UK Employment Law Coffee Break: General election, future claims and settlement agreements, and AI and workers' rights

What does the general election mean for employers?

Our latest Insight looks at the employment, immigration and pensions implications of a new government after the general election on 4 July. While for employers, a re-elected Conservative government is unlikely to bring any significant surprises, a newly elected Labour government would see a period of substantial employment law reform. While Labour has reassured employers that it will be consulting on its proposals before legislation is introduced, employers should start thinking ahead now to the legal and practical implications of Labour's proposals and their potential impact on the workplace. 

We will be running an "Election Special – The Road Ahead for Work and HR" webinar on Tuesday 9 July at 09:30 with HR World and sponsors Maru Search & Consultancy (Hannah Waddington) looking at what the next government has on offer. To join us, please register now.

EAT rules that a settlement agreement validly waived future claims arising during 'inactive' employment 

We looked earlier at a decision of the Inner House of the Scottish Court of Session (Bathgate) which held that section 147 Equality Act does not exclude the settlement of future claims provided the types of claim are clearly identified and the objective meaning of the words used is such as to encompass settlement of the relevant claim.

The Employment Appeal Tribunal (EAT) has now applied this to a decision to strike out a claimant's discrimination claims on the basis that they were precluded by the terms of an earlier settlement agreement. 

Here, the claimant submitted a grievance while absent on ill health grounds which included a failure by his employer to transfer him to its disability plan. A compromise agreement (now termed settlement agreement) was entered into, providing that the claimant would transfer to the plan and receive disability salary payments at a specified level. The claimant also waived his right to bring various claims, including future claims "connected to" his grievance or "arising from" his transfer to the disability plan. Subsequently, the claimant brought disability discrimination claims against his employer on the basis that he had not received any salary review whilst on the plan and his annual leave payments were at a reduced rate compared to employees not on the plan. 

The EAT agreed with the tribunal that the claimant could not proceed with the claims; the waiver in the compromise agreement was valid to preclude him from bringing his subsequent disability discrimination claims. 

Following the Court of Session's analysis in Bathgate, there was nothing in the relevant statutory provisions precluding the settlement of future claims provided appropriately clear language was used and which was the case here. Statute did not impose any temporal limitation on the kinds of claims that can be settled; the statutory provisions regulate how parties enter into a statutory settlement agreement, rather than constraining the kinds of claims that can be settled. 

The EAT further noted that the fact that the claimant was still employed in this case (whereas the claimant in the Bathgate case had ended employment) was "a distinction without a difference". 

The EAT's clarification that a statutory settlement agreement can be used to settle unknown future claims is welcome; employers should, however, ensure that any wording is clear – in this case the claimant's future claims sat squarely within the specific waiver of claims as expressed in the compromise agreement. 

Here also the claimant's continuing employment was "inactive" to enable him to benefit from the plan. It may be more difficult for an employer to rely on a future waiver where employment is still active and the waiver seeks to cover unrelated claims; while the EAT did not comment specifically on this, the tribunal decision noted that "there is a difference between settling claims that might arise in the future on the same basis to new future claims. It would be remarkable if a person the victim of a sexual harassment at work could settle a claim on the basis that no claim could be brought for future sexual harassment. That would leave such an individual at risk of sexual harassment with no remedy. I see it as entirely different to come to an agreement where the Claimant achieved his main aim, to be transferred to the Plan and to settle his holiday pay claim, only for the Respondent to be faced with a new similar claim afterwards". As established by case law, the wording used to settle future claims must be "absolutely plain and unequivocal". 

The case is also a useful reminder of the need to set out clearly in any agreements related to disability benefits or permanent health insurance, the position on future pay rises. 

AI and workers' rights 

Technology continues to rapidly transform the workplace, with awareness growing around the challenges posed by algorithmic management and its potential impact on workers' rights. In the UK, the current government has looked to regulators (such as the ICO) to set out guidance for employers, as well as publishing most recently its own guidance on AI and recruitment. Labour has indicated that should it form the next government it will work with "workers and their trade unions, employers and experts" to consider the impact of AI on "work, jobs and skills". 

While neither the Conservative Party nor the Labour Party have so far put forward any specific proposals for legislation should they form the next government, this may be an evolving picture. In April 2024, the Trade Union Congress published its proposed draft Artificial Intelligence (Employment and Regulation) Bill, intended to create legal protections for workers and employers in relation to the use of AI (and which would create a broadly similar regime to that in the EU). 

A study published this month, conducted by academics from the Universities of Bristol and Southampton, has also highlighted a shift in various sectors where algorithms are now playing a crucial role in managing workers: including recruitment, day to day management, disciplinary actions and dismissals. The report highlights growing concerns over the "dehumanisation" of work and a need for legislative intervention to protect employees, with the report finding that current employment laws, such as those governing unfair dismissal and discrimination, are proving ineffective against the nuances of algorithmic management. 

Getting ready for the EU AI Act 

The legislative position in the UK is in contrast to that under the EU's AI Act, where the use of AI systems in relation to recruitment, work allocation, monitoring and appraisal and contract termination will be classified as "high risk" and subject to the full regulatory regime. Emotion-inference AI systems will be banned altogether in the workplace. We look here at the latest compliance deadlines for the EU AI Act. The EU Platform Workers Directive will also introduce further specific legislation in relation to the algorithmic management of platform workers. 

International employers will need to remain alert to how the laws, regulations and guidance on the use of AI in the workplace develop across jurisdictions in light of the EU AI Act. For example, on 23 April, the Italian Council of Ministers approved a bill to introduce provisions on AI in line with the EU AI Act, with articles 10 and 11 of the bill dedicated to the use of artificial intelligence in labour matters – read more here. 

We will be hosting a webinar on 28 June on "Getting ready for the EU AI Act" – please register here if you would like to attend and please get in touch with your usual Osborne Clarke contact to discuss how we can support you across your jurisdictions.