Bathgate v Technip: Waiving Future Statutory Employment Claims in the Channel Islands

The Employment Appeal Tribunal (“EAT”) in the UK has held that unknown future statutory claims cannot be compromised by a settlement agreement. In the same case, the EAT also addressed a second jurisdictional issue in respect of employees working on board vessels operating outside UK territorial waters. This article will consider whether the EAT’s decision that future unknown statutory claims cannot be waived would be considered persuasive in the Channel Islands, and if so, what impact this has on the ability of Channel Island employers to achieve a clean break when severing ties with an employee.

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Background

In the case of Bathgate v Technip UK Ltd (2022), the Claimant was employed as a Chief Officer on a number of vessels by Technip UK Ltd (“Technip”) for almost 20 years before he agreed to take voluntary redundancy. He entered into a settlement agreement, which provided that he would receive various payments and benefits, including an additional payment for redundancy which would be calculated in accordance with the terms of a collective agreement at a later date.

Under the terms of the relevant collective agreement, employees aged 61 and over were not entitled to receive a payment. The Claimant, who was 61 years’ old, was not aware of the cut-off age at the time of signing the settlement agreement and did not therefore know that he would not be entitled to the additional payment. The settlement was agreed in January 2017. In March 2017, Technip decided that employees aged 61 or over would not be eligible for additional payments. This was not communicated to the Claimant until June of that year, the month in which the payment was due to be made.

Employment Tribunal (ET) Decision

The Claimant instigated ET proceedings, alleging that the prohibition on making payments to those age 61 or over was discriminatory on grounds of age. Technip submitted that the Claimant had settled any claim he might have had for age discrimination when he entered into the settlement agreement.

The agreement stated that it constituted full and final settlement of all claims that the Claimant “intimates and asserts” against the Respondent, including various specific claims including age discrimination. The ET found that the potential age discrimination claim could not proceed, as it had been validly waived under the settlement agreement.

Appeal

The Claimant appealed the ET’s decision on the basis that section 147 of the Equality Act 2010 did not permit settlement of claims before they had arisen.

Section 147 of the Equality Act 2010 lays down certain conditions that must be met before a claim can be settled, including the fact that the settlement agreement must relate to “the particular complaint”. The Claimant argued that this meant claims could only be settled if the claim was known to the parties at the time of entering into the agreement. Similar wording can be found in article 79(3)(b) of the Employment (Jersey) Law 2003, which covers the settlement of claims under the Employment (Jersey) Law 2003 and the Discrimination (Jersey) Law 2013, and in article 30A(3) of the Employment Protection (Guernsey) Law 1998. In both Islands the agreement must relate to the “particular proceedings” in order to be valid.

Employment Appeal Tribunal Decision

The EAT agreed with the Claimant that section 147 of the Equality Act 2010 prevented settlement of claims before their existence was known. The EAT considered parliament’s intention behind the expression “particular complaint” and referenced an excerpt from Hansard where Viscount Ullswater stated: “We are proposing that these procedures should only be available in the context of an agreement which settles a particular complaint that has already arisen between the parties to that complaint.”

In his decision, Lord Summers said: “I accept that this conclusion may be inconvenient where there is a mutual desire to avoid future claims and a wish to end the employment relationship permanently. Nevertheless it seems to me that Parliament did not consider that a settlement of the sort seen in this case was desirable and legislated to prevent them.” He was also persuaded by Lunt v Merseyside TEC Ltd 1999, in which the Judge stated: “A compromise agreement cannot, therefore, seek to exclude potential complaints that have not yet arisen on the off-chance that they might be raised; it cannot, in other words, be used to sign away all the employee’s tribunal rights...”

Crucially, the EAT concluded that the Claimant must be aware of the claim or the cause of action relating to the claim prior to the agreement being entered into in order to waive their right to bring such a claim in the Employment Tribunal.

Impact on Channel Islands employers in practice

It is commonplace for employers in the Channel Islands to draft settlement agreements in full and final settlement of all contractual and statutory claims, whether known or unknown. However, in the UK it is now clear that unknown statutory claims cannot be settled. Given that the wording in the Jersey and Guernsey legislation is almost identical to that of the UK, it is likely that this judgment would be highly persuasive in both the Jersey and Guernsey Employment Tribunals.

The impact of this judgment is not limited to a claim for age discrimination in Jersey. It applies to the settlement of any statutory claims in Jersey and Guernsey, based on the current protected characteristics/grounds in force at present in each Island. The introduction of the new Discrimination Ordinance in Guernsey will increase the range of statutory claims an employee may bring from October 2023. The new Ordinance does not prohibit age discrimination although there is a proposal to add age as a protected ground at a later date.

Employers will need to be aware of the limitations on settling future statutory claims when considering a settlement agreement. Where there is any concern about a future complaint, employers should consider specifically referring to those potential claims within the settlement agreement to make sure they are captured by the settlement agreement.


GUERNSEY
Sarah AshGroup Partner*T +44 (0) 1481 748 935sarah.ash@walkersglobal.com
Danielle BrouardSenior CounselT +44 (0) 1481 748913danielle.brouard@walkersglobal.com
Devon JenkinsAssociateT +44 (0) 1481 74 8915devon.jenkins@walkersglobal.com

JERSEY
Daniel ReadPartnerT +44 (0) 1534 700 764daniel.read@walkersglobal.com
Jenny BruntonAssociateT +44 (0) 1534 700 766Jenny.Brunton@walkersglobal.com

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