A significant drafting error in the Equality Act 2010 has
potentially rendered compromise agreements ineffective as a means
of settling claims for discrimination or equal pay brought under
the Act.
As has always been the case with compromise agreements, in order
to be effective the employee must first receive advice from an
"independent adviser". Rather bizarrely, however, the provisions in
the Equality Act defining who can act as independent adviser in
such circumstances specifically prohibit anyone who has acted for
the employee in the matter in dispute from acting as the employee's
independent adviser. Taken at face value this means that a
solicitor or other adviser advising an employee on the terms of the
employee's claim(s) cannot also advise the employee on any proposed
compromise agreement.
There is a real risk that compromise agreements will be invalid
in relation to claims under the 2010 Act.
Some steps may be taken in the drafting of compromise agreements
to reduce or negate the effect of this drafting blunder, but great
care will require to be taken in using compromise agreements in the
near future, until parliament can correct the legislation, or the
courts give definitive guidance. Employers may also wish to
consider utilising ACAS conciliated COT3 agreements to settle
discrimination claims, which are not affected by this
provision.
IMPORTANT - In light of the above please note that we have
amended our standard compromise agreement and older versions must
not be used. Please contact a member of our employment law team for
advice in relation to any new compromise agreements to be entered
into.