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Compromising discrimination claims

Some of you will be aware of the drafting issue in section 147 of the Equality Act 2010 which means that arguably a solicitor negotiating exit terms on behalf of an employee cannot also be their “independent adviser” for the purposes of a compromise agreement. If an employee has not been independently advised on the terms and effect of a compromise agreement, they will not have validly waived their potential claims against the employer. This has led to a practice of drafting provisions into compromise agreements to protect employers against this risk (e.g. requiring the employee to enter into a COT3 in the event that the waiver is found to be invalid).

The Equality Act 2010 is to be amended from 6th April 2012 to make it clear that an employee in a discrimination dispute who takes legal advice can then use the same lawyer to advise on a compromise agreement. The government does not accept that the original drafting was wrong, only that the amendment is needed to make the position clearer.

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