The Crucial Role of Settlement Agreements: Case Study Review of "Bathgate v Technip Singapore PTE Ltd"

Settlement Agreements are often utilised to help manage the exit process when an employee leaves their place of employment, especially in redundancy and dismissal situations. By signing a Settlement Agreement, the employee agrees to waive their legal right to pursue a claim against an employer, usually in return for a financial sum.

Employees presented with a Settlement Agreement will often be aware of the potential claims that could be brought against the employer and may have even raised a grievance about the problem previously. But what about the claims employees aren't aware of? Do Settlement Agreements cover all future claims regardless of whether the employee was aware of them or not, or does it simply protect the employer against the claims employees knew about? 

This question was answered when the Court of Session in Scotland drew judgment on the case of Bathgate v Technip Singapore PTE Ltd. The case involved an employee who had worked for Technip. After 20 years of employment with the company, the employee accepted voluntary redundancy. He signed a Settlement Agreement, which included a standard waiver clause settling all employee claims against the company, including age discrimination claims under the Equality Act 2010.

The terms of the standard Settlement Agreement included an additional payment to the employee due under a maritime collective agreement facilitated by a trade union. Technip concluded that the ex-employee was not entitled to that payment as it only applied to employees under the age of 61. The employee was already 61 at the date of termination, and therefore, Technip felt he was not entitled to receive the payment.

The ex-employee disagreed and pursued a claim for age discrimination against Technip. He defended this claim and relied upon the terms of the Settlement Agreement, which purported to settle any claims the employee may have against them.

Although the Employment Tribunal agreed with Technip's argument, the Employment Appeal Tribunal overturned the decision. They stated the Settlement Agreement must relate to a specific complaint and that future claims could not be waived unless the circumstances giving rise to the claim had arisen before the agreement was signed.

Technip, unsatisfied with the decision from the Employment Appeal Tribunal, appealed to the Court of Session (the Supreme Civil Court in Scotland). The Court of Session ruled that s147 of the Equality Act did not prevent the settlement of claims unknown to the parties at the time the agreement was signed. The agreement in the Technip case was sufficient to waive the age discrimination claim as it fell within the general waiver clause of the Settlement Agreement. This decision meant the ex-employee could not pursue his claim for age discrimination.

This case perfectly demonstrates the necessity for Settlement Agreements to be drafted carefully, ensuring they contain sufficient detail about future claims unknown to the employee (or the employer) when the agreement is signed.

For more information or advice on settlement agreements, please reach out to our Employment Litigation team on 02380 639311 or email enquiries@warnergoodman.co.uk. We can help draft your settlement agreements and provide essential advice to help safeguard your business from future claims from past employees.