Wednesday, 17 November 2010

UK: England and Wales: a partner or employee?

The Employment Appeal Tribunal delivered its judgment yesterday in Tiffin v Lester Aldridge LLP [2010] UKEAT 0255_10_1611: see here. In earlier proceedings, the Employment Tribunal held that the claimant, a solicitor, was a "partner" within the meaning of Section 1(1) of the Partnership Act 1890 and not an "employee" within the meaning of Section 230(1) of the Employment Rights Act 1996. Section 1(1) of the 1890 Act provides that partnership is "the relation which subsists between persons carrying on a business in common with a view of profit".

The solicitor was a fixed share partner, received a salary and a small share of the profits, was liable to contribute a small proportion of the capital to the respondent firm but had very limited involvement in the firm's management. Before the EAT it was argued, amongst other things, that the Employment Tribunal had erred in finding that the solicitor was a partner because his limited involvement in management negated the finding that he carried on a "business in common" as required by Section 1 of the 1890 Act. The EAT rejected this argument, observing that there was no minimum threshold that had to be reached with regard to a person's rights to profits or involvement in the firm's management in order to be regarded as a partner. In this regard, the EAT observed (paras. [19] to [20]):

There is no statutory provision or authority, which states that for a person to be a partner, he or she has to have a certain minimum number or a certain minimum types of rights to vote or to participate in management decisions. Indeed the members of this Tribunal are aware that in many large professional partnerships, all but very few of the partners have any right to participate in the overwhelming range of decisions made by the firm and yet they are clearly partners. There is evidence that the Claimant was entitled to participate in the Respondent's management as he could attend and vote at partnership and members meetings as well as being able to make representations at them. He had authority to sign cheques on behalf of the Respondent ... In our view, there was quite enough material ... to enable the Employment Tribunal to conclude that the Claimant carried on business in association with the Respondent".

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