Introduction

In Clifford v IBM UK Ltd ET/3302436/22 (Clifford), the Employment Tribunal considered the difficult question of whether a discrimination claim arising after a lawful compromise agreement was caught by that agreement. This was made more complex by conflicting appellate authority as to whether later acts or omissions could be caught by an earlier compromise agreement.

EJ Housego struck out Mr Clifford’s claims on the grounds that they were indeed precluded by the compromise agreement and anyway had no reasonable prospects of success. Clifford is notable because it clarifies (albeit at ET level) the extent to which compromise agreements can settle future claims, including those brought under the Equality Act 2010 (EQA 2010). It also provides a timely insight into how to construct an appropriate comparator where a disabled person is provided with benefits that are not available to a non-disabled employee.

Background

Mr Clifford was disabled and had been absent from work due to ill health since 2008. In 2013, following a formal grievance and appeal process which included complaints about not having a salary increase, holiday pay and assertions of disability discrimination, the parties reached a compromise agreement which transferred the claimant to a self insured salary replacement scheme under which he was entitled to 75% of his salary for the remainder of his working life. The Scheme was similar to a permanent health insurance scheme.

Under the terms of the compromise agreement, Mr Clifford agreed inter alia to waive complaints that were connected to the matters set out in the grievance and appeal processes and that arose out of his transfer to the Scheme. Subsequently, Mr Clifford brought claims in the Employment Tribunal that:

1. He had received no salary increase or salary review since entering into the Scheme which amounted to disability discrimination (ss 13, 15 and 19 EQA 2010).
2. He had not been paid for annual leave since entering into the Scheme which amounted to disability discrimination (ss 15 and 19 EQA 2010) and unlawful deductions from wages and/or a breach of the Working Time Regulations 1998.

The Extent of the Compromise Agreement

Mr Clifford’s counsel submitted that the Employment Appeal Tribunal had authoritatively decided, in Bathgate v Technip UK Ltd [2023] ICR 191 (Bathgate), that a compromise agreement could not settle future claims – meaning claims arising out of conduct occurring after the date of the settlement agreement. In contrast Alice Mayhew KC, on behalf of the Respondent, relied on the Court of Appeal’s decision in Arvunescu v Quick Release (Automotive) Ltd [2023] ICR 271 (Arvunescu) that a compromise agreement could settle future claims provided that the language of the agreement was absolutely clear this was intended.

EJ Housego agreed with the Respondent. He held that Mr Clifford had waived his right to bring the disability discrimination and holiday pay claims by reason of the compromise agreement. Arvunescu was clear authority that future claims can be settled by compromise agreement provided the language of that agreement is absolutely clear. Bathgate could be distinguished from the present facts because it concerned claims that were unknowable. In this case, the salary and holiday pay issues were known at the time of the compromise agreement. To the extent that Bathgate was inconsistent with Arvunescu, the latter was to be preferred.

On the facts, the claims were similar to the complaints which had been settled in 2013. The terms of the compromise agreement were clearly intended to preclude such similar claims. Mr Clifford had agreed to waive those similar claims and this was a valid waiver.

Appropriate Comparators

Having considered the issue of compromise in IBM’s favour, EJ Housego visited the tricky issue of comparators where, on the facts, a generous benefit was provided to one type of employee – namely those on long term sickness absence.

Mr Clifford relied on the hypothetical comparator of a non-disabled employee who was not a member of the Scheme and who received annual pay rises and/or reviews. EJ Housego determined this was not a true comparator. The Scheme was a benefit that was only available to disabled employees. Non-disabled employees could not be transferred to the Scheme. It followed that in this case, disabled employees were treated more favourably than non-disabled employees, rather than the other way around. Clifford has been widely reported on in the national media including The Mail Online, The Mirror, The Telegraph, Yahoo News and The Sun.