Employers and employees have to enter into a compromise agreement or an Acas conciliated agreement in order to exclude or limit employees’ statutory employment rights. In Clyde & Co LLP v van Winkelhof, the High Court said the employer could not rely on a members’ agreement which provided for binding arbitration, thereby precluding members from bringing Tribunal claims.
Ms van Winkelhof joined Clyde & Co in February 2010 as a senior equity partner after the buy-out of the firm in which she had been a partner. On 1 February 2010, she entered into a deed of adherence to Clyde’s members’ agreement dated 28 June 2008, which was subsequently amended in June 2010.
Clause 41(1), which applied to outgoing members as well as to existing members, stipulated that any disputes arising between members or between members and the partnership, would be dealt with initially by the management board.
If the board could not resolve the dispute, then, under paragraph 41.2, the firm could refer the complaint to arbitration which would act as the final arbiter in the matter.
In January 2011, after being expelled from membership, Ms van Winkelhof lodged a Tribunal claim for discrimination on grounds of her sex and/or pregnancy as well as making a whistleblowing claim.
The firm applied for an injunction to “stay” (suspend) her Tribunal claim so that the compulsory arbitration clause could take effect.
Section 203(1) of the 1996 Employment Rights Act (ERA) states that any provision in an agreement (whether a contract or otherwise) is void if it purports to exclude or limit any provision of the Act or to stop someone from bringing proceedings in a Tribunal.
Section 203(2) ERA states that (1) does not apply to any agreement to refrain from instituting or continuing proceedings where a conciliation officer has taken action under section 18 of the Employment Tribunals Act 1996.
Section 144 (1) of the Equality Act (EA) states that nobody can enforce a term of a contract that would operate in their favour if it purports to exclude or limit a provision of the Act, unless it was made with the assistance of a conciliation officer or was a “qualifying compromise contract”.
High Court decision
The High Court judge said that the key question was whether clause 41 of the members’ agreement was rendered void by section 203 of the ERA and section 144 of the EA.
In her view, the provision in clause 41 that arbitration had to be the final resolution of a member's dispute (subject only to an appeal on a question of law) did preclude the possibility of a member making a Tribunal claim.
Accordingly, she said that “unless freely entered into where, as provided by ERA Section 203(2)(e), a conciliation officer has taken action under Section 18 of the Employment Tribunals Act 1996, in my judgment such an agreement would be rendered unenforceable by Section 203”.
She therefore refused the company an injunction.