A recent employment law case is also a reminder for the need to regularly review existing business and commercial agreements.
This unusual case (Gerry Abrams Limited -v- EAD Solicitors LLP) highlights the need to review core business agreements periodically or when the business structure changes. It could also impact on how Limited Liability Partnerships (LLPs) treat member companies within their business and view the risks from potential associative discrimination claims.
Periodical reviews of member, partnership or shareholder agreements should be considered as good practice to ensure that they are up-to-date and operate as intended. Periodic reviews of these fundamental legal documents helps to protect the business and its owners by checking to see whether they are still ‘fit for purpose’ or whether they need to be amended to reflect a change in circumstances.
Background of this case
The case involved Mr Abrams, a member of EAD Solicitors LLP. Before he reached the retirement age stated in the LLP deed, he set up his own limited company, Gerry Abrams Limited, which then replaced him as a member of the LLP.
When Mr Abrams reached the LLP retirement age, EAD stopped paying fees to Gerry Abrams Limited – it had effectively been “retired” from the LLP.
Gerry Abrams Limited then issued a claim for associative discrimination arising out of age discrimination based on Mr Abrams’ age.
This claim relied on two aspects of the Equality Act 2010:
- The definition of “direct discrimination” in the Equality Act 2010
- The requirement that an LLP must not discriminate against any of its members.
The question of whether these could apply to the company was considered by the Liverpool Employment Tribunal, and it was decided that they could.
A hearing on the merits of the discrimination claim is now awaited. Few people would have predicted the claim brought by Mr Abrams or the Employment Tribunals reaction to it.
For more information on this or to discuss a review of your business agreements, please contact Peter Flowerday on 0115 9 101 316 or send him an email.
Posted on September 23, 2015
