11 June 2015

Service companies can bring discrimination claims

We are used to individuals, rather than companies, bringing discrimination claims. But what does this mean for individuals who provide their services through their own service company? It is not uncommon for an LLP to have some corporate members; there are several tax advantages for individuals to pay themselves dividends through their own company rather than accept a profit share directly. This was the case for EAD Solicitors LLP. One of their solicitors, Garry Abrams, provided his services to EAD through his own company, Garry Abrams Ltd (GAL) which was a member of the LLP. It was a term of the LLP  agreement that members would retire at the end of the financial year in which they reached the age of 62. At the end of the year in which Mr Abrams turned 62, EAD stopped paying GAL its profit share. GAL then brought a claim of associative age discrimination. EAD attempted to have the claim struck out on the basis that a company cannot bring a claim under the Equal Pay Act 2010. The employment tribunal held that, because the company was a member of the LLP, it was entitled to bring a discrimination claim in its capacity as a member and the Employment Appeal Tribunal has recently agreed. If you are thinking of providing your services to an LLP through a service company (or already do so), this suggests you will not necessarily be giving up your discrimination rights.

Category: Blog