Compromise Agreement UK

The EAT case of Linda McWilliam & Others is a useful decision for any employers facing mass claims (in this case in respect of equal pay but could apply equally to redundancy etc) when they wish to direct employees to specific adviser(s) to sign off on the compromise agreements.  In this scenario, is the adviser truly independent or actually acting in the matter for the employer?

In this case, the Council anticipated thousands of equal pay claims and agreed settlement proposals with the union.  They then appointed a panel of six firms of solicitors to act for the individuals.  As a group, the employees attended a PowerPoint presentation from one of the solicitors and then had individual meetings with other solicitors during which compromise agreements were signed.  The question before the Tribunal was whether the employees received independent advice (a pre-requisite for the agreement to be valid).

The EAT focused on the fact that the statutory requirement is for an employee to receive independent advice as to the ‘terms and effect of the proposed agreement’ and does not require the adviser to offer a view as to whether the deal is or is not a good one.  As such, the employees did receive advice from their own identified adviser at individual meetings as to the terms and effect of the agreements and information from the group presentation was  incorporated into the meetings.  The fact that the Respondent appointed the solicitors and such solicitors agreed between themselves how matters would be handled before making contact with the employees did not prevent the solicitors from being independent.

Take note:

One point here to be aware of (for any advisers reading) is the EAT’s reference to the fact that the individual solicitors did attend the group presentation.  It was therefore found that they knew exactly what information had been provided and could reference this at the individual meetings.  The situation may be different if the solicitors had not attended the group meeting and then ‘rubber stamped’ the agreements at individual one to one’s.

The decision is also useful as confirmation that to be enforceable, an employee does not have to have articulated their complaint before the agreement was offered.  What matters is whether it is apparent to the employer (or the employee) that there is a potential claim.  It does not matter whether or not there has been a history of communication or dialogue about the complaint.