Employment Equality Acts – Not just for employees? Application to partnerships and certain self-employed contractors

Employment Equality Acts – Not just for employees?

Application to Partnerships and certain self-employed contractors

The Employment Equality Acts 1998-2015 (the “Acts”) prohibit discrimination based on any of the following nine grounds: – gender, civil status, family status, sexual orientation, religion, age, disability, race and membership of the Traveller community.  Discrimination is generally defined as less favourable treatment on any of those grounds.

The title of the Acts is somewhat misleading.  At first glance, it appears that the Acts apply only to employment relationships.  This is not the case.  The protection of the Acts extends beyond employees and also protects partners and certain self-employed contractors.

Application of the Acts to Partnerships

Section 13A of the Acts (inserted by section 7 of the Equality Act 2004) extends the application of the Acts to partnerships.  That section provides:-

“(1)   This Act applies to a partner in a partnership as it applies to an employee and accordingly has effect with the modification that:-

(a) references to an employee include references to such a partner, and
(b) references to an employer include references to a partnership, and with any other necessary modifications.

(2)    In subsection (1) references to a partner shall be construed, in the case of a limited partnership, as references to a general partner, as defined in section 3 of the Limited Partnerships Act 1907.”

Irrespective of the terms of a Partnership Agreement, partners are prohibited from treating a prospective partner or a fellow partner less favourably on any of the nine protected grounds.

Discrimination may arise in a number of circumstances, including, inter alia, the following:-

1.    access to a partnership, (i.e. the factors for determining who should be admitted to the partnership);
2.    conditions on which partnership is offered;
3.    access to opportunities as between partners;
4.    grounds for expulsion from a partnership.

Compulsory Retirement as an example

Compulsory retirement of a partner may give rise to a claim for age discrimination.  This situation arose in the UK case of Seldon v Clarkson Wright and Jakes.

Mr Sheldon was an equity partner in a law firm. At the end of the year in which he turned 65, Mr Sheldon was given notice to retire, pursuant to mandatory retirement provisions in the partnership deed. He argued that his compulsory retirement constituted discrimination on the grounds of age.

The Firm accepted that Mr Seldon’s compulsory retirement was direct age discrimination, but said that it was objectively justifiable to achieve its legitimate aims which were identified as:-

Staff retention: retaining associates by being able to offer them the opportunity of partnership after a reasonable period;

Workplace planning: facilitating planning with realistic expectations as to when positions would become available; and

Dignity: avoiding expulsion of partners through performance management.

Unlike other forms of discrimination, direct age discrimination is permitted in Ireland provided it is “objectively and reasonably justified by a legitimate aim” and “the means of achieving that aim are appropriate and necessary”.  Similar provisions apply in the UK.

Ultimately, the Supreme Court held that the Partnership had identified legitimate aims (staff retention, workforce planning and dignity) which could objectively justify Mr Sheldon’s compulsory retirement provided his retirement age was a proportionate means of achieving those aims.  The Supreme Court remitted the case back to the employment tribunal which decided that the mandatory retirement age was a proportionate means of achieving the retention and planning aims.

Businesses, including partnerships, need to identify and document the specific legitimate aim and objective justification that it intends to rely on to enforce compulsory retirement.  The legitimate aim should be stress tested to ensure that is can withstand robust scrutiny to defend a claim for age discrimination, as is demonstrated by the Roper case.

The Workplace Relations Commission (“WRC”) decision in Roper v RTÉ demonstrates that the WRC will carefully examine objective justifications advanced by a business to enforce compulsory retirement.

Ms Roper worked with RTÉ since 1988, most recently as an executive producer.  Coming up to her retirement, Ms Roper requested that she be permitted to continue working past the retirement age for a further 18 months.  RTÉ refuses that request and compulsorily retired Ms Roper on her 65th birthday.  Ms Roper took a case to the WRC.

The WRC found that RTÉ had discriminated against Ms Roper on the grounds of age and awarded her €100,000 as compensation.

At the hearing RTÉ advanced the argument that her mandatory retirement was objectively justified on the basis of “intergenerational fairness”.  While this justification is well established in both European and domestic law, the WRC held that in this case the mandatory retirement of Ms Roper, fell “considerably short “of contributing to intergenerational fairness in RTÉ.

In scrutinising the justification of “intergenerational fairness”, the Adjudication Officer (“AO”) acknowledged that Ms Roper’s retirement had resulted in her position being filled internally and a further person being recruited externally.  However, the AO held that the impact of Ms Roper’s compulsory retirement was limited to her department and “as a method of achieving intergenerational fairness, it fell considerably short.”  It was held that the decision to compulsorily retire her was disproportionate and it was difficult to see a connection between Ms Roper’s retirement and the objective of “intergenerational fairness”, as others had been permitted to stay beyond the retirement age.

Identifying a legitimate aim is not just a box-ticking exercise. Care needs to be taken to ensure the aim is actually relevant to the circumstances and evidence can be produced of the practical implementation of the aims sought to be achieved.  This applies equally to compulsory retirement in a partnership.

Application of the Acts to certain self employed contractors

In the Labour Court case of Moyne Veterinary Clinic and Natasha Nowacki, Ms Nowaki, a veterinary surgeon, claimed that she had been discriminated against on the grounds of gender and family status by the partners in the Moyne Veterinary Clinic.

At first instance, the AO held that Ms Nowaki was not an employee and accordingly, she could not pursue her claim under the Employment Equality Acts.  Ms Nowaki appealed that decision to the Labour Court.

The Labour Court examined the provisions of section 2 of the Acts which defines a contract of employment as:-

“(a) a contract of service or apprenticeship, or
 (b) any other contract whereby:-

       (i) an individual agrees with another person personally to execute any work or service for that person, or
      (ii) an individual agrees with a person carrying on the business of an employment agency within the meaning of the Employment Agency Act 1971 to do or perform personally any work or service for another person (whether or not the other person is a party to the contract

       whether the contract is express or implied and, if express, whether oral or written”

Section 2(3)(d)(i) provides:-

“references in this Act to an employee shall be constructed as references to the party who agrees personally to execute the work or service concerned and reference to an employer as references for whom it is to be executed.”

The Labour Court noted that “nature of the relationship between the parties was not employer/employee”. However, it went on to say that: –

“employment under a contract of service is not a condition precedent to locus standi under the Acts. The Acts apply to a person employed under a contract of employment. However, it is clear that that term is given a much broader meaning than under other employment enactments. The definition brings within its ambit a person employed on “any other contract” which can include a person employed on a contract for services provided that the person provides services personally…”

“The question as to whether or not a self-employed person comes within the ambit of the Acts, is answered by Article 14 of the Recast Directive 2006/54/EC and Article 3 of the Framework Directive 2000/78/EC, both of which make it clear that the principle of non-discrimination extends to self-employed persons. The Race Directive 2000/43/EC also brings self-employment within the scope of Article 3. The [Employment Equality] Acts are intended to implement these three Directive and must be interpreted in conformity with each of them. It follows that the broad definition of a “contract of employment” as defined by the Acts must be interpreted as intended to bring self-employed persons within the ambit of the Acts so as bring the Acts into conformity with the personal scope of the Directives.”

The Labour Court held that given the “broad definition under Section 2 of the Acts”, and the fact that Ms Nowacki was required to “personally execute” the work assigned to her by the practice, that she was an employee of the veterinary practice under a contract of employment for the purposes of the Acts.

This decision makes it clear that the ambit of the Acts extends to encompass self employed contractors who provide services personally as such persons will be considered employees for the purposes of the Acts.

Key Points

The WRC deals with complaints of discrimination, while claims of discrimination on the basis of gender may be brought before the Circuit Court.

At the WRC, a preliminary application may be made in relation to whether the Acts apply in the particular circumstances. There may be a mistaken belief that the Acts do not apply to persons, other than employees. However, the position is clear that the Acts apply to partners and to self employed contractors who personally execute work or services.

For further information on this topic, please contact Laura Graham at lgraham@reddycharlton.ie

Laura Graham
Author: Laura Graham