It is a well-established principle that a company is able to discriminate against an individual but the case of EAD Solicitors LLP and others v Abrams UKEAT/0054/15 is the first case to consider whether companies can be discriminated against and can therefore bring discrimination claims.
Mr Abrams was a member/partner of EAD Solicitors LLP (EAD) and was due to retire at age 62. On approaching his retirement, Mr Abrams set up a limited company for tax reasons, of which he was the sole director and principal shareholder. He then used the company to take his place as a member of EAD. The company took the profit share that Mr Abrams would have been entitled to and supplied fee-earner services to EAD. Mr Abrams was therefore neither an employee nor a worker of EAD, nor did he have a continuing contractual relationship with it.
When Mr Abrams reached 62 and advised EAD that he, or rather his company, would not be stepping down as a member of the partnership, EAD took the decision to terminate the company’s membership of the LLP.
Mr Abrams and his company both brought claims of age discrimination against EAD and the employment tribunal had to decide as a preliminary point whether a company could claim discrimination.
Discrimination – a brief reminder
Under the Equality Act 2010 (the Act), a person is protected from discrimination as a result of less favourable treatment arising from a protected characteristic such as age (section 13). In addition, it is unlawful for an LLP to discriminate against a member on certain grounds, which again includes age (section 45). Neither of these elements requires that the person or member be a natural person.
Employment tribunal decision
The employment tribunal (ET) held that a company could be a claimant in a discrimination claim.
In particular, it was noted that the two sections of the Act mentioned above could apply to protect corporate entities as well as individuals. However, the ET stated that this would only be the case where “the corporation in question reflects the characteristics of one individual (or possibly the protected characteristics of more than one individual or a group of individuals) where the grounds upon which the actions taken towards the corporation are claimed to be based on the individual’s (or group’s) protected characteristics.”
EAD appealed this decision.
EAD argued that since only individuals can have a protected characteristic, only an individual could bring a discrimination claim. The EAT rejected this argument.
It held that the Act does not deal with individuals on the basis of their own protected characteristics but rather identifies discrimination as being detrimental treatment caused by a protected characteristic or related to it. Such detrimental treatment can be given to any person, whether natural or legal, and if it is because of a protected characteristic, it can form the basis of a discrimination claim. Therefore, it was held that there is nothing in the wording of the Act to prevent a corporation bringing a discrimination claim.
The EAT also pointed out that, under the Interpretation Act 1978, a 'person' includes a company, unless it was clear that the context provided otherwise. That was not the case here and therefore the claim of Mr Abrams’ company was allowed to proceed. It has been referred back to the ET.
Whether or not the claim will succeed is another matter. We will be keeping an eye on this case and we will report on the decision in due course.
In the meantime, this is a hugely important development for discrimination law, not just in the field of employment but in other fields too. In this regard, the EAT gave some interesting examples of how the decision could be extended to commercial and property transactions, relating to treatment contrary to public policy, for example:
- A company being shunned commercially because it is seen to employ a Jewish or ethnic workforce; or
- A company losing a contract because of the openly gay stance of a chief executive.
Employers should therefore take care not to discriminate because of a protected characteristic when selecting or determining arrangements with their contractors.
This decision also raises further issues around whether the right to protection against discrimination would be extended to indirect discrimination and how any award of injury to feelings could or would be made to a company.