Ian Clifford v IBM United Kingdom Ltd

This is an appeal from the decision of Employment Judge Housego (the “EJ”) sitting at Reading Employment Tribunal (the “ET”) promulgated on 24 April 2023, striking out the claimant’s claims as having no reasonable prospect of success and on the basis that they were precluded by a compromise agreement entered into by the parties on 10 April 2013. I will refer to the parties as they were known below.

The claimant brought claims for disability discrimination contrary to sections 13, 15 and/or 19 of the Equality Act 2010 (“EQA”), unlawful deduction of wages and breach of the Working Time Regulations 1998 (“WTR”). This appeal is only concerned with the decision to strike out the disability discrimination claims.

The claimant advances three grounds of appeal, namely that the ET erred in:

Permission to proceed in respect of Ground 1 was granted at the sift stage by Caspar Glyn KC sitting as a Deputy High Court Judge. HHJ Auerbach permitted Grounds 2 and 3 to proceed following a hearing under rule 3(10) of the Employment Appeal Tribunal Rules 1993 (as amended) on 19 December 2023. Subsequent to the sift decision the Court of Session allowed an appeal from Bathgate EAT in Bathgate v Technip Singapore Pte Ltd [2023] CSIH 48, [2024] IRLR 326 (“Bathgate CoS”).

The claimant is employed by the respondent, who provides IT, technology, hardware, software, new business solutions and services. He commenced employment with the respondent on 1 July 2001. His employment transferred pursuant to the Transfer of Undertaking (Protection of Employment) Regulations 1981 from Lotus Development United Kingdom Limited; his period of continuous employment began on 26 June 2000.

The claimant has been continuously absent from work due to ill-health since 19 September 2008. In 2012 he raised a grievance. His complaints were summarised by the EJ as including: ongoing and proposed deductions from his salary (reduced pension contributions), not having a salary increase since 2008, not receiving holiday pay for the period of his sickness absence and failing to transfer him to the respondent’s Disability Plan. It was also said that the allegations relating to the lack of salary increase and to holiday pay were disability discrimination. Following the determination of the grievance and a related appeal, it was agreed that the claimant would be moved to the respondent’s Disability Plan, and he was placed on this plan on 6 April 2013.

On 10 April 2013, the parties entered into a compromise agreement. The claimant did so having received legal advice from specialist employment law solicitors (Doyle Clayton) who signed the accompanying Adviser’s Certificate.

The recitals to the compromise agreement included the following:

Paragraph 1 said that it was agreed that the claimant was eligible for the disability benefit under the terms of the IBM Aligned Sickness and Accident Benefit (“the Aligned Policy”) and the Disability Plan, and that he would be treated as an incentive employee. The text continued that under the Aligned Policy, incentive employees have their disability benefit calculated by reference to on target earnings (“OTE”) and that, “Therefore whilst you remain eligible for the disability benefit under the Aligned Policy you will be paid 75% of OTE salary less the single person’s social security incapacity benefit or employment support allowance. For these purposes, your OTE will be £72,037.44 per annum”.

Paragraph 3 of the agreement recorded that the respondent agreed to make a payment in relation to the claim for untaken leave without admission of liability.

Paragraph 5 provided:

Under clause 8 the claimant acknowledged that he had received legal advice on his rights arising out of and in connection with his employment with the respondent. The wording continued, “and you have been advised that you have or may have complaints or claims arising in relation thereto, whether or not they are or could be in the contemplation of you or IBM at the date of this Agreement. You acknowledge that the terms in this Agreement are offered to you on the basis that you accept them in full and final settlement of all and such claims that you may have against IBM (or any Group Company) and any of its (or their) directors, officers or employees. You waive your rights to pursue such claims including but not limited to the following…” (emphasis added). A list of claims was then set out. The list included at sub-clause (f) “any claim for discrimination, harassment, or victimisation related to disability, failure to make adjustments or any other claim under the Disability Discrimination Act 1995 or the Equality Act 2010”, and at sub-clause (i) “any claim for compensation for entitlement to annual leave, payment in respect of annual leave, refusal to give paid annual leave, daily and/or weekly and/or compensatory rest and/or rest breaks and any other claim under the Working Time Regulations 1998”.

Paragraph 9 then said:

In paragraph 10 the claimant warranted and confirmed that he had received independent legal advice as to the terms and effect of this Agreement and, “in particular as to its effect on your ability to pursue your rights before an Employment Tribunal, County Court or High Court in respect of each of the claims referred to in paragraph 8 from the Adviser”.

Paragraph 18 provided that the agreement, the Disability Plan, the Aligned Policy and the Disability Plan Guidelines set out the entire agreement and understanding between the parties.

The Disability Plan Guidelines were reproduced at Schedule 2 to the agreement. The eligibility criteria for the Plan included that all reasonable workplace adjustments which might bear upon the employee’s fitness had been explored and that the employee’s medical condition and its effects were likely to preclude a return to active employment for the reasonably foreseeable future. The Guidelines also said:

The claimant issued his present claim in February 2022. It is agreed that he is a disabled person for the purposes of the EQA. He alleged that his absence from work and/or being placed on the Disability Plan and/or his inability to perform his duties under his contract was “something arising” from his disability. His grounds of claim pleaded that he had been treated unfavourably because of this “something arising” in that:

The claimant contended that if he had not been disabled and thus able to continue to perform his role, he would have had an annual salary review and annual salary increases each year since 2013 and would have been paid in full for his contractual annual leave entitlement.

I need say no more about the fourth aspect of the section 15 complaint (or the equivalent complaint in respect of indirect discrimination), as Mr Kennedy clarified during the hearing that the disability discrimination claims were now only pursued in relation to the lack of salary reviews and salary increases.

The claimant also pleaded a claim of direct discrimination on the basis that by refusing to annually review his payments under the Disability Plan and/or increase these payments, the respondent had treated the claimant, a disabled person, less favourably than it treated non-disabled employees.

In the alternative, the claimant alleged indirect discrimination in that the respondent’s practice put disabled employees, including members of the Disability Plan, at a particular disadvantage, in that disabled employees were not given the benefit of an annual salary review and were not given equivalent annual salary increases when compared to their non-disabled comparators.

The claimant also brought claims of unlawful deductions from wages and under the WTR in relation to non-payment of annual leave.

In its response, the respondent contended that the ET did not have jurisdiction in respect of the claims as they fell within the terms of a legally binding compromise agreement and because they had been presented outside of the prescribed time period. In the alternative, the claims were denied. As regards the merits, the respondent asserted that the position of inactive employees on the Disability Plan was significantly different from regular employees who were temporarily absent from work, whether through sickness or otherwise. The claimant had remained on the Disability Plan and continued to receive 75% of his OTE as set out in the compromise agreement. As regards the section 13 EQA claim, the respondent denied that the claimant was treated less favourably because of his disability. Its decision not to include the claimant and other members of the Disability Plan in the annual salary review process (which did not lead to a guaranteed increase) was due to their different status, as reflected in the terms and conditions of the Plan. An “inactive” employee was not expected to return to work for the respondent and was in receipt of a benefit payment, rather than a salary for work performed, which is a payment of a different nature. The purpose of salary increases included the retention of employees in active service with strategically valuable skills, rewarding employee’s performance and motivating their future career development with the respondent. The same reasoning did not apply to the claimant’s payments under the Disability Plan.

As regards the indirect discrimination claim, the respondent denied that it had a policy or practice of salary reward reviews that was applied to both active employees and those on the Disability Plan. The respondent adopted an entirely separate approach to its review of plan payments for inactive employees, where it had a discretion to make increases. In the alternative, it was denied that any policy or practice put or would put the claimant or other disabled employees at a particular disadvantage when compared with persons who were not disabled. Active employees were not guaranteed a salary increase every year either. In the further alternative, the respondent averred that any prima facie discrimination was justified.

As regards the section 15 EQA claim, the respondent contended that the relevant treatment was the respondent’s ongoing payment to the claimant of his Disability Plan payments whilst he is an “inactive” employee and unable to work, and that there was nothing intrinsically unfavourable or disadvantageous to the claimant about that. Furthermore, that the factors considered in relation to salary reviews for active employees were not applicable to those in the claimant’s position as the claimant was not undertaking his employment duties.

A Preliminary Hearing for Case Management took place on 12 January 2023 before Employment Judge Boyes. The Judge listed an open Preliminary Hearing (“OPH”) for 24 March 2023 to consider the respondent’s strike out application. At that stage, the strike out application had not been made. The application was described at para 9 of the order as one to determine, “whether the claimant’s claims should be struck out and/or deposits ordered, including on the basis that the claimant’s claims fall within the terms of a valid and legally binding compromise agreement dated 10 April 2013”. The respondent was directed to file its strikeout application by 26 January 2023. Paragraph 15 of the order noted that the issues to be determined at the OPH were “listed in the Case Summary below. If you think the list is wrong or incomplete you must write to the Tribunal and the other side by 9 February 2023. If you do not, the list will be treated as final unless the Tribunal decides otherwise”. The Case Summary summarised the relevant history and then said at para 42:

Paragraph 43 summarised the contentions that the respondent raised in respect of the compromise agreement. Paragraph 44 noted that the parties were agreed that issues relating to time limits should be dealt with at the full merits hearing. Paragraph 46 recorded that, “subject to what is said in the respondent’s strike out application and the parties’ skeleton arguments, all of which are yet to be filed, the issues to be determined at the preliminary hearing are as follows:

The respondent’s strike out application was set out in a letter to the ET dated 26 January 2023. Page 1 of the letter included the following:

The body of the letter then addressed the terms of the compromise agreement and why it was said that the claimant was precluded from pursuing his pleaded allegations.

The parties subsequently prepared an “Agreed List of Issues for the Open Preliminary Hearing on 24 March 2023”. In its material parts it read:

The OPH was held on 24 March 2023. Following submissions, the EJ reserved judgment. At para 1 of his Reasons, he said: “This hearing was to consider whether to strike out the claim in whole or in part, either as precluded by a compromise agreement of 13 April 2013 [sic], or as having no reasonable prospect of success”. The EJ then summarised the compromise agreement, the claims that were now made, the previous Case Management order and the list of issues.

At para 15 he noted the following agreed fact:

The EJ then observed that an aspect of the claimant’s grievance was that he had not been transferred to the Disability Plan and that it was “self-evident that being transferred to the Plan afforded advantage to the Claimant, so that he was better off after 06 April 2013 than before” (para 16).

After setting out the parties’ submissions at some length and reminding himself of the power to strike out in rule 37 of the Employment Tribunal Rules of Procedure, the EJ turned to his conclusions in respect of the compromise agreement. He had referred to Bathgate EAT, Hinton v University of East London [2005] IRLR 552 (“Hinton”) and Arvunescu v Quick Release (Automotive) Ltd [2023] ICR 271 (“Arvunescu”) when summarising the respondent’s submissions.

The EJ’s reasoning and conclusions included the following (“CA” is used as an abbreviation for the parties’ compromise agreement):

Whilst the EJ’s reasoning was largely focused on the holiday pay claims, it is accepted that his reasoning regarding the compromise agreement also applied to the disability discrimination claims, albeit they were addressed much more briefly.

Under the heading “Discussion as to Rule 37 application to strike out” the EJ turned to the merits of the disability discrimination claims. He said:

The contractual position was summarised by Lord Bingham of Cornhill in Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2001] ICR 337 as follows:

The need for very clear words to be used where a compromise agreement is intended to encompass future claims was also stressed in the context of an employment claim compromised by a COT3 agreement in Royal National Orthopaedic Hospital Trust v Howard [2002] IRLR 849 (“Howard”). Judge JR Reid QC said at para 9:

However, the parties’ freedom to reach agreement is modified in relation to claims brought under the EQA, by virtue of sections 144 and 147. Similar provisions appear in other employment statutes including the Employment Rights Act 1996 (“ERA 1996”).

Section 144(1) EQA provides that, “A term of a contract is unenforceable by a person in whose favour it would operate, in so far as it purports to exclude or limit a provision of or made under this Act”. Section 44(4) provides a carve out from sub-section (1) by stating that, “this section does not apply to a contract which settles a complaint within section 120 if the contract – (a) is made with the assistance of a conciliation officer, or (b) is a qualifying settlement agreement”.

The prerequisites for the existence of a qualifying settlement agreement are set out in section 147(1)-(3) EQA, which provides:

In the present case, it is accepted that these requirements are met other than the stipulation in subsection (3)(b); the claimant says that his disability discrimination claims are not “the particular complaint” to which the agreement related.

Hinton concerned a claim for detrimental treatment as a result of making protected disclosures. The claimant had been employed by the respondent university and had raised various grievances. He took voluntary redundancy and a compromise agreement was arrived at, expressed to be “in full and final settlement of all claims…which the employee has or may have against the university…arising out of or in connection with his employment…or otherwise including in particular the following claims”. Eleven particular kinds of claim were then listed, but this list did not include a detriment claim under section 47B of the ERA 1996. The events giving rise to the protected disclosure claim had occurred before the compromise agreement was entered into. The ET held that the agreement did not preclude the claim, the EAT reversed this decision, but the Court of Appeal allowed the claimant’s appeal. The relevant provision was section 203 of the ERA 1996. The statutory wording referred to “particular proceedings” rather than “particular complaint” but was otherwise not materially distinct from the provisions I have set out in respect of the EQA.

At para 17 Mummery LJ analysed the statutory provision and the policy that lay behind it as follows:

Lord Justice Mummery went on to hold that that the very general wording of the clause used in this instance was insufficient to cover the claim now brought under section 47B ERA 1996. He explained this in the following way:

Lady Justice Smith agreed with Mummery LJ and added some observations of her own regarding the purpose of the statutory provision and what was required to satisfy it:

Hilton UK Hotels Ltd v McNaughton UKEATS/0059/04 (“Hilton Hotels”) concerned a claim for exclusion from the respondent’s pension scheme during a period of part-time employment. The issue before the EAT was whether the terms of a compromise agreement prevented the claim from being advanced. The EAT dismissed the appeal, the majority agreeing with the Employment Tribunal that the claim could proceed as it was not one to which the compromise agreement applied. The applicable provisions in section 77(3) and (4A) of the Sex Discrimination Act 1975 (“SDA 1975”), also used the expression “the particular complaint” and were in materially the same terms as the EQA provisions. The majority’s reasoning in respect of the particular compromise agreement is at para 23. The claim could proceed as the agreement said that a claim was only excluded if the claimant believed on the date of signing it that she had such a claim and had raised it with the respondent. Lady Smith commented that “an alternative wording might not have presented such a difficulty” for the respondent (para 23). She summarised the applicable principles in para 20 (her reference to Lunt is to Lunt v Merseyside TEC Ltd [1999] ICR 17 (“Lunt”)), to which I will return:

In McWilliam & Ors v Glasgow City Council UKEATS/0036/10/BI (“McWilliam”) the EAT was also concerned with section 77(4B) SDA 1975. Lady Smith held that a “complaint” for these purposes included where there had been an express of dissatisfaction about something, so that the employee’s complaint did not need to have reached the stage of a claim presented to a tribunal (para 28). Accordingly, the case was not directly concerned with claims that were unknown at the time when the agreement was signed. Nonetheless, Lady Smith’s identification of the reason for the statutory requirement is of value. At para 30 she said:

I turn then to Bathgate, which lies at the heart of the appeal on Ground 1. The claimant was employed by the respondent as chief officer aboard a number of vessels. There came a time when he ceased working on vessels and after a period of working onshore he was placed at risk of redundancy. He raised various grievances and subsequently signed a settlement agreement under which he agreed not to pursue a list of specified claims against the respondent, including for age discrimination. The terms of the agreement extended to claims that could not have been known at the time of signing the agreement. The redundancy payment consisted of an “enhanced redundancy and notice payment” and, secondly, an “additional payment” that was to be paid at a later date. The additional payment was not made as the respondent subsequently decided that those aged over 60 at the point of redundancy were ineligible for it. The claimant brought proceedings alleging that the failure to make the additional payment amounted to age discrimination. The complaint plainly related to events that post-dated the compromise agreement.

In Bathgate EAT, Lord Summers found that the age discrimination claim was not precluded by the settlement agreement, as the reference to “the particular complaint” in section 147(3)(b) EQA was not apt to cover future claims that the parties were unaware of when the agreement was signed. He considered that construing “the particular complaint” to encompass future claims unknown at the date of the compromise, was contrary to the purposes of the section as identified by Mummery and Smith LJJ in Hinton. He then said in para 25 that:

Lord Summers went on to say that Mummery LJ’s observations about future claims had to be read in the context of the facts of the particular case; and that whilst Lady Smith had relied upon Howard in her summary of the principles in Hilton Hotels, Howard did not discuss the statutory restrictions imposed on settlement agreements by section 147 EQA or its equivalents (para 26). He went on to recognise at para 27 that his conclusion may be inconvenient where there is a mutual desire to avoid future claims and a wish to end the employment relationship.

Lord Summers said that he did not consider that the limits Parliament placed on settlement could be elided by contract (para 28). Finally, he relied upon an observation of Morrison J in Lunt where he said of the provisions in section 203 ERA:

Lord Malcolm gave the Court of Session’s judgment. At para 27 he said:

At paras 31 – 32 Lord Malcolm said:

At paras 33 – 35 Lord Malcolm referred to the Court of Appeal’s judgments in Hinton, noting that the required level of particularity was met in the present instance, as the agreement had specified age discrimination claims. He continued, “There is nothing in the Court of Appeal’s judgments which supports the proposition that a future complaint cannot be sufficiently particularised in a settlement. If anything the discussion suggests the contrary”. He then referred to passages in Hilton Hotels and McWilliam that I have already cited and observed: “All that matters is the presence or absence in the waiver of sufficient identification of the complaint being made”.

Lord Malcolm also considered that the structure of sections 144 and 147 supported his interpretation:

Lord Malcolm also addressed Lord Summers’ reliance upon Lunt, as follows:

Accordingly, the Court of Session upheld the cross-appeal, finding that the jurisdiction of the tribunal was excluded by the settlement agreement.

Pursuant to rule 37 of the Employment Tribunals Rules of Procedure:

Rule 37(2) provides:

It is well established that a discrimination claim should only be struck out as having no reasonable prospects of success in the clearest cases and based on taking the claimant’s case at its highest. It would only be in an exceptional case that a claim would be struck out where the central facts are in dispute, Mechkarov v Citibank NA [2016] ICR 1121 per Mitting J at para 12.

Discrimination arising from disability is defined in section 15 EQA as follows:

Indirect discrimination is defined in section 19 EQA as:

Disability is one of the relevant protected characteristics for these purposes, see section 19(3).

The application of these provisions has been considered in a number of cases where disabled employees were provided with benefits pursuant to disability-related schemes.

The leading authority is Trustees of Swansea University Pension and Assurance Scheme v Williams [2019] ICR 230 (“Williams”). In that case the disabled claimant had taken ill-health retirement at a relatively young age. Under the terms of the employer’s pension scheme, employees who were unable to continue to work through ill-health were entitled to take their accrued pension benefits immediately without any reduction for early receipt. However, those benefits were enhanced on the basis of the employee’s salary at their actual retirement date. The claimant complained that this amounted to discrimination arising from disability, since it led to his entitlements being calculated on the basis of his lower part-time salary, whereas had he not suffered from a progressive illness and become disabled, he would have continued to work full-time and his pension would have been calculated on that basis. The Supreme Court concluded that the treatment complained of was not “unfavourable” within the meaning of section 15 EQA. Lord Carnwarth JSC (with whom the other Justices agreed) indicated that the central objection to the claimant’s case could be shortly stated:

Lord Carnwarth also indicated that he was substantially in agreement with the reasoning of the Court of Appeal. Lord Justice Bean’s judgment in the Court of Appeal included the following passage at paras 42 – 43:

Chief Constable of Gwent Police v Parsons & Ors UKEAT/0143/18/DA (“Parsons”) was a case that fell on the other side of the line. The relevant police force operated a voluntary exit scheme for officers, under which a compensation lump sum was payable. The claimants, who were both entitled to retire by reason of disability were in any event entitled at the point of termination of their office to an immediate deferred payment under a disability pension scheme. When the claimants made successful applications under the voluntary exit scheme, a decision was made to apply a cap to the compensation lump sum that was payable to them because they were also entitled to the immediate deferred pension. The EAT (HHJ Shanks presiding) upheld the Employment Tribunal’s finding that this constituted “unfavourable treatment” for the purposes of section 15, rejecting the respondent’s contention that the effect of the two schemes should be considered together. The EAT concluded that the tribunal had been entitled to consider the two schemes separately as they had separate purposes and were set up at different times (para 19). The EAT held that Williams was distinguishable, as the relevant treatment in that case had been the award of pension which the claimant would not have received if he had not been disabled and thus was not capable of amounting to unfavourable treatment. Whereas, in Parsons, the relevant treatment was identified as the application of a cap to what would otherwise have been a substantially larger payment under the voluntary exit scheme (para 20).

These authorities were discussed by Eady J (President) in Cowie & Ors v Scottish Fire and Rescue Service [2022] EAT 121, [2022] IRLR 913 (“Cowie”). The respondent operated a time off in lieu (“TOIL”) policy. It also operated a paid special leave policy: where TOIL had been exhausted, employees could request time off to deal with unforeseen matters and emergencies. In the early months of the coronavirus pandemic, the respondent extended paid special leave to address problems faced by staff who were “shielding” at home. Such staff were able to apply for special leave, but they were required to first use any TOIL and accrued leave. One group of disabled claimants who were “shielding” at home brought section 15 EQA claims on the basis that they needed to make use of the paid special leave as a result of their disabilities and that compelling them to first use their annual leave and TOIL was unfavourable treatment related to their disability. The Employment Tribunal upheld the claim, but the respondent successfully appealed to the EAT.

At para 74, Eady J noted that it was common ground that if the respondent was correct in its contention that there was no unfavourable treatment and the claimants suffered no disadvantage, this would dispose of both the section 15 and the section 19 claims; she said it had not been suggested that there was any distinction to be drawn for these purposes between “unfavourable treatment” in section 15 EQA and “disadvantage” in section 19.

At para 75 she observed that if the requirement to use TOIL and annual leave was properly to be seen as separate from the claimants’ entitlement to paid special leave, then the EAT could see how the circumstances might have been viewed as more akin to Parsons. However, the question was whether that was the correct way of defining treatment in this case. The EAT went on to hold that it was not. Eady J explained:

A similar approach was applied in McAllister v Commissioners for Revenue and Customs [2022] EAT 87, [2023] ICR 483 (“McAllister”), a decision of Eady J (President). The claimant was employed as an administrative officer by the respondent. He was absent from work with stress, anxiety and depression for a long period. After he confirmed that he was not fit to return to work in any capacity, he was dismissed under the respondent’s attendance management policy. Under the Civil Service Compensation Scheme (“CSCS”) he received compensation for loss of employment due to unsatisfactory attendance resulting from disability of 50% of the maximum amount that he could have been awarded. The payments were then increased to 80% by the Civil Service Board on appeal. He brought a claim for disability related discrimination. The Employment Tribunal found that the initial reduction of the compensation payment to 50% was unfavourable treatment within the meaning of the section, but that the 80% payment awarded on appeal was not. In any event, the tribunal found that the treatment was justified. The claimant appealed and the respondent cross-appealed the finding that the 50% payment was unfavourable treatment. The appeal was dismissed and the cross-appeal allowed by the EAT.

The core of Eady J’s reasoning in relation to the cross appeal appears from the following passage:

She thus concluded that the tribunal had erred in failing to see this as a case where there was no unfavourable treatment for the same reason as had been identified in Williams.

Section 13 EQA defines direct discrimination as follows:

Section 23 EQA states (as relevant):

Accordingly, the Employment Tribunal must attribute the same abilities and other relevant circumstances (other than the fact of disability) to the comparator: High Quality Lifestyles Ltd v Watts [2006] IRLR 850 EAT at paras 46 – 49.

As regards Ground 1, in what he acknowledged was a “bold” submission, Mr Kennedy argued that the EAT was not bound to follow Bathgate CoS and that it should not do so as the Court of Session had erred in its interpretation of section 147 EQA. In the alternative, Mr Kennedy contended that Bathgate was distinguishable as it was a “clean break” situation, unlike the present case, as the parties were not in a continuing employment relationship after the compromise agreement was made.

In particular Mr Kennedy submitted that the Court of Session failed to appreciate that section 147 provides for a limited exception to the important section 144 prohibition on contracting out of the protections afforded by the EQA and that, as such, it ought to be construed narrowly. Further, he said that the statutory phrase “the particular complaint” served no purpose if the Court of Session’s interpretation is followed. He asserted that the Court of Session misapplied Mummery LJ’s reasoning in Hinton, failing to appreciate that it involved a claim relating to matters that were in existence at the time of the compromise agreement. He also said that the Court of Session’s approach undermined the statutory policy identified in Hinton and that it would leave employees insufficiently protected as a simple reference to the EQA in a compromise agreement could preclude a sexual harassment claim arising in the same employment many years later.

Mr Kennedy submitted that I should follow the reasoning of Lord Summers in Bathgate EAT, which he said was more persuasive. Accordingly, he said that I should find that section 147 does not extend to future claims that were unknown and unknowable at the time when a settlement agreement is entered into.

In terms of the EJ’s reasoning in the present case, Mr Kennedy says that he was wrong to characterise the discrimination claim in respect of pay reviews as a repetition of the matters raised in the grievance; the claim relates to the operation of the Disability Plan and given the point in time at which the claimant was moved to the Plan, this is a wholly new claim, which was not in existence or contemplation at the time of the compromise agreement. As such, it is a future claim which is not precluded by the compromise agreement.

In relation to Ground 2, Mr Kennedy submitted that the claimant was not given any reasonable opportunity to make representations as to the striking out of the disability discrimination claims. This was not within the agreed list of issues and he had not prepared to address the ET on this basis, either in his written or his oral submissions. Furthermore, he did not accept that the EJ gave him any appropriate opportunity to make submissions on this topic at the OPH and that a brief interchange with the EJ, when Mr Kennedy answered specific questions that he raised, was insufficient. Mr Kennedy said that if the EJ had indicated that he was considering striking out the discrimination claims on their merits, he would have asked for time to consider this and take instructions. He also submitted that it was inappropriate and premature to strike out the discrimination claims before the disclosure stage and without giving the claimant the opportunity to adduce evidence. He said that evidence regarding the decisions made as to salary reviews, both for those on the Disability Plan and for active employees was pertinent.

At para 28 of his skeleton argument, in the course of addressing Ground 2, Mr Kennedy introduced a complaint that the EJ erred in his assessment of the merits of the direct discrimination claim. Specifically, that the claimant remained an employee (although inactive) and he was entitled to compare his situation with that of active employees, who did receive salary reviews, so that the failure to review his salary amounted to, or at least was capable of amounting to, less favourable treatment.

In respect of Ground 3, Mr Kennedy submitted that in his analysis of the merits, the EJ failed to deal with the section 15 and section 19 discrimination claims, focusing solely on the direct discrimination claim and, in particular, upon the inappropriateness of the comparator relied upon by the claimant. He said that neither disability related discrimination nor indirect discrimination involve a comparison exercise and that what he describes as a “passing reference” in para 44 of the EJ’s Reasons was not sufficient to address the merits of these claims and to support the relatively draconian step of striking them out.

He submitted that it was inappropriate and/or unfair for me to reach a view on the merits at this pre-evidence stage and that, in any event, each of the disability discrimination claims had reasonable prospects of success, albeit he acknowledged that the indirect discrimination claim was weaker than the other claims. As regards the disability related discrimination claim, he contended that the absence of salary reviews, and thus salary increases, was the relevant unfavourable treatment (rather than the overall provision made for him under the Disability Plan) and that the circumstances were more analogous to Parsons than to Williams.

The respondent resists the appeal on the basis of the EJ’s reasoning and for the additional reasons that I will summarise.

In relation to Ground 1, Mr Forshaw KC submitted that the EJ could not be criticised for failing to follow Bathgate EAT in circumstances where that decision has now been overturned by the Court of Session. He said that if the ground of appeal was read literally, that in itself was sufficient to dispose of Ground 1 of the appeal.

In any event, Mr Forshaw contended that the Court of Session’s decision was cogent, plainly correct and should be followed. He submitted that there is nothing in sections 144 or 147 EQA that precludes the settlement of future claims, provided that they are compromised in appropriately clear language. He said that section 147(3) does not constrain the kinds of claims that can be settled, rather it regulates how the parties enter into a statutory settlement agreement. If Parliament had intended to curtail the parties’ freedom of contract as to which kind of claims might be settled by compromise, it would be expected that the clearest of language to that effect would have been used in the legislation, as Lord Malcom had observed in the Court of Session. He did not accept that section 144(4) should be viewed as an exception, as opposed to a part of the statutory structure. In any event, there was nothing in the statutory wording that indicated a temporal limitation of the kind that Mr Kennedy suggested.

Mr Forshaw also submitted that there was no basis to distinguish Bathgate; neither the statutory wording nor the authorities supported any distinction being drawn between a compromise agreement entered into upon the termination of employment relationship and one applying to a continuing employment relationship.

Mr Forshaw submitted that Lord Summers’ decision in Bathgate EAT was out of step with the earlier authorities and that the Court of Session’s decision has restored the orthodox position.

Mr Forshaw pointed out that the claimant’s preferred construction would give rise to an unsatisfactory situation, as it would mean that future claims could be settled by means of a COT3 as in Arvunescu, but not by a statutory settlement agreement, in circumstances where there is no apparent basis for the legislature to have drawn such a distinction, especially given that in the later instance the employee must have obtained legal advice before entering into the agreement, which is not the case in respect of a COT3.

Mr Forshaw also submitted that even on the caselaw as it was at the time of the OPH before the EJ, there was, at best, conflicting decisions of the EAT, such that the ET was bound to analyse the law itself and was not bound to apply Bathgate EAT, which was inconsistent with the Court of Appeal’s decision in Hinton. In any event, as Bathgate EAT was wrong, as the Court of Session has now confirmed, there was no material error of law in the EJ’s decision.

In the alternative, Mr Forshaw relied upon the distinction drawn by the EJ; whatever the position in relation to unknown future claims, given the grievance history leading up to the compromise agreement, this was not a situation where the employee had compromised entirely unforeseen claims.

Mr Forshaw pointed out that if Ground 1 failed, Grounds 2 and 3 became academic, as the claims would in any event remain struck out, as precluded by the compromise agreement.

In relation to Ground 2, Mr Forshaw emphasised that the ET may strike out claims on its own initiative. He suggested that the terms of the respondent’s strike out application were sufficiently broad to encompass striking out the disability discrimination claims on their merits and that the ET was not bound by the parties’ agreed list of issues. He said that his instructing solicitor’s notes of the hearing showed that the EJ had raised the merits of the discrimination claim with Mr Kennedy, who was given an opportunity to address his concerns.

In the alternative, he submitted that even if the claimant’s arguments in respect of Ground 2 were correct, this could not result in a successful appeal because any procedural failing would be academic in circumstances where the section 15 and section 19 claims are plainly unarguable, so that no injustice was caused by the EJ’s approach. He also objected to the claimant now challenging the reasoning of the EJ in respect of the direct discrimination claim and the comparator that was relied upon when this had not been raised as a specific ground of appeal.

As regards Ground 3, Mr Forshaw submitted that all the claimant’s discrimination claims were hopeless and fell to be struck out on their merits. He contended that the authorities I have summarised earlier showed that an employer’s provision of benefits pursuant to a disability related scheme cannot constitute “unfavourable treatment” for the purposes of section 15 or group disadvantage for the purposes of section 19 merely because there are aspects of the scheme which a disabled person considers to be insufficiently generous or because they result in the payment of lower benefits than the employee might have received in different circumstances if they had remained an employee in active employment. He said that although these authorities were not before the EJ, his decision was entirely consistent with them. It was apparent from the EJ’s reasoning, considered as a whole, that he regarded the Disability Plan as providing the claimant with a “very substantial benefit” that amounted to more favourable treatment than he would have received had he not been disabled; that the fact he did not receive annual salary increases whilst in receipt of the benefits under the Disability Plan was simply a feature of the Plan that could not be considered in isolation and separated from the Disability Plan as a whole. In short, that the claimant’s treatment was generous and favourable and did not become unfavourable or disadvantageous simply because he regarded the benefits as not being favourable enough.

As Mummery LJ explained in Hinton (para 45 above), the first question will be whether, as a matter of contract, the proceedings are precluded by the parties’ compromise agreement. In this instance, there is no appeal from the EJ’s conclusion that the pleaded discrimination claims came within the terms of the waiver in the compromise agreement. He was plainly correct in this respect. Paragraph 8 of the agreement applied to claims arising out of or in connection with the claimant’s employment with the respondent “whether or not they are or could be in the contemplation of you or IBM at the date of this Agreement”. The claimant acknowledged that the agreement constituted a full and final settlement of “such claims” and the waiver in terms covered claims for discrimination under the EQA 2010. The claimant was not assisted by the paragraph 9 exception for claims arising after the date of the Agreement, as it did not apply to claims “connected to the matters set out in the Grievance or Appeal” or arising “out of the Claimant’s transfer to the Plan”.

Accordingly, determination of whether the disability discrimination claims were precluded by the compromise agreement turned on whether that agreement complied with the requirements in section 147(3) EQA. As I have already indicated, the only issue arises in relation to section 147(3)(b), namely whether “the contract relates to the particular complaint”.

The Court of Session’s decision in Bathgate is not binding upon me; however, the EAT of England and Wales will ordinarily expect to follow decisions of the Court of Session “where the point confronting them is indistinguishable from what was there decided”: Caulfield & Ors v Marshalls Clay Products Ltd [2004] EWCA Civ 422 at para 31. At para 32, Laws LJ went on to observe that although not creating binding precedent, “Comity and practicality are another thing altogether. They exert a wholly legitimate pressure”. As Mr Forshaw pointed out, it would be undesirable for the same piece of legislation to mean one thing in England and Wales and something quite different in Scotland.

In any event, and for the reasons that I set out below, I consider that the circumstances of Bathgate CoS are indistinguishable from the present case, that the Court of Session’s reasoning was cogent and that the case was correctly decided.

Before setting out my reasoning, I mention for completeness that I have not approached Ground 1 on the narrow basis that Mr Forshaw suggested by way of his first submission (para 88 above). In my judgement, Ground 1 as formulated does raise the broader question of whether the EJ was right to hold that the compromise agreement related to the “particular complaint” of the disability discrimination claims, given they were based on events that post-dated the agreement.

I regard the material facts and circumstances as indistinguishable from Bathgate; both cases concern future claims that had not arisen at the time when the compromise agreement was signed. I reject Mr Kennedy’s suggested basis for distinguishing the earlier authority (para 79 above). Whilst it is factually true that the employment relationship in Bathgate had come to an end, whereas the relationship between the parties continued in the present case, for present purposes this is a distinction without a difference. There is nothing in the wording of the statutory provision or in the way this wording has been interpreted in the authorities (which I have already summarised) that provides a basis for drawing such a distinction.

I will next consider Mr Kennedy’s submissions that Bathgate CoS was wrongly decided. He submitted that the statutory phrase “the particular complaint” had no meaning or purpose if the Court of Session’s analysis was correct and that this cannot have been Parliament’s intention. I do not accept the premise of this submission. The purpose of section 147(3)(b) EQA was identified by Mummery and Smith LLJ in Hinton (paras 45 – 47 above). It is to prevent an employer from being able to use a blanket waiver in relation to which an employee could sign away their rights without appreciating the significance of what they were doing. It does so by requiring that the claims or potential claims to be covered by the agreement are identified by a generic description (such as “unfair dismissal”) or by reference to the section of the statute giving rise to the claim. It is clear from paras 33 – 35 of Lord Malcolm’s judgment, that this approach was endorsed by the Court of Session in Bathgate.

I reject Mr Kennedy’s submission that the Court of Session misapplied Hinton. As is apparent from my earlier summary, Hinton was not a case, on its facts, that was concerned with claims that had only arisen after the compromise agreement, but there is nothing in Lord Malcolm’s judgment that suggests that the Court of Session were under any misapprehension in this respect. Lord Malcolm referred to Hinton not because he suggested that it was factually on all fours with Bathgate, but because Mummery and Smith LJJ had identified the legislative objective and the particular purpose of section 147(3)(b) (as I have explained in my previous paragraph). Indeed, as is apparent from my citation from his judgment at para 51 above, it was Lord Summers (rather than the Court of Session), who did not apply Hinton, as he indicated that there was no material distinction, in terms of protection, between a general waiver and a waiver that lists possible claims by reference to their section numbers.

I do not consider that there is force in the complaint that in construing the legislation, the Court of Session failed to keep in mind that sections 144(4) and 147 were exceptions to the general prohibition on contracting out. Section 144(1) and 144(4) are two parts of the same statutory scheme. Furthermore, it was relevant to bear in mind that the statutory provisions were a restriction on freedom of contract, as the Court of Session identified.

I do not accept Mr Kennedy’s submission that Parliament cannot have intended that an employee could waive their rights to bring claims arising out of future events. If that had been Parliament’s intention, it could have said so; however, the statutory provisions introduce no temporal limitation on the kinds of claims that can be settled. Moreover, as Mr Kennedy accepted, it is clear from the Court of Appeal’s relatively recent confirmation in Arvunescu, that future claims can be settled by means of a COT3, and there is no sensible basis, in terms of the legislative wording or the policy objectives, for drawing a distinction between statutory settlement agreements and COT3s for these purposes. I respectfully agree with Lord Malcolm’s observations to this effect at para 37 of Bathgate CoS (para 57 above).

As Smith LJ said at para 33 in Hinton (para 47 above), the legislative purpose of the provision is to protect claimants from the danger of signing away their rights without a proper understanding of what they are doing (emphasis added). It is not to prevent the waiver of all future claims. In seeking to support this aspect of his submissions, Mr Kennedy suggested that if Bathgate CoS is good law, then a waiver of future discrimination and harassment claims could arise simply from an employer inserting a reference to the EQA in a compromise agreement. However, it is apparent from the passages I have already cited from Hinton that this would not suffice (para 47 above), and there is nothing in Bathgate CoS that seeks to dilute the requirement to identify claims by reference to a generic description or to the relevant section of the statute. In the latter respect, Mr Kennedy sought to draw support from the penultimate sentence of Lord Malcolm’s para 31 (para 55 above), but this needs to be read in the context of his observation earlier in the same paragraph, that the settlement of future claims is not excluded “so long as the types of claim are clearly identified” and his endorsement of Hinton (para 56 above).

I agree that there is nothing in the statutory language that precludes the settlement of future claims provided appropriately clear language is employed. I accept Mr Forshaw’s submission that section 147(3) regulates how the parties enter into a statutory settlement agreement, rather than it constraining the kinds of claims that can be settled.

Whilst the pre-Bathgate authorities were not directly concerned with claims that arose after the settlement agreement was signed, the judgments are supportive of the approach taken in Bathgate CoS, both as to the legislative purpose of the provision and as to the absence of any temporal limitation as to the kinds of claims that may be compromised. In addition to Hinton (which I have already discussed), I have in mind Lady Smith’s observations at para 20 in Hilton Hotels (para 48 above) and at para 30 in McWilliam (para 49 above). As regards Lunt, the authority from which Lord Summers derived support in Bathgate EAT, I agree with Lord Malcolm’s observations at para 39 of Bathgate CoS (para 58 above). In addition, as Mr Forshaw pointed out, Morrison J’s observation in Lunt that was cited in Bathgate EAT (para 53 above), relied upon a passage in Harvey on Industrial Relations and Employment Law at para T[729] where the editors had observed that. “A compromise agreement cannot… seek to exclude potential complaints that have not yet arisen on the off-chance that they might be raised”, whereas the comparable passage in the current text of Harvey, contains an important qualification to that statement: “A settlement agreement cannot seek to include, by a blanket waiver, potential complaints that have not yet arisen on the off-chance they might be raised in the future” (emphasis added).

Whilst the authorities do not support the distinction drawn by the EJ in the present case (para 35 above); there was no material error of law in him not applying the decision in Bathgate EAT, which is now shown to be legally erroneous; and, for the reasons that I have discussed, he was correct in his conclusion that the disability discrimination claims were precluded by the compromise agreement.

I therefore dismiss Ground 1. It follows that Grounds 2 and 3 are academic as the disability discrimination claims cannot be advanced. In the circumstances, I will address those grounds more briefly than I otherwise would have done.

I agree that striking out the disability discrimination claims on their merits (as opposed to because they were caught by the compromise agreement) was not before the ET at the OPH on 24 March 2023 and that it was undertaken without affording the claimant a reasonable opportunity to address these matters. I arrive at these conclusions for the reasons that follow.

Firstly, the order made following the January 2023 Preliminary Hearing for Case Management provided that the issues to be determined at the OPH were those listed in the Case Summary, unless the parties contacted the ET as stipulated. The list that appeared in the Case Summary only referred in terms to striking out the claims on the basis compromise agreement (paras 26 and 27 above). No subsequent attempt was made by the respondent to amend this list.

Secondly, the respondent’s strike out application sought to strike out only one aspect of the claim on the basis that it had little or no reasonable prospects of success, namely the WTR claim relating to accrued annual leave (para 28 above).

Thirdly, the parties’ agreed list of issues for the OPH made no reference to striking out the disability discrimination claims on the basis that they did not have reasonable prospects of success.

Fourthly, notes of the OPH made by the respondent’s solicitors, indicate that there was a discussion at the outset of the hearing as to its scope. Mr Kennedy informed the EJ that there was: “No listing for discrimination claim for prospects” and counsel who then represented the respondent agreed with this position.

Fifthly, in these circumstances, I do not consider that the sheer fact that during the course of his submissions, the EJ asked Mr Kennedy a few questions about how the discrimination claims were put (with no indication that the scope of the hearing had now changed), amounted to the ET giving the claimant a “reasonable opportunity to make representations” against the striking out of these claims on their merits. Accordingly, there was a failure to comply with rule 37(2) of the Employment Tribunal Rules of Procedure (para 61 above) before the disability discrimination claims were struck out on their merits.

However, I do not accept that the error was a material one; it is readily apparent that none of the discrimination claims had any reasonable prospect of success, so that the claimant would not have been in any better position if Mr Kennedy had been given an appropriate opportunity to make submissions on this aspect of the case. Accordingly, I do not uphold Ground 2.

Given the way that the submissions were advanced, I will address the merits of the indirect discrimination and disability related discrimination claims under Ground 3, whereas I will consider the direct discrimination claim at this stage. I will make some generally applicable observations at this juncture.

Whilst it is well-established that a tribunal should be cautious about striking out discrimination claims, in the present case the lack of merit is apparent when the claims are taken at their highest and on the basis of the claims as pleaded by the claimant. Although he was not given the opportunity at the OPH, Mr Kennedy did have a reasonable opportunity to make representations during the appeal hearing, in circumstances where he was aware in advance of the hearing that the respondent argued that none of these claims had reasonable prospect of success and that this was one of the reasons why the appeal should not succeed. Mr Kennedy suggested that there should be disclosure of documents and the hearing of evidence before the merits of the claims were assessed. However, he was unable to identify the evidence that was currently unavailable that would significantly bear on the merits of these claims; he referred to not knowing when decisions were taken regarding annual reviews of active employees’ salaries and when decisions were made not to undertake reviews under the Disability Plan and not knowing who made these decisions. I do not consider that such information would materially assist the claimant in circumstances where the difficulties are inherent in and apparent from the formulation of the claims.

The grounds of appeal did not assert that the EJ erred in law in concluding that the direct discrimination claim had no reasonable prospects of success because the attempted comparison with a non-disabled employee who was not under the Disability Plan was fundamentally flawed. This point was first raised in the claimant’s skeleton argument for the appeal hearing. I agree with Mr Forshaw that the claimant would need to be granted permission to amend his grounds of appeal to pursue this matter. Mr Kennedy did not accept that an amendment was required, but, in the alternative, made an oral application for permission to amend to pursue this challenge.

I decline to grant permission to amend the grounds in this respect. Firstly, because Grounds 2 and 3 are in any event academic in light of my conclusion on Ground 1. Secondly, in order to grant permission to amend Ground 2, I would need to be satisfied that the contention that the EJ erred in law in his approach to the direct discrimination claim was at least arguable, and I do not consider that it is. Thirdly, because the challenge to this aspect of the EJ’s reasoning was less than fully developed. It was addressed in just one paragraph in the claimant’s skeleton argument and, although Mr Kennedy contended that the EJ was wrong in his analysis of the comparator question, he did not cite any caselaw relating to the identification of the correct comparator in direct discrimination disability cases, nor address how the authorities support his position.

I raised the High Quality Lifestyles Ltd v Watts approach to comparators with Mr Kennedy during his submissions (para 78 above). It is well-established that the comparator for a direct discrimination claim must have the same abilities and other relevant circumstances as the claimant, other than the fact of disability. Whilst Mr Kennedy maintained that the correct comparison was with an active employee, who was able to perform his work duties and received a salary for doing so, such a position is inconsistent with section 23 EQA (para 77 above) and the caselaw. The correct comparison would be with an employee who was not disabled but who was not in active employment. However, the claimant’s direct discrimination claim is dependent upon the flawed comparison that he seeks to make (paras 18 and 20 above).

I will deal firstly with the way that the indirect discrimination case was pleaded and advanced (para 21 above). Mr Kennedy is incorrect to submit that indirect discrimination does not involve a comparison. The statutory definition in section 19 EQA (para 64 above) requires a comparison to be drawn between the impact of the provision, criterion or practice upon two groups to whom it is applied, namely those persons who share the relevant protected characteristic with the claimant and those persons who do not share the relevant protected characteristic. As with direct discrimination, section 23 EQA requires that in an indirect discrimination case, there must be no material difference between the circumstances relating to the two comparator groups (para 77 above). Accordingly, the EJ’s analysis as to why it was inappropriate for the claimant to compare himself to those employees who were able to perform their work duties and received a salary for doing so, was fatal for the indirect discrimination, as well as for the direct discrimination case.

Additionally, there is an even more fundamental reason why the indirect discrimination claim has no reasonable prospects of success. An indirect discrimination claim can only arise where the alleged discriminator applies, or would apply, the provision, criterion or practice to both the claimant’s group and the comparator group who do not share the relevant protected characteristic. However, in this instance the complaint was about the absence of an annual salary review and consequential salary increase for disabled employees who were in the Disability Plan. The whole thrust of the complaint was that disabled employees in the Plan were treated in an adverse way that was not applied to non-disabled employees; complaints of differential treatment are not complaints of indirect discrimination.

I turn to the disability related discrimination complaint. I have summarised how that claim was put at para 17 above. In short, the “unfavourable treatment” relied upon was the absence of annual salary reviews (and the consequential lack of increases in the level of disability salary payments). At para 44 of his reasoning, the EJ referred to “detriment caused by something arising from disability” rather than to unfavourable treatment because of something arising in consequence of disability (para 37 above), but it is apparent that he was addressing the section 15 claim at this stage. It is also clear from his reasoning that the EJ rejected the proposition that there had been detrimental treatment as he considered that, viewed as a whole, the Disability Plan provided the claimant with “a very substantial benefit” and that the matters complained of by him were integral features of the Disability Plan that should not be viewed independently.

Accordingly, and contrary to the claimant’s contentions, the EJ did address the prospects of success of this claim. The real question is whether there was any error of law in the EJ’s approach, which involved looking at the benefits conferred by the Disability Plan as a whole, rather than considering the absence of annual salary reviews in isolation.

I have summarised the relevant authorities at paras 67 – 74 above. It is quite clear to me that the present circumstances fell on the Williams, rather than on the Parsons, side of the line. It would be wholly unrealistic, for the purposes of a section 15 complaint, to isolate the absence of annual salary reviews from the generous provisions of the Disability Plan, an advantage which was only open to the claimant because he met the eligibility criteria as a result of his long-term disability. The terms of the Disability Plan were inextricably interlinked; the discretionary nature of the reviews was a facet of a scheme under which employees who were unlikely to be able to work again received disability salary payments potentially right up until their date of retirement. As in Williams, Cowie and McAllister, this is simply a complaint that the particular provision that was made for disabled employees could have been on an even more generous scale. By contrast, in Parsons, it was not the operation of a facet of a disability scheme that was in issue, rather it was the fact that the Chief Constable had tried to disadvantage the claimants in respect of a voluntary retirement scheme applicable to all, because of separate payments that they would receive under the disability pension scheme (para 69 above).

Accordingly, neither the indirect discrimination claim nor the disability related discrimination claim had reasonable prospects of success and the ET did not err in striking them out.

For the reasons set out above, I decline to grant the claimant permission to amend Ground 2 and I dismiss all three of the grounds of appeal. The appeal therefore fails.