Partner loses appeal against age discrimination ruling

A former partner in an accountancy firm has lost his appeal against a ruling that he had brought an age discrimination claim out of time.

Joanne Stronach, Head of Employment and HR, reports on this recent case.

The case involved Philip Parr and MSR Partners LLP (formerly Moore Stephens LLP).

Parr had been an equity partner of the firm when it was Moore Stephens. The LLP Members’ Agreement provided for all partners to have a normal retirement age of 60, Moore Stephens having discretion to extend beyond that time on terms to be determined by the managing partner, in the event of there being a business need.

Parr wished to stay on after his normal retirement date of 30 April 2018.

In October 2017, the firm decided that he should continue for two years beyond that date but only as an ordinary non-equity partner.

A de-equitisation agreement was entered into providing for a change in Parr’s status, which took effect after 30 April 2018.

In September 2018, Parr learned of proposals to sell the business. He was informed that he was not entitled, as a non-equity partner, to a share in the proceeds of any sale. He brought a claim for direct age discrimination in the Employment Tribunal, alleging losses including in relation to the proceeds of the sale.

At a preliminary hearing, the tribunal held that the claim was in relation to a rule which had resulted in Parr’s demotion from equity partner to ordinary partner and was “conduct extending over a period” which was continuing at the date of presentation of the claim, so that it had been brought within the statutory time limit set out in the Equality Act 2010.

The Employment Appeal Tribunal held that the tribunal had erred in finding that Parr’s change in status had been brought about by the operation of a rule that continued to have effect after the agreement came into force and which amounted to continuing conduct.

It was because of a one-off act involving Moore Stephens exercising the discretion that the Act afforded them and the resulting agreement that fundamentally and permanently changed the relationship.

The Court of Appeal has upheld that ruling.

If added that if Parr’s argument were accepted, it would encourage greater ruthlessness by partnerships and LLPs in making sure that a retirement age clause was put into effect to terminate the relationship altogether rather than allowing the former equity partner to continue as a salaried partner, since to allow the latter would leave the partnership exposed to a discrimination claim for as long as any contractual relationship existed between the parties.

Parr’s claim was remitted to the tribunal to decide whether it was just and equitable to extend time for the presentation of the claim.

For more information about the issues raised in this article or any aspect of employment law please contact Joanne on 01228 516666 or click here to send her an email.