Don’t Discriminate against Companies!
The Employment Appeal Tribunal, in case of EAD Solicitors LLP & Ors v Abrams, recently affirmed that a limited company can bring a claim of discrimination pursuant to the Equality Act 2010 (Equality Act) before an Employment Tribunal. The Court considered the coverage of “person” in the Equality Act, and concluded that a limited company can bring a claim as a legal person.
Background of the Case
Mr Abrams (Abrams) was once a member of EAD Solicitors LLP (LLP). As he approached retirement, Abrams set up a limited company which he was the sole director due to tax reasons. Afterwards, the limited company replaced Abrams as a member of the LLP and was entitled to receive the profit share Abrams would have received. In return, the limited company agreed to supply the services of an appropriate fee-earner to LLP, where the fee-earner was implicitly presumed to be Abrams himself.
Later on, the LLP rejected the service offer by the limited company on the ground of Abrams’ age and objected the company continuing as a member of the LLP. Therefore, Abrams made a claim of direct discrimination pursuant to the Equality Act. The Tribunal ruled that such claim could be brought by a limited company in the first instance.
Reasons for Ruling
The Employment Appeal Tribunal affirmed the decision in the first instance based on a number of reasons:
- According to Schedule 1 of the Interpretation Act, the word “person” should include “a body of person corporate or incorporate”. The Court held that such definition is applicable to the Equality Act when a person is subject to discrimination. Therefore, a limited company, as a legal person, was able to make a claim of direct discrimination.
- The Court recognized that the nine prohibited characteristics in s.4 of the Equality Act could only be applied to individuals. However, the essence of the Equality Act was to deal with discrimination based on these prohibited characteristics, instead of discrimination against individuals who possessed these prohibited characteristics. Hence, legal persons should not be barred from brining a claim.
- Besides, the Court reinforced its previous reason by referring to the difference in wording between the Disability Discrimination Act 1995 and the Equality Act. In the former legislation, the provision has an explicit link between the treatment and the disabled person, instead of any person. However, the Equality Act does not include such a link, which means that the legislature intends to expand the scope of the protection of the clause.
- Finally, the Court ruled that there is no contrary intention shown in the Equality Act that the “person” being discriminated cannot carry the meaning of a legal person.
First of all, the case is a strong affirmation of the trite law that limited companies exist as separate entities or as legal persons in the law. Hence, it is expected that they can act as all natural persons unless contrary intention is found in the legislation.
Besides, even though the ruling does not include other forms of business corporations, it is anticipated that most of them can launch a claim of direct discrimination as well. Apart from interpreting the word “person”, the Court relied heavily on her understanding of the essence of the Equality Act being the elimination of discrimination or detrimental treatment based on prohibited grounds instead of simply protecting certain individuals that are treated differently based on these grounds. Therefore, it is very likely that the Court will also allow all other legal persons or entities to launch a claim of direct discrimination in order to uphold the essence of the Equality Act.
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