RegulationCorporate GovernanceDiscrimination rules allow young partners to sue

Discrimination rules allow young partners to sue

Young partners in firms could sue in order to gain a greater share of profits under new age discrimination rules

New regulations introduced at the beginning of October could threaten a
profits structure used by many accountancy firms known as the lock-step.

The new rules could also make it difficult to force partners to retire at a
certain age.

Roger Byard, a specialist in employment law and a partner at Cripps Harries
Hall, makes the claim today in Accountancy Age.

The lock-step commits partners to a system that delivers increasing
remuneration as they progress up the steps of the profit sharing ladder year by
year.

‘While lock step is intended to reward loyalty the partners who benefit most
are likely to be older people. The new law will mean that such a policy will
indirectly discriminate against younger partners who have a shorter period of
membership.’

Some are suggesting the move could mean the end of such structures, as young
partners seek to sue to get a merit-based share of profits.

‘It remains to be seen if younger partners…will challenge it,’ Byard writes.

Firms using lock-step structures will have to prove that the structure ‘is in
pursuit of a legitimate aim and proportionate,’ Byard says.

The rules also challenge partnership structures specifying precise retirement
ages, he says: ‘if a partner is obliged by the partnership deed to retire at a
certain age this will amount to direct discrimination.

‘Equally where a policy or practice is applied that disadvantages groups who
are defined by their age then this would amount to indirect discrimination.’

Partners in firms appear to be becoming increasingly younger. Ernst &
Young recently appointed Tracy Wood as a partner at just 28.

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