Yesterday, the Employment Appeal Tribunal issued its Judgment in the case of McWilliam & Others v Glasgow City Council, in which the EAT considered the requirements outlined under Section 77 of the Sex Discrimination Act 1975 in relation to compromise agreements.
This is a significant decision for employers and for us at MacRoberts as Stephen Miller, Head of our Employment Group, acted for the City Council at all stages of this litigation.
Section 77 sets out the criteria which require to be met in order for a compromise agreement to be used as a valid and effective means of waiving claims arising under the Sex Discrimination Act and the Equal Pay Act. In particular, Section 77 stipulates that the compromise agreement must relate to a "particular complaint" and that the employee must receive "advice" from a "relevant independent adviser as to the terms and effect" of the agreement before it is entered into.
Upholding the Judgment of the Employment Tribunal in full, the EAT held that:
- the term "particular complaint" does not mean that there requires to be a claim lodged with an Employment Tribunal before that complaint can be waived under a compromise agreement. Further, the EAT held that the complaint does not even require to have been articulated by the employee prior to the agreement being entered into. Instead, it was held that the purpose of the "particular compliant" requirement is to see that there is adequate specification in the compromise agreement itself, so as to avoid the employee being asked to sign a blanket waiver of all possible claims he or she may have. What matters is that both parties know to which particular complaint the compromise agreement relates (i.e. both parties are aware that particular matter cannot be litigated in future). It does not matter whether or not there has been a history of dialogue or communication about the complaint.
- when advising the employee on the terms and effect of the compromise agreement, the independent adviser does not need to offer a view as to whether or not the deal on offer is a good one or whether or not the employee should accept the offer given his or her particular circumstances. That means that the adviser need not comment on the potential value of the claim or assess the likelihood of success. All that is required is that the employee is advised what the terms of the compromise agreement are and what they mean.
The EAT also upheld the Employment Tribunal's determination that the solicitors who had advised the Claimants on the terms and effect of their compromise agreements were "relevant independent advisers" and were not also "acting in the matter" for the City Council, even though their fees were paid by the City Council and they had attended a meeting with representatives of the City Council at which the logistics for mass advice sessions had been established.
Whilst this case relates to the requirements outlined under Section 77 of the Sex Discrimination Act only, those requirements are replicated in other statutory provisions regulating compromise agreements, including the Equality Act 2010. The requirements outlined under Section 77 are also substantially the same as those contained in the Employment Rights Act. As a result, the EAT's Judgment in this case is an extremely important one and provides valuable guidance as to the scope and extent of the advice an employee must receive before entering into any compromise agreement, if that agreement is to be valid and binding.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
