Monday, July 09, 2012

Compromising settlements?

I commend the excellent blogpost on this link ( for highlighting the utter absurdity of changing the name of "compromise agreements" to "settlement agreements", as proposed by lause 16 of the Enterprise and Regulatory Reform Bill.

There's a lot not to like about compromise agreements, but their name isn't part of the problem! They were introduced in 1993 by a previous Tory Government to provide a watertight way for employers to ensure that workers accepting a financial settlement were giving up their legal rights to bring any claims to an employment tribunal (or, for that matter, elsewhere).

Now they are an opportunity for firms of solicitors to make money (£350 plus VAT is pretty standard) for the old rope of advising workers of the rights that they are giving up. Ironically, the same service can still be provided free of charge to either party in the public sector by Conciliation Officers employed by the Advisory, Conciliation and Arbitration Service (ACAS) - and with the same legally binding effect. What you call the privatised alternative to ACAS makes no real difference.

The more serious problem facing workers seeking trade union support for employment-related litigation arises, however, precisely from the domination of employment tribunals by lawyers of which the prevalence of compromise agreements is just one symptom.

Driven by the imperative to keep down the costs of professional indemnity insurance, trade unions increasingly (over the past decade or more) have "outsourced" actual representation to solicitors (who thereby inherit the liability and hence the costs of indemnity insurance).

Cases are supported only where a prior "merits assessment" indicates a "reasonable prospect of success", meaning that marginal (or inadequately prepared and presented) cases are unlikely to be supported.

I've blogged before about my concern that this can weaken the efficacy and collective strength of our movement (, but a worse flaw is exposed if workers, having been turned down by the union, try their chances unrepresented.

Employers, who are of course wise to the arrangements we make to represent workers against them, are handed a useful argument with which to seek to intimidate unrepresented claimants into withdrawing their claims in these circumstances - because they can infer that the unrepresented claimants previously supported by a trade union have probably had legal advice (even if only indirectly) that their claim lacks a "reasonable prospect of success."

In these circumstances claimants probably won't even be offered the opportunity to sign away any rights, whether they do so with a "settlement agreement" or a "compromise agreement", or even through ACAS. Knowing that a claimant who pursues their claim in spite of adverse legal advice is at greater risk of an award of costs against them, employers can try to cajole workers into abandoning claims and thereby escape scrutiny of their actions in a tribunal, assisted by the very arrangements made by the trade union to secure legal advice and support for members.

We need to reconsider what we're doing here.

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