Compromise Agreements Under The Equality Act 2010

Thursday, November 18th, 2010

There appears to be a significant flaw in the new Equality Act 2010, in particular, relating to compromise agreements.

These agreements have, quite rightly, been subject to careful regulation as their purpose is essentially to prevent an employee from bringing claims against his or her employer, usually in return for a sum of money.

Section 144 of the Act makes compromise agreements void unless they fall into one of the exceptions listed in Section 147(3). One of these exceptions is met if the employee has received independent legal advice from a lawyer or trade union representative and they have “signed off” the agreement. The Act says, however, that any lawyer previously advising the employee is not an independent lawyer for these purposes and is therefore precluded from advising and signing off the compromise agreement. The same applies if the solicitor has acted in any way for the employer during the course of the complaint. This is a nonsense and clearly not what was intended. Unfortunately, a straight forward reading of the Act produces this result.

What to do? The consensus amongst employment lawyers is that any Court or Tribunal will have a purposive interpretation of this section and this means that they will read into it, the intention of Parliament when passing the legislation. In addition, this provision only affects discrimination claims and if the agreement is reached through ACAS, then the problem does not arise. And so, it would appear to be a ‘storm in a tea cup’, yet if anything, provides for a clear demonstration of the sloppy manner in which contemporary legislation can be scrutinised.

How can Hanne & Co help you?

Hanne & Co provide a bespoke service to both employers and employees. Our experience employment law team offer specialist advice on compromise agreements.

Hanne & Co offers an employers a competitive fixed fee of between £600 and £1000 to draft a compromise agreement.

Partner and Notary Public, David Taylor, heads the firm’s employment law department and has over 30 years experience in handling complex issues of employment law, having conducted his first tribunal in 1977. David has acted in many significant employment law disputes, representing both employers and employees.

About the firm

Hanne & Co is a leading law firm based in Clapham Junction. Established in 1898 we have a long history and outstanding reputation. As well as services in Employment Law, we are experts in Property (residential and commercial), Private Client and Wills, Family Law, Housing, Landlord and Tenant and Crime. We have a thriving practice with our staff dedicated and committed to providing a quality service at competitive rates.