Court of Appeal rules training repayment clause unenforceable
The Court of Appeal has provided important guidance on the enforceability of training repayment clauses in employment contracts.
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In the recent case of Bathgate -v- Technip UK and others, the Employment Appeal Tribunal (EAT) held that the Equality Act 2010 does not allow for the settlement of future discrimination claims that are unknown at the time of entering into a settlement agreement.
29 November 2022
Case Study
The claimant, who was aged over 61, signed a settlement agreement as part of a voluntary redundancy package. The settlement agreement included enhanced redundancy and notice entitlements, and also an additional sum calculated by reference to a collective agreement. Notably, there was no requirement in the collective agreements for additional payments to those over 61.
When that change was communicated to the claimant, he sought to bring an age discrimination claim. In response to his claim, the employer argued that the claim had been compromised by the settlement agreement and so it could not proceed at the employment tribunal.
Case Study
The employment tribunal sided with the employer as it concluded that the settlement agreement included a waiver of “all claims…of whatever nature (whether past, present or future)”.
The case was appealed and the EAT allowed the claimant’s appeal on this point. While the claimant had signed away a long list of claims, including age discrimination claims, the EAT did not accept that this identified the particular claim as required by section 147 of the Equality Act 2010.
Section 147 allows employment claims to be compromised by way of a settlement agreement that “relates to a particular complaint.” Lord Summers (who heard the claim in the EAT) was of the view that the use of those words demonstrated that when passing the legislation, Parliament anticipated the existence of an actual complaint or circumstances where the grounds for complaint existed. Unfortunately for the claimant, the appeal also concerned a jurisdictional point in which he was unsuccessful, and for this reason the EAT ruled that the claim could not succeed.
This case highlights that it is only possible to waive statutory employment claims when an actual complaint exists or circumstances exist that may give to grounds for a complaint. In this case, the circumstances giving rise to the age discrimination claim only came to light after signing a settlement agreement and therefore could not be waived under the agreement.
As a result of this finding, employers may see a change of direction and possibly an increase of litigation on the validity of waivers, which emphasises the importance of carefully drafted settlement agreements.
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