Silent partner

The recent employment tribunal in which a PricewaterhouseCoopers senior partner claimed discrimination in respect of his disability could be a landmark case for solicitors.

Judgment has not yet been handed down in the case of Tenner v PwC, but chances are it will have a significant impact on the internal management of firms as well as on the legal advice that they give to their partnership and LLP clients.

The case addresses the common but costly misconception among some partnerships that partners cannot bring employment tribunal proceedings. It has also served to highlight the negative attitude which some partnerships adopt towards partners' mental health issues.

Tenner issued disability discrimination proceedings against PwC after informing his managers that he was suffering from work-related stress caused by bullying from a client. He asked PwC to implement procedures under its anti-bullying policy, but told Belfast Employment Tribunal that he was informed by his managers that he was not protected by the firm's anti-bullying policy 'because he was a partner'.

The panel heard that minutes of a supervisory board partner affairs committee meeting stated that there was the possibility of Mr Tenner going to an employment tribunal, but they had concluded that he could not because he was a partner.

Mistaken belief

This was an expensive error on PwC's part, as all partners, be they salaried, fixed share, junior or full equity partners, share discrimination rights with employees.

Any professional partnership under this illusion could find itself in deep water, drowning under a tide of claims from salaried, fixed share and equity partners. Negative PR could ensue and additional time constraints as well as administrative burdens will be placed on HR and senior management. In addition, legal costs will be incurred in defending such claims, even if they are not successful ultimately.

In reality, many partners, particularly the dying breed of salaried partners, as opposed to full equity partners, are in effect employees and will have exactly the same rights as them. Employment tribunals will not attach any relevance to the label given to an individual or to whether they are held out to third parties as being partners. Instead, the tribunal will look at the true nature of the relationship which exists between the individual and their firm.

The duty of good faith

In the case of genuine full equity partners, there is no implied duty of mutual trust and confidence, as exists between employers and employees in an employment relationship. In traditional partnerships, the duty of good faith applies between genuine partners. Breach of this duty, for example standing back and allowing a partner to be bullied or harassed by a client of the firm, or by a colleague, if the firm has knowledge of this harassment and bullying, or derogatory comments by senior management could give rise to a breach of contract claim by that partner for breach of the duty of good faith.

The partner could argue that such conduct constitutes fundamental repudiatory breach of the duty of good faith, such that any restrictive covenants in the partnership deed fall away and are no longer binding on the partner. This could have an adverse effect on the firm's ability to protect its confidential information, client connections and the stability of its workforce. Firms need to be careful not to act in breach of this duty in the first instance. The difficulty from the individual partner's perspective will be quantifying any damages that they may suffer as a result of the breach of the duty of good faith.

In a limited liability partnership, such as PwC, the duty of good faith between partners is usually expressly written out of the members' LLP agreement. One usually finds that the express duty of good faith only flows one way, from the partners or members of the firm towards the LLP.

Linking harassment to discrimination

While partners can bring a claim for harassment, unless they are genuine full equity partners in a traditional partnership, as opposed to members of an LLP, they cannot bring harassment as a standalone claim on the basis that, by allowing the harassment to continue, the firm is acting in fundamental repudiatory breach of the duty of good faith. Harassment would have to be linked to a claim for discrimination.

It is unlawful for a firm, in relation to an individual's position as a partner, to discriminate against a person on the grounds of their disability, religion or belief, sex, race, sexual orientation or age by subjecting them to harassment that violates their dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment.

It is clear that the harassment has to be on a protected ground. Mr Tenner alleged the harassment and bullying by the client was not linked to a protected ground. Rather, Mr Tenner's claim is that, as a result of the bullying and harassment, he suffered mental health problems and PwC dismissed him as a result of these mental health issues, which he argues constitutes a disability for the purposes of the Disability Discrimination Act.

It is alleged by Mr Tenner that the managing partner sent an email to another partner when he was on sick leave stating: 'Real partners simply do not get sick.' He argued that this memo demonstrated that a stigma is still attached to mental health issues and that there is a lack of sensitivity and understanding within some professional firms regarding such problems.

Senior management need to be aware that partners are not made of different stuff to employees. They are therefore no less susceptible to suffering from mental illness caused by workplace issues, such as harassment and bullying, than employees. If anything, partners are probably under a higher degree of pressure, given their greater level of responsibility. As partners operate within a highly charged and often macho and political environment, professional firms are particularly open to claims of unlawful harassment.

In order to minimise their firm's potential exposure, senior management and HR personnel need to deal with issues of harassment and bullying of partners upfront, as soon as they arise, in the same way that they would deal with them if a grievance was raised by an employee on the same grounds.

Firms' internal anti-bullying and anti-harassment policies should be amended so that they apply expressly to partners and members of LLPs as well as employees. Firms should ensure that senior managers are aware of their policies and that they receive regular training in relation to their application and any new case law or legislation which affects them.

Damaging consequences

Mr Tenner's complaint may have been dealt with differently had it been made against a colleague, rather than a client. It is particularly difficult when a complaint of harassment is made against a client, especially one that generates a lot of work for the firm. However, not addressing this issue can impact adversely on the partner's health, have a negative effect on internal morale, cause the firm to suffer reputational damage and cost the firm a large amount of money in respect of compensatory awards.

In discrimination claims, compensation is unlimited and is based on the individual's loss of future earnings. If the mental health condition from which Mr Tenner suffers is such that he will not be able to work again, then PwC could be ordered to pay Mr Tenner 15 years' worth of compensation, the amount that he is claiming up to his normal retirement age. He could also claim an award for injury to feelings, which could be as much as £30,000.

At present the definition of harassment under the Sex Discrimination Act covers cases of repeated failure to prevent the harassment of employees by third parties such as clients. It is intended that the Equality Act will extend employer liability for third-party harassment of employees to cover the other main strands of discrimination legislation.

If talented senior employees on the cusp of partnership feel that they would be better protected in terms of their statutory

discriminatory rights by remaining employees in their current firms, rather than accepting offers of partnership, they may reject such offers and seek to move to progressive professional partnerships which take active steps to protect their partners' health. Such firms risk suffering a 'brain drain' and losing their highest performers, thus affecting their ability to compete effectively in their chosen market.