Court of Appeal holds that default retirement age in LLP agreement does not give rise to a ‘continuing act’

January 17th, 2022

In Parr v MSR Partner LLP (and others) [2022] EWCA Civ 24 the Court of Appeal considered the question of discrimination time limits in the context of a decision to de-equitise a member of an LLP.

Mr Parr was an equity partner of MSR, which had a default retirement age in its members’ agreement of 60, subject to a discretion to extend.  As his 60th birthday approached, Mr Parr sought to extend his equity partnership, but he was permitted to remain with the firm only as a salaried partner.  MSR subsequently entered into a series of transactions which generated significant profit for the firm.  Having cease to be an equity partner, Mr Parr did not benefit from a profit distribution, and he brought an age discrimination claim many months after the termination of his equity partnership for some £3 million alleged loss of profit.  Relying on the House of Lords’ decision in Barclays Bank v Kapur [1991] 2 AC 355, in which it was held that the employer’s discriminatory refusal to recognise service in Africa for pension purposes amounted to a continuing act, he contended that his de-equitisation was similarly a continuing act, because the discriminatory retirement rule remained in place and he remained a member of the firm, albeit on a salaried basis.

The Court of Appeal rejected Mr Parr’s argument that this amounted to “conduct extending over a period” within the meaning of section 123 of the Equality Act 2010.  Bean LJ (with whom Lewis LJ and Elisabeth Laing LJ agreed) noted at [38] that “the ratio of Kapur is that the critical distinction is between a one-off decision and a continuing act or continuing state of affairs, and that to require employees to work on less favourable terms as to pension than their comparators is as much a continuing act as to require them to work for lower current wages.”  The Court of Appeal accepted MSR’s submission that the default retirement age of 60 could be applied to Mr Parr only once: see [41].  It was important to focus on the specific act complained of, which in this case was Mr Parr’s de-equitisation, or demotion.  This was a one-off act, and there was no reason to treat it differently simply because the parties remained in a contractual relationship: see [42].

It was also significant that the discriminatory retirement age was subject to a discretion, such that there was no inevitability about Mr Parr’s demotion: see [43].  Following Tyagi v BBC World Service [2001] IRLR 465, the Court of Appeal accepted that, for a discriminatory rule to give rise to a continuing act, it must continue to be in some sense “in action” vis-à-vis the individual claimant: see [45].

Moreover, Bean LJ found that there was force in MSR’s policy argument that, on Mr Parr’s approach, “the result would be to encourage greater ruthlessness by partnerships and LLPs in making sure that a retirement age clause is put into effect so as to terminate the relationship altogether rather than allowing the former equity partner to continue in the lesser status of salaried partner, since to do the latter would leave the partnership exposed to a discrimination claim for as long as any contractual relationship existed between the parties.”

Daniel Stilitz QC appeared as counsel for MSR and the other respondents

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