Feeds

Equality Act flaw 'undermines compromise agreements'

Outside lawyer requirement makes things tougher for employers

Bridging the IT gap between rising business demands and ageing tools

A flaw in the just-enacted Equality Act makes it impossible for an employer and an employee to settle all their differences through a compromise agreement, according to employment lawyers and the Law Society.

A compromise agreement is a contract through which an employee or ex-employee can settle an employee's statutory claims with an employer and agree not to take further action against it.

But a drafting error in the Equality Act, most of which came into force on 1 October 2010, undermines the ability of employers and individuals to settle discrimination claims by insisting that the lawyer who advises an employee is "independent".

"There is a fundamental error in the drafting of the Act which means that any compromise agreement which seeks to settle Equality Act claims existent from 1 October 2010 is potentially unenforceable," said Edward Goodwyn, an employment law expert at Pinsent Masons, the law firm behind OUT-LAW.COM. "The reason for this is that 'independent adviser' is defined in the Act in such a way that it excludes anyone who is acting for a party to the compromise agreement."

Goodwyn said that he would advise companies to use conciliation service ACAS (Advisory, Conciliation and Arbitration Service) to settle disputes or to use "claw back" provisions in any settlement to prevent later Equality Act claims against the terms of settlements.

Part of the settlement payments could also be delayed until after the period within which an ex-employee could take a claim, he said.

The Law Society, which represents solicitors in England and Wales, agrees that the law creates problems.

"The Law Society is aware that there is some ambiguity in the drafting of section 147 of the Equality Act which is likely to have an effect on the use and effectiveness of compromise agreements made under the Act," said a statement from the body. "The way this section is currently drafted suggests that a solicitor who was instructed by the employee prior to the production of the final agreement for consideration will be precluded from acting any further."

The Government Equalities Office (GEO), the government department responsible for equality policy, said that it believed that there was no problem with the law.

"The GEO and its legal team do not agree with the Law Society's interpretation of section 147(5) of the Equality Act 2010," said a spokesman. "However, we are aware of the society's concerns and are continuing to discuss the issue with them."

"The Government Equalities Office has stated that 'the situation that existed prior to passage of the Act' remains unchanged and, by implication, that a solicitor who had advised a client in respect of an action would also be able to provide advice on a compromise agreement," said the Law Society statement. "However, we have received advice from counsel which disagrees with this view."

"The advice indicates that a court or tribunal would construe section 147(5)(d) as meaning that a solicitor who was instructed by the employee prior to the production of the final contract for consideration, or who has acted in any way for the employee during the course of his complaint – even in a supporting role to the lead adviser perhaps as holiday cover – will be precluded from acting any further as an independent legal adviser in that compromise contract," the Society said.

"Advice from counsel also indicates that a solicitor to whom the client was referred solely for the purpose of advising on the agreement would not be able to provide such advice," it said. "The effect of this is that there is no way in which compromise agreements under the Equality Act can be made enforceable."

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

The smart choice: opportunity from uncertainty

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.