Compromise Corrected

February 16th, 2012 by Daniel Stilitz KC

With the Equality Act 2010 (Amendment) Order 2012 (“the Regulations”) the Government has, somewhat belatedly, amended the compromise provisions contained in the Equality Act 2010 (“the EA”).  Section 147 of the EA sets out the conditions which must be fulfilled in order for a settlement agreement compromising a discrimination claim to be a “qualifying compromise contract”.  Only a “qualifying compromise contract” is effective to compromise a claim brought under the EA.

One of the stipulated conditions is that the complainant has, before entering into the contract, received advice from an “independent advisor” about its terms and effect (section 147(3)(c)).  Unfortunately, the definition of “independent advisor” was poorly drafted.  It excluded (at sections 147(5)(a) and (d)) “a person who is acting for a person who is party to the contract or the complainant” from being a qualifying “independent advisor”.  On a narrow, literal reading, this definition is wholly self-defeating, since it prevents a lawyer or other representative who is advising the complainant from providing the requisite advice for the purposes of the compromise agreement.

Most took the view that this construction of the section was so manifestly absurd that no court or tribunal would countenance it.  However, written advice obtained by the Law Society suggested that section 147 might indeed be ineffective.  This naturally made those advising the parties to discrimination complaints and their advisors somewhat nervous.

The Government has finally rectified the problem with the introduction of the Regulations.  Now, only persons who are acting for “a person who is a party to the contract or the complaint (other than the complainant)” are excluded from the definition of “independent advisor” under section 147(5)(d) of the EA (see regulation 2(3) of the Regulations, amending section 147(5)(a) of the EA).  This is clearly what was intended all along.

The Regulations will come into force on 6 April 2012.  However, since the Explanatory Note to the Regulations makes clear that the amendment has been introduced merely to “clarify” that a complainant’s legal adviser may be an “independent advisor”, it would perhaps be wrong to assume that the section is defective as it stands.


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