Back at the end of July we noted the decision of the Liverpool Employment Tribunal in Gerry Abrams Limited v. EAD Solicitors LLP that a limited company could claim age discrimination.  That rather surprising conclusion then went off to the Employment Appeal Tribunal which has just found in unassailably clear terms that this is correct – a company can indeed claim to have been discriminated against through the protected characteristic of an individual associated with it. 

In brief, a company supplied the services of an individual to a firm of lawyers.  The firm sought to discontinue that arrangement when the individual reached its normal retiring age.  The company said that this was less favourable treatment arising from the protected characteristic (age) of the individual, and it has now been given a clear green light to proceed with that claim.

The thinking behind this conclusion is very simple.  Section 13(1) Equality Act 2010 says that “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”.  We have long accepted without question that person A, often the employer, can be a corporate entity, but it has not really been considered before whether B has to be the same.  The Employment Appeal Tribunal found in the Interpretation Act 1978 a reference to “person” as including “a body of persons corporate or incorporate“.  In addition, since we know that A can be a company, said the Judge, you would expect some clear indication if Parliament had intended that B had to be a natural person.

That was basically it.  Add to that the absence of any required link in section 13 between B and the protected characteristic (it says “a” protected characteristic, not “B’s”) and you can skip direct to companies having protection against discrimination on the grounds of the protected characteristics of any individual.  It appears from the decision that the Judge considered there to be public policy considerations behind this also – if we accept that discrimination on grounds of the Equality Act protected characteristics is bad, why allow it against companies any more than against natural people?

Part of the answer to this may lie in the potential for abuse which this decision creates.  The EAT Judge said that this decision does not give rise to a whole new class of discrimination, but I think with respect that he may under-estimate the problem here.  This particular ruling relates to a personal services company where the individual whose protected characteristic founds the claim is very obvious, but there is nothing in the EAT’s arguments which limits its application to PSCs or prevents its use in the wider commercial world.  The decision opens up to companies essentially the same rights to sue as the law grants to job candidates – if as either a business or a private individual I choose not to do business with your company, that company can sue me, contending that I did not buy from it because I didn’t like what I saw of the age, colour, religion, disability, etc. of its representative.  The EAT refers by way of examples to not using a company because of the perceived race or faith of its workforce, because it had expressed financial support for the Conservatives or an Islamic education body or because its CEO was openly gay.  Actually that is over-simplifying things.  Because of the breadth of section 13, the protected characteristic could easily be that of a sole employee, not a majority of staff  or high-profile figure within the company.

An unscrupulous company could easily become a serial claimant on the same way as those spurious job applicants, firing out allegations of discriminatory failure–to-contract in the knowledge that most companies would sooner pay a few thousand pounds tax free by way of settlement than have to go through the tortured and costly business of baring their whole procurement process in the Employment Tribunal.  It is also not just corporates who may be victims of this – the threat to a private individual barricaded in his house against companies claiming that he would have bought their insurance, dishcloths or double-glazing had the representative not been of an ethnic minority, foreign-accented, female, disabled, etc., is a real one.  Add a “without prejudice” request for £500 to go away and you create a whole new avenue for exploitation of vulnerable people.

This is clearly not what the discrimination legislation was drafted for.  While the EAT’s decision has a certain horrible logic to it, that does not make it right or sensible.  It ought to be possible to conclude that the legislators’ failure to make a specific point is not because it had an express intention to allow or ban it but because the idea that a corporate could be able to claim age or race or pregnancy discrimination had simply been seen as too silly to need explicit provision in law.

Lessons for HR

Unless and until there is some clarification of the scope of this decision in practice, it will be wise to keep the same notes of why you do not continue or contract with a particular company (whether a PSC for an individual or a supplier of HR services such as payroll, recruitment, IT or outplacement) as you would of why you do not recruit or retain a particular employee.  It may also be wise to get Procurement to take the same precautions.