The rules relating to compromise agreements are notoriously technical. In a recent case the EAT has decided that a compromise agreement which aimed to settle “all claims past or future arising out of the termination of employment” only waived claims arising out of termination of the employee’s employment and did not waive claims which pre-dated termination.

The claimant was therefore entitled to bring proceedings in respect of those earlier claims.

Furthermore, the EAT ruled that the compromise agreement was not sufficient to compromise claims of race discrimination due to a further technicality relating to the drafting of the agreement.

This case serves as a warning to employers of the need to draft the wording of compromise agreements very carefully to avoid exposure to further claims.

Palihakkara v BT plc