UK: EAT confirms future claims can be waived by settlement agreement, at least where ongoing employment is inactive

In Clifford v IBM United Kingdom Ltd, the Employment Appeal Tribunal has applied the Scottish Court of Session's ruling in Bathgate (see here) to an English case, confirming that future claims can be validly compromised despite the facts giving rise to the claim not having occurred at the time the agreement is signed.  In Bathgate the employment had ended with the settlement agreement, whereas here the employment was continuing but inactive (the employee had gone onto the employer's disability benefit plan), but the EAT ruled that this distinction was not relevant.

In Clifford the employee had raised a grievance about the failure to transfer him onto the employer's disability plan.  This was settled with his transfer onto the plan, and the settlement agreement waived any future claims in relation to matters connected to the grievance or arising from his transfer to the disability plan, notwithstanding that they could not be in the contemplation of the parties at the date of the agreement.  The EAT ruled that Clifford's subsequent claim nine years later, concerning his pay under the disability plan, was precluded by the waiver, as it plainly fell within its terms.  The EAT agreed with the analysis of the Court of Session that there was nothing in the statutory language that precludes the settlement of future claims, provided that appropriately clear language is used.  Further, there was nothing in the statutory wording to support distinguishing between a clean break termination and a situation where the employment is ongoing but 'inactive'.

This ruling is binding on employment tribunals in England & Wales, pending any appeal, and supports the inclusion of future claims in settlement agreement waivers where this can be negotiated.  It is notable that only a specific and limited type of future claim was waived in this case (and the general subject area of the claim was clearly not entirely unforeseen), and that the ongoing employment had become permanently 'inactive'.  The EAT did not comment on - and therefore the decision leaves open - the question of whether public policy would prevent the effective waiver of future claims more broadly, for example claims arising from future harassment, where the employment is actively continuing and therefore there is a real potential for such (completely unforeseen) claims to arise.  Employees remaining at work will be very reluctant to agree to such a broad waiver, even if this is effective.  Where there is a clean break situation, employees agreeing to waive future claims may reasonably seek to minimise the risk of the employer acting in a way which gives rise to potential claims, for example by ensuring there is an agreed reference.