Break during UK Work Hours: Power Outages, Forfeiting Future Complaints, and Recent Highlights in HR Pension Matters
In a recent decision by the Employment Appeal Tribunal (EAT), the legality of waiving future statutory claims in UK settlement agreements has come under scrutiny. Here's what employers need to know.
The EAT held that constructing possible future causes of action as being in view would be contrary to the statutory conditions on settlement agreements. This serves as a reminder that employers should ensure that any complaints and claims known to the parties relating to the claimant's employment and/or its termination are expressly identified in the settlement agreement.
Under current UK law, employers can waive future statutory employment claims, provided the agreement is correctly and carefully drafted with precise wording reflecting this waiver. However, certain claims cannot be waived, such as claims to enforce the settlement agreement itself, personal injury claims, and accrued pension rights.
Employers should allow employees a reasonable period to consider the agreement, generally at least 10 calendar days, for reviewing the terms and obtaining advice. Applying undue pressure or rushing this process can jeopardize the enforceability of the agreement and lead to challenges.
If an employee breaches the terms by bringing a claim covered by the waiver, the employer may have contractual remedies such as refusing or requiring repayment of the termination payment, or recovering legal costs incurred in defending against or pursuing actions related to the waived claim.
From October 2025, employers may need to update settlement agreement templates to comply with new legislation such as the Victims and Prisoners Act. However, the specific implications are still emerging.
In a related development, Danielle Kingdon, partner in the employment team, discusses legal issues and practical steps for employers regarding potential blackouts this winter in a podcast.
Few workplaces are able to justify a compulsory retirement age, and ageing employees are likely to seek greater flexibility at work. Employers should seek to build appropriate protection into a settlement agreement from their perspective, even though the EAT decision was ultimately determined on other grounds.
The EAT's decision has cast doubt on the scope of future statutory claims that can be validly waived under a settlement agreement. Both a "rolled up" waiver and a waiver which lists a variety of possible claims by reference to their nature or section number are general waivers and fall foul of the guidance in Hinton.
Many workers without a proportion of defined benefit pension will seek to retire in the next 10-15 years, and many may not be able to afford to. This places employers under pressure to manage an ageing workforce. The EAT's decision suggests that settlement agreements may need to be amended to specifically identify particular complaints that have already arisen between the parties.
The focus over the last 10 years has been on automatically enrolling workers into contributory pension schemes. However, the minimum contribution levels are too low to generate a comfortable retirement income. Higher engagement should mean that employees will value employer pension contribution rates more highly, and employers with better than average pension terms will attract staff more easily.
Employers should be aware of the uncertainty surrounding the ability to validly waive future unknown statutory claims under a settlement agreement, as per the recent Scottish EAT decision. It is advisable to ensure settlement agreements are reviewed by legal professionals to maintain enforceability under the evolving legal framework.
- Employers might need to reconsider the drafting of settlement agreements in light of the EAT's decision, ensuring that any waivers of future statutory claims are specifically identified and not overly general, such as in the case of education-and-self-development courses or seminars related to employment law, technology, general news, sports, or any other possible future claims.
- Given the impact of technology on various aspects of our lives, including education-and-self-development, it's essential for employers to stay updated on employment law changes, like the recent EAT decision regarding waiver of future statutory claims in settlement agreements, to ensure their agreements remain enforceable and comply with the evolving legal framework.
