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The Equality Act & Compromise Agreements

Most employment solicitors welcome the Equality Act’s attempts to harmonise and simplify discrimination law and remove inconsistencies. However, there are concerns about the ambiguity of Section 147 and the implications for Compromise Agreements.

This now famed section seems to suggest a solicitor or trade union adviser instructed by an employee prior to a Compromise Agreement being produced is precluded from advising and signing off the Compromise Agreement as they are not an ‘independent legal adviser’ for the purposes of the Act. The same applies if the solicitor has acted in any way for the employer during the course of the complaint.

As Laurie Anstis, an associate solicitor with Boyes Turner, notes in his post Compromise Agreements and the Equality Act 2010:

“…a literal interpretation of these provisions leads only to one conclusion – that a lawyer acting for an employee cannot be an ‘independent adviser’ for the purposes of advising on a compromise agreement under the Equality Act.”

And he goes on:

“Since any lawyer consulted by the employee might be said to be acting for them, this leads to the absurd conclusion that there is no lawyer who can validly count as an independent adviser. Immediately they start to advise the employee, they will be ‘acting for’ the employee and no longer independent.”

This and competing interpretations of the Equality Act’s stipulations in regard to Compromise Agreements have caused much debate. For its part, the Government Equalities Office says the situation remains unchanged. So, a solicitor who has advised a client in respect of an action can advise on a Compromise Agreement.

But the Law Society is not convinced. Its barrister has advised the Government’s interpretation is incorrect.

Head of Cloisters Robin Alan QC disagrees with the Law Society and believes the Equality Act 2010 can be read as meaning no change. His analysis of the offending clauses is that they are merely trying to ensure the independent adviser is not acting for another party – or person connected with another party – which would be a conflict of interest and so undermine the adviser’s independence.

However, he does go on to recommend caution where huge amounts of money are at stake. As a precaution he advises using Acas as the Equality Act 2010 appears to allow for a previous adviser to be involved where the contract is made with the help of an Acas conciliation officer using a COT 3 Agreement rather than a Compromise Agreement.

However, given the huge increase in cases being lodged at the Tribunal and Acas officers’ immense workload, could they help quickly enough to meet the limitation dates associated with these type of claims?

Daniel Barnett on the other hand recommends a more pragmatic approach. Commenting on Laurie Anstis’ post, he says:

“Here’s what I’ve advised a solicitor (advising an employee) to do to avoid a professional negligence claim: tell them there is a theoretical loophole which might mean the employer can try to get out of the agreement but it’s very unlikely any employer will try, especially if they’ve paid over the money. Any court asked to order that the money be returned to an employer would be very reluctant to find there was no consideration for the Compromise Agreement; even if the consideration is as trivial as going and consulting a solicitor.

“If advising an employer worried about having a claim brought despite the employee having signed a Compromise Agreement, my view is that (a) any tribunal will adopt a purposive approach of s147 (okay, a re-writing) to find that the Compromise Agreement is binding; and (b) any ET1 would be struck out under rule 18(5) of the Procedural Regs as being an abuse of process.”

So for now the debate goes on. The Law Society has notified the Home Secretary of its concerns and has requested an urgent meeting with the Government Equalities Office which in turn is said to be considering publishing a further clarification.

For all busy solicitors dealing with five or six Compromise Agreements a week, this matter needs to be resolved as a matter of urgency.

About the author

Fiona Martin

fiona-martin

I lead the employment teams in our solicitors’ offices in Brighton, Eastbourne, Shoreham, Gatwick & Crawley and Croydon. As founding Director, I am also responsible for the firm’s marketing. I provide expert opinion for the press, disseminate employment law round-ups through my employment law blog and campaign on important issues such as maternity and disability discrimination. I train employers and HR professionals to be best practice managers and I am also a CEDR accredited mediator.

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