Monthly Highlights - UK Employment Law - November 2022

7 minute read

In November's UK Employment Law update, our team examine the EAT’s determination that a settlement agreement cannot waive an employee’s right to future claims for discrimination, highlight the impact of the Retained EU Law (Revocation and Reform) Bill on employment regulations derived from EU laws, and discuss the passing of the second reading of the Protection from Redundancy (Pregnancy and Family Leave) Bill. We also outline the new ‘monitoring at work draft guidance’ published by the Information Commissioner’s Office and highlight how the 2022 Autumn statement will affect the National Living Wage going forward.

  1. In Bathgate v Technip UK Limited and Ors [2022] EAT 155, the Scottish Employment Appeal Tribunal (the “EAT”) determined that a settlement agreement cannot waive an employee’s right to future claims for discrimination if such claims are unknown to the parties at the time of contracting:

    The facts:

    • On 13 January 2017, the Claimant was put at risk of redundancy. Shortly thereafter and following independent legal advice regarding the terms of the redundancy offer, the Claimant entered into a settlement agreement (the “Agreement”). The Agreement provided an enhanced redundancy and notice payment upon termination and a further payment in June 2017 (the “Additional Payment”). The Additional Payment was governed by the terms of a collective agreement and would only apply to qualifying individuals who had not reached the age of 61 – at the time of contracting, this was unknown to the Claimant, and he believed he would receive the Additional Payment. However, as the Claimant was 61, it was subsequently determined he would not receive the Additional Payment. The Claimant therefore pursued an action for direct and/or indirect post-employment age discrimination.
    • The Respondent contested the claim on the premises that by signing the Agreement the Claimant had compromised his right to pursue any future claims. In particular, the terms of the Agreement were in “full and final settlement” of claims for direct or indirect discrimination relating to age. In addition, the Agreement contained a general waiver for “all claims […] of whatever nature (whether past, present or future…)”.

    'Qualifying’ settlement agreements:

    • Pursuant to s147 of the Equality Act 2010 (the “Act”), in order for a contract to amount to a “qualifying settlement agreement” it must meet certain statutory conditions, including that:
      • the contract is in writing;
      • the contract relates to a particular complaint; and
      • the complainant has, before entering into the contract, received advice from an independent adviser about its terms and effect.

    The EAT’s findings:

    • The EAT disregarded the clear wording of the Agreement and held that a qualifying settlement agreement must relate to a “particular complaint” (as detailed by s147(3)(b) of the Act) i.e., an actual complaint or circumstances where the grounds for a complaint already exist. In turn, the words “particular complaint” contained within the Act were not apt to describe a potential future complaint.
    • The EAT diverged from the existing case law by considering: (1) that it would be contrary to the purpose of protecting employees from signing away their statutory rights at the time a settlement agreement was concluded if they could validly waive claims before knowing whether or not they had a claim; and (2) the practice of waiving claims by way of generic description or statutory reference.

    Key takeaways:

    • To effectively compromise future claims in a settlement agreement, an employer must specifically identify such claims or circumstances where the grounds for a future complaint exist, which may lead to such claims.
    • In addition, employers may bolster their protections against future claims by drafting warranties and/or indemnities into their settlement agreements. For example, under the terms of a settlement agreement, an employer may require its employees to repay any compensation they have received for their redundancy if they elect to pursue a future claim.

  2. On 22 September 2022, the Retained EU Law (Revocation and Reform) Bill (the “EU Bill”) was introduced to Parliament. The EU Bill contains a ‘sunset’ clause that will automatically repeal any EU-derived subordinate legislation and retained direct EU legislation which is not expressly restated, replaced or revoked by 31 December 2023 although this is currently being debated. Key points to note: 

    • The EU Bill will not affect employment laws contained in ‘Acts’ and other national legislations, however, it will impact a plethora of employment regulations derived from EU laws, such as the Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Working Time Regulations 1998.
    • It is unclear to what extent the government will amend such regulations prior to the sunset date and there is debate as to whether this date should be extended until 23 June 2026.
    • Until the EU Bill is passed by Parliament and until there are any guidance on which pieces of EU-derived law will be restated, replaced or revoked, the impact of the future of certain employment laws remains unclear.

  3. The Protection from Redundancy (Pregnancy and Family Leave) Bill (the “Redundancy Bill”) has passed its second reading and is likely to become law. The purpose of the Redundancy Bill is to strengthen redundancy protections for new parents and pregnant women. The current law requires employers to provide individuals on parental leave with alternative employment where a suitable alternative vacancy exists in priority to anyone else before considering provisional redundancy selection. The intention of the Redundancy Bill is therefore to extend such protections to pregnant women before they start maternity leave and after they return to work. It will also protect new parents returning to work from adoption or shared parental leave.

    The press release, issued by the government last week, made it clear that protection will start from the point at which the employee tells their employer that they are pregnant (we do not yet know whether they will need to provide a MATB1 form first) and for pregnant women will end 18 months from the start of their maternity leave. Therefore, a woman who takes the maximum maternity leave of 52 weeks, will get an extra six months' protection after her maternity leave ends.

    Similar provisions will apply to people who are adopting a child or taking shared parental leave. Employers should keep an eye on the passing of this Redundancy Bill and consider the impact on redundancy processes and policies once passed.

  4. On 12 October 2022, the Information Commissioner’s Office published ‘monitoring at work draft guidance’. The draft guidance is now out for public consultation and will remain open until 11 January 2023. The primary purpose of the draft guidance is to provide employers with sufficient information to monitor their workforce whilst complying with the UK General Data Protection Regulation and the Data Protection Act 2018. In addition, the draft guidance is intended to provide greater regulatory certainty and build stakeholders’ trust.

  5. On 17 November 2022, the government delivered its 2022 Autumn statement. Although the statement was geared towards belt tightening in order to fill a fiscal blackhole, the Chancellor proposed increases to the national living wage (the “NLW”) and the national minimum wage with effect from 1 April 2023. The NLW for those over aged 23 will therefore increase by 9.7% from £9.50 to £10.42 per hour.

For further advice on any of the issues raised above, please contact a member of the London Employment team.