Posted: Monday 20 February 2012
Compromise Agreements - Equality Act Issue To Be Resolved
Although it only entered into force in 2010, the Equality Act has already been subject to criticism over the drafting of one of its provisions, section 147, which relates to compromise agreements.
Under the Equality Act, in order for a compromise agreement to be validly constituted, the complainant must have received independent advice from an ‘independent advisor’. The issue which has resulted in a fair bit of debate relates to the fact that a literal interpretation of section 147 means that a person could not be an ‘independent advisor’ if they were also advising the employee about a possible claim or the terms of a compromise agreement.
Despite somewhat unconvincing assurances from the Government that there was in fact no drafting error if the section was ‘read as a whole’, there continued to be speculation over the interpretation of section 147.
The passing of the Equality Act 2010 (Amendment) Order 2012, which comes into effect on 6 April this year, will amend section 147 clarifying that an individual’s lawyer can be an independent advisor in terms of section 147.
In practice (due, in particular, to the use of warranties and other appropriate drafting within compromise agreements and also the psychology of settlement) this has not presented much of an issue but it is good to see the ambiguity being cleared up.
Of more interest will be the Government's proposals to simplify compromise agreements. This is with a view to enabling the employer and the employee to reach a no-fault settlement in exchange for an agreement not to bring future claims with a standard text “settlement agreement” suggested (good luck with that!).
As yet the Government has not commenced this consultation exercise and it may be that it will be dealt with at the same time as the consultation on "protected conversations".
Expect to hear more on this in due course.
