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In DLA Piper’s latest case report, the Court of Session held that limited liability partnerships (LLPs) that were contracted to carry out duties that were formerly carried out by a local authority were "associated employers" of the council for equal pay purposes.
Glasgow City Council and others v Unison claimants and another  CSIH 27 CS
In recent years, there has been a shift away from the provision of certain public services directly by local authorities, resulting in a trend towards restructuring the provision of public services in the form of "arm's length external organisations" (ALEOs) and other enterprises.
The appellants in this case were two LLPs and Glasgow City Council. The LLPs were contracted to carry out duties that were formerly carried out by the local authority.
Employment tribunal and EAT decisions
Employees of the LLPs, backed by Unison and Fox Cross, raised claims in the employment tribunal under the Equal Pay Act 1970 (now replaced by the Equality Act 2010). They argued that they were entitled to equal pay in relation to their chosen comparators, who were individuals directly employed by the council. They argued that the LLPs were under the council's effective control, as demonstrated by the fact that, under the LLP agreements, they were required to implement any direction of the council and the council was entitled to "99.999% of the profits" of the LLPs. Essentially, it was argued that the LLPs were just extensions of the council, carrying out public functions but at a distance in terms of formal structure.
The employment tribunal held that the Equal Pay Act 1970 applies only to "