because the disability discrimination claim was precluded by the Settlement Agreement.

Mr Clifford then appealed to the Employment Appeals Tribunal.

EAT Decision

The EAT dismissed the Appeal and concluded that the Tribunal was right that their claim fell within the terms of the Settlement Agreement.

The EAT reaffirmed the ruling in the Scottish case of Bathgate -v- Technip Singapore PTE where it was found that an unknown future claim would be waived via an appropriately worded Settlement Agreement.

This decision of Bathgate had been subject to some discussion as the Claimant was a former employee whose employment was not continuing.

The decision confirms that in some circumstances a future claim could be precluded by a Settlement Agreement, whether or not, the employment is still continuing.

Points to take away

• Employers should be aware that well drafted Settlement Agreements can preclude unknown future claims that have not arisen at the date of the Agreement. Therefore, care must be taken to ensure that the waiver is clear in relation to its scope.

• Employers should take away that whilst this decision relates to a Claimant whose employment was continuing, the facts of this particular case are unusual in that Mr. Clifford was an inactive employee. It would not be necessarily the case that the ET would reach the same decision for an employee who continued with an active employment relationship.

Employment Director Vaishali Thakerar adds:

“We know it can be incredibly hard and complex for an employer to protect themselves from Tribunal action of existing employees, let alone employees who have already left the company. This unusual case sets out the importance of the precise use of words used in the ‘waiver’ section of the Settlement Agreement document, and especially the position relating to the claimant’s rights to pursue future claims.”

Lawson West specialises in Settlement Agreement law and can advise accordingly, Contact Us.

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