You are probably so used to seeing Advisor’s Certificates on the back of Settlement Agreements that you probably don’t give them a huge amount of thought.  You are probably vaguely aware that in order to be a binding Settlement Agreement, the employee has to also have the Agreement signed off by a “relevant independent advisor”.  This person is defined in Section 203(3A) of the Employment Rights Act 1996 but broadly is a solicitor, a barrister or a trade union official, provided they have either insurance cover or an indemnity provided for members of their profession eg. from the trade union.  In the majority of cases people usually use a solicitor, with the odd trade union representative and the occasional barrister but a Legal Executive is also OK so long as they are regulated by their trade body ILEX.

You may not be aware but the Solicitors Regulation Authority (SRA) brought out new standards and regulations in 2019 that created a new category of solicitor.  It is now possible to have a solicitor who works in an unregulated organisation (as opposed to a law firm that is regulated by the SRA) or to be freelance solicitor, and a ‘freelance solicitor’ can either offer reserved services (this is the name for a specific kind of service that includes things like litigation), and a freelance solicitor who only offers unreserved services.  The question then becomes, can such a solicitor qualify as the relevant independent advisor for the purposes of the Settlement Agreement?

There will be circumstances in which this new breed of ‘freelance’ solicitor can operate without needing to have their practice authorised (where they are providing non-reserved services), they wouldn’t be an authorised person for the purposes of the Employment Rights Act.  They are also likely to have different insurance arrangements.  

This does mean that employers should no longer take it for granted that the person representing an employee in a given circumstance is ultimately able to sign off the agreement in a form which makes it legally binding, just because they use the title solicitor.  In particular, when you are advising staff of the need to obtain independent legal advice, you may wish to edit any letters that you use to emphasise the requirement that they obtain legal advice from a solicitor who qualifies as a relevant independent advisor for the purposes of the Employment Rights Act.  The most simple way to explain this to an employee is probably to refer them to the fact that the solicitor needs to work in a Solicitors Regulation Authority regulated firm with adequate insurance.

As part of the employer’s due diligence they should look at the purported solicitors headed notepaper and check for the wording that law firms are required to state, namely, that they are authorised and regulated by the SRA or indeed check the website, again looking for that information, because any firm that is authorised and regulated by the SRA has to display this in a prominent position on their website (usually at the bottom of the first page).

Refreshing Law Limited

June 2020