The implications of Winkelhof for professional practices – Part-time worker status
Following the decision in Clyde & Co LLP –v– Bates van Winkelhof (see our previous alert on the topic here), we look at the implications of the Supreme Court’s decision for LLP members and their firms and, in particular, what firms should consider to respond and manage that risk.
This week, in the first of this series, we look at the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551) (“the PTW Regs”) which now apply to LLP members.
The PTW Regs
An LLP member now has the right not to be treated less favourably than their firm treats a comparable full-time LLP member, unless the treatment can be objectively justified by the firm. This less favourable treatment has to relate to:
- the terms of their contract; or
- by being subjected to any other detriment by the firm.
Objective justification typically means that the LLP must be able to prove that the treatment achieves a legitimate business objective of the firm and is a proportionate way (necessary and appropriate) to achieve that objective (a similar test is applied to indirect discrimination claims). Courts are unlikely to be sympathetic to a firm’s justification being based purely on cost.
The PTW Regs do not give members a right to work part-time, just protection if a member is a part-time worker (although it is important to bear in mind that a refusal to grant e.g. a female member’s request to change working hours if she has childcare commitments or a disabled member’s request to change their hours for health-related reasons, may give rise to a separate claim for unlawful discrimination).
How is less favourable treatment established?
To establish less favourable treatment a part-time LLP member must usually identify an appropriate full-time worker as a comparator, which (unlike discrimination claims) must be based on an actual (not hypothetical) comparator.
There are requirements set out in the PTW Regs which help to identify an appropriate comparable full-time worker (e.g. they must work under the same type of contract and be engaged in the same or broadly similar work). It is likely that the appropriate comparator for a part-time LLP member will be a full-time LLP member working at the same firm.
Exceptionally, if an LLP member switches from full-time to part-time work, they can compare their new terms and conditions to those that they enjoyed whilst working full-time.
The pro-rata principle also needs to be applied when making the comparison unless it is inappropriate. So, broadly speaking, where a comparable full-time LLP member receives or is entitled to receive profit-share or any other benefit, a part-time LLP member should receive not less than a relevant proportion of that pay or other benefit, unless the firm can prove, with clear evidence, that it is objectively justified to pay the member on a less than pro-rata basis. In our experience most firms would struggle to prove that a lower than pro-rated basis is in fact justified.
Any less favourable treatment of a part-time member in respect of one term or benefit cannot be offset or cancelled by more favourable treatment of a different kind (so the Courts will look at a term-by-term approach rather than the whole package offered to an LLP member).
An LLP member also has the right not to be victimised under regulation 7(2) of the PTW Regs, by for example, having brought proceedings under the PTW Regs; alleging that the firm has infringed the PTW Regs; or refusing to forgo a right conferred on them by the PTW Regs (this Iist is not exhaustive).
What is the potential liability for Firms?
Detriment Claim: An LLP member who has been treated less favourably can bring a number of claims to an Employment Tribunal (“ET”), usually within 3 months of the date of the relevant act or omission, subject to the rules on early conciliation (please see our earlier alert on conciliation here). Where an ET upholds a detriment claim it can do any (or all) of the following:
- make a declaration as to the rights of the parties.
- order the firm to pay uncapped compensation which the ET considers is just and equitable having regard to the less favourable treatment and any loss attributable to it. The LLP member is under a duty to mitigate those losses and any compensation may be reduced to reflect their contributory conduct.
- recommend that the firm take, within a specified period, action to obviate or reduce the adverse effect of the unfavourable treatment. If the firm fails to do this, without reasonable justification, an order of further compensation may be made.
Injury to Feelings award
Usually an award of compensation under the PTW Regs cannot include an award for injury to feelings (which are typically payable in a successful discrimination claim and range in value from £660 – £33,000). However, the position is less clear in respect of a claim for victimisation under Regulation 7(2) of the PTW Regs (see above). An award for injury to feelings is not specifically excluded so in principle there is no reason why such an award cannot be made.
Written Reasons: An LLP member can now request a written statement giving particulars of the reasons for the less favourable treatment. Any such statement has to be provided by the firm within 21 days of the request. If the firm deliberately and without reasonable excuse omits to provide a written statement or it is evasive or equivocal, an Employment Tribunal can infer that the LLP member has been discriminated against on the grounds of their part-time status.
What is the likely impact of this change on Firms?
It is doubtful that firms will see an immediate outbreak of standalone claims from LLP members on the grounds of their part-time working status. In our experience, part-time working in LLPs remains dominated by female partners, who can in many cases already rely on indirect sex discrimination protections. It is likely, however, that PTW Regs claims by LLP members will rise generally over time.
Firms should be aware, however, that PTW Regs claims are arguably more readily accessible (and potentially are easier to run) for LLP members than discrimination claims on a number of grounds, including, but not limited to:
- No difference in gender is required with the PTW Regs, so it will apply to men who experience unfavourable treatment on the grounds of their part-time status.
- To bring an indirect sex discrimination claim, an LLP member may need to prove a provision, criterion or practice places e.g. women at a particular disadvantage generally, as well as the female claimant herself (this is irrelevant under the PTW Regs).
- In an indirect sex discrimination case, the initial burden of proof rests with the LLP member and that burden will shift to the firm when a “prima facie” case of discrimination is established. Whereas, if an LLP member presents a claim to an ET under the PTW Regs, it is for the firm to identify the ground for the less favourable treatment or detriment.
Therefore firms need to be prepared for the likelihood that PTW Regs claims will be asserted more frequently going-forward, both in tandem with discrimination claims, or potentially on their own. In particular, the PTW Regs protect a wider category of individuals than those who work part-time with child-care commitments. For example, firms could more readily see claims from other protected categories of LLP members, such as those who work part-time because they are disabled or older members who wish to work reduced hours.
What steps should Firms consider taking in practice?
Steps which firms should consider taking to seek to reduce their exposure to part-time LLP member claims going forward:
- Firms should regularly audit their terms, policies and procedures if they do not already do so. Any terms which treat part-time members less favourably than their full-time equivalents should be carefully considered, including the application of the pro-rata principle if applicable. If the terms cannot be objectively justified, based on clear evidence, then the firm will need to take appropriate steps to remedy the difference.
- In our experience, key areas which should be carefully considered include:
- verifying the pro-rata reduction in LLP members’ profit share arrangements is no greater than it should be;
- ensuring that part-time LLP members are not treated less favourably than full-time members in terms of any other benefits received (e.g. car benefits);
- not excluding part-time LLP members from training, client-events, seminars, legal directory contributions etc;
- ensuring sabbatical schemes are offered to part-time LLP members as they are full-time LLP members unless their exclusion can be objectively justified;
- auditing the level of partner promotions from associate to salaried/fixed share member, and from salaried/fixed share to full equity, having regard to any disparities between those who work part-time and those who work full-time (to ensure that part-time status is not a barrier to any such promotion);
- ensuring that the criteria used for partner exits are objectively justified and do not target or otherwise treat part-time workers less favourably.
- In our experience, key areas which should be carefully considered include:
- Ensure that your HR department or management has in place a procedure to deal with any request by an LLP member for a written statement giving particulars of the reasons for their less favourable treatment. Ensure the date of the request is diarised so any response can be made with 21 days.
- Although the PTW Regs do not give a member a right to work part time, it is advisable to have a formal policy and procedure which address such applications and ensure the decision-making process, and the arrangements which may be agreed, are dealt with consistently across the LLP membership.
In addition to whistleblowing rights, part time worker protection is a further substantial protection now available to part-time LLP members. Whilst firms are unlikely to face an immediate outbreak of PTW Regs claims from LLP members, now is the opportune time for firms to audit their policies, procedures and LLP agreement to ensure that they are best protected moving forward.