Chris Milsom considers the recent EAT Judgment which decides that a limited company can sue for discrimination under the Equality Act 2010 below:
In this month’s Employment Law Association Briefing (Blurred Lines? ‘Association’, ‘Direct’ and ‘Indirect’ following CHEZ) I addressed the controversial decision on associative discrimination of CHEZ Razpredelenie Bulgaria Ad v Komisia Za Zashtita Ot Diskriminatsia  IRLR 746. I suggested that one observation in the opinion of AG Kokott at  warranted further attention on another day (emphasis added):-
“…it is clear that economically active persons are also exposed in various ways to the risk of suffering discrimination based on certain personal characteristics, in particular on the grounds listed in Article 21 of the Charter of Fundamental Rights and in the anti-discrimination Directives. Consequently, the prohibition of discrimination, as given substance in Directive 2000/43, expressly also applies in employment and occupation, as can be seen not least from the definition of its scope in Article 3(1)(a) to (d) of the Directive. Even legal persons can enjoy protection against discrimination where necessary.”
Before the dust has even settled on the CJEU’s decision the EAT has spoken in EAD Solicitors LLP and ors v Abrams UKEAT/0054/15/DM. Its practical effects may well be considerable. The Equality Act 2010 is very likely to find its way into civil disputes far more frequently going forward.
Mr Abrams, aged 62, set up a limited company on approaching retirement (L Co) and was a member of an LLP. L Co was essentially the Claimant below. On setting up that limited company as sole director he replaced himself as member of the LLP with L Co. L Co, as member of the LLP, was entitled to receive the same profit share as formerly enjoyed by Mr Abrams and conversely agreed to supply the services of an appropriate fee-earner to the LLP. Whilst Mr Abrams was the obvious choice to provide these services there was no obligation upon him to do so. He was neither an employee nor a worker; nor was there any contract between him and the LLP.
It had been agreed between the LLP and Mr Abrams that had he continued to be a member of the LLP he would retire at a stipulated age. The twist in the tail is that on Mr Abrams attaining that age the LLP objected to L Co offering Mr Abrams’ services and further objected to L Co continuing as a member of the LLP.
The Basic Framework
A few words on the legislative background. Section 4 LLP Act 2000 permits corporate bodies to be members of an LLP. Section 45(2) of the Equality Act 2010, 10 years later, provides as follows:
(2) An LLP(A) must not discriminate against a member (B)
(a) as to the terms on which B is a member…
(c) by expelling B;
(d) by subjecting B to any other detriment.
Such claims, by reason of s120(1)(a), can only be pursued in the ET. Discrimination bears its usual meaning including, for these purposes, that found at s.13:
(1) A person (A) discriminates against another (B) if, because of a protected characteristic, A treats B less favourably than A treats or would treat others.
“A person,” according to Schedule 1 of the Interpretation Act 1978, includes “a body of persons corporate or unincorporate.” It is entirely uncontroversial in practice that person “A” extends to a corporate person: hence the vast majority of ET claims against employing entities rather than individual persons. But what of person “B?”
As Langstaff P held, what is sauce for the goose is sauce for the gander. It does not matter than a limited company – or any other corporate person for that matter – does not possess the individual protected characteristic in question (whether age, as in this case, or any other). This is because “the Equality Act does not deal with individuals on the basis of their protected characteristics but identifies discrimination as being detrimental treatment caused by the protected characteristic or related to it. Detrimental treatment can be given to any person, whether that person is natural or legal. There is no reason to restrict the class of those who can suffer a detriment if what is being complained of, and that which the statute seeks to avoid, is a detriment being suffered because of an individual’s protected characteristic.”
In short, the focus is not so much on the identity of the particular claimant but on whether any disadvantage is sustained by reason of a protected characteristic of an individual. Enter Coleman, CHEZ et al. The fact that Mrs Coleman did not possess the protected characteristic whereas a corporate person could never possess a protected characteristic was, in Langstaff P’s eyes, a distinction without a difference.
Nor were there any conceptual difficulties in identifying other hypothetical forms of associative discrimination experienced by legal persons. Per Langstaff P at :
“It seems to be that there are any number of examples that may be given of treatment which comes within the scope of this question that is plainly contrary to public policy. Examples might be a company being shunned commercially because it is seen to employ a Jewish or ethnic workforce; a company that loses a contract or suffers a detriment because of pursuing an avowedly Roman Catholic ethic; one that suffered treatment because of its financial support for the Conservative Party or, say, for Islamic education; or one that was deliberately not favoured because it offered opportunities to those who had specific disabilities that were unattractive to some would-be contractors or because, let us suppose, of the openly gay stance of the chief executive. These…are all examples of the way in which one person, natural or legal, may suffer because of the protected characteristic of another when public policy tends to the view that there is no proper basis for any such treatment.”
A straightforward and incontrovertible exercise in statutory interpretation leads to potentially seismic consequences. The Equality Act enjoys a wide remit: premises; services and public functions; transport; associations; education. Its remit is widened still further by the evolving concept of associative discrimination to include complaints of indirect discrimination by association. In CHEZ, for example, the Claimant could just as easily have been a corporate entity operating in the predominantly Roma district and paying higher electricity bills rather than an individual shop-keeper. It would follow that there is nothing to prevent a company from pursuing a complaint of indirect discrimination where a PCP disadvantages a proportion of its clientele which falls within one of the protected characteristics provided such a measure would fall within the arena of the Equality Act. Such claims could also serve as a handy tool for campaigning organisations or charities provided that some measure of disadvantage to them could be established. It is time for equality practitioners – and “legal persons” - to become far more creative.