Limited company can claim discrimination

The case concerned a member of a limited liability partnership, EAD. As Mr Abrams approached retirement he set up a limited company of which he was the sole director. This company replaced him as member of the LLP and took the profit share which he would have received, in return for which it supplied services to the LLP. There was no obligation on him personally to provide the services, albeit this was expected. He had no ongoing contractual relationship with the LLP.

The LLP became concerned about him providing services through the company beyond the date upon which he would ordinarily have retired. As such it objected to the limited company continuing to be a member of the LLP – which Mr Abrams considered gave rise to a direct age discrimination claim which he brought in the Tribunal under the Equality Act. He named himself as the First Claimant and the company as the Second Claimant.

As a preliminary issue the point about whether the limited company could bring a claim was considered. The Tribunal considered that the company could do so and on appeal by EAD to the EAT, the appeal was dismissed. The reason for this was that the EAT considered the Equality Act does not deal with individuals on the basis of their protected characteristics but, rather, identifies discrimination as treatment which is caused by a protected characteristic or related to it. There is well established case law on the matter of associative discrimination, where any person, whether an individual or a legal entity, may suffer detrimental treatment; and if the treatment is suffered because of an individual’s protected characteristic, this is covered by the Act. The EAT also referred to the Interpretation Act in respect of the interpretation of “person”, which can include a person corporate or incorporate. As there was nothing in the Equality Act to indicate that companies were excluded, the EAT considered that the use of “person” in the Equality Act could include a corporation. As such, the claim was allowed to proceed.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.