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Compromise Agreements

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[Thanks to John Bowers QC of Littleton Chambers and Stephen Miller of MacRoberts for telling me this decision had been handed down]

It's an employment tribunal rather than appellate case, but sufficiently important to warrant reporting.

McWilliam & Others v Glasgow City Council is the first case to consider the requirements of section 77 of the Sex Discrimination Act 1975. Section 77 sets out the criteria for a valid compromise agreement and in particular the need for the complainant to receive independent advice as to the terms and effect of the proposed contract.

Most importantly, the vice-president of the Scottish employment tribunals, Employment Judge Walker, held that it is not necessary that the advice is such as would allow the complainant to make an informed decision. All that is required is that the complainant is advised what the terms of the compromise agreement are and what they mean. This would include the scope of the claims, what claims are being compromised, how any payment would be treated for tax purposes etc.. This is to be distinguished from an assessment of whether or not the agreement is a 'good deal'.

Other points decided were that:-

  • there is no requirement for a claim to be lodged with the ET before it can be compromised
  • the solicitors who agreed the compromise agreements were independent even though their fees were paid by the City Council and had attended a meeting at which the logistics for mass advice sessions had been set.