The claimant had been a partner with the respondent firm. He appealed against the rejection of his claim for unfair dsmissal on the basis that he had not been an employee.
Held: The appeal failed. Had this been an unlimited partnership under the 1890 Act, she would have been a partner, which was inconsistent with employee status. So she could not pursue her claim.
Rimer LJ discussed the impossibility of a partner being an employee under the 2000 and 1890 Acts: ‘The drafting of section 4(4) raises problems. Whilst I suspect that the average conscientious self-employed professional or business person commonly regards himself as his hardest master, such perception is inaccurate as a matter of legal principle. That is because in law an individual cannot be an employee of himself. Nor can a partner in a partnership be an employee of the partnership, because it is equally not possible for an individual to be an employee of himself and his co-partners (see Cowell v. Quilter Goodison Co Ltd and Q.G. Management Services Ltd [1989] IRLR 392). Unfortunately, the authors of section 4(4) were apparently unaware of this. The subsection is directed to ascertaining whether a particular member (call him A) of an LLP is or is not for any purpose an employee of it. The statutory hypothesis which the subsection requires in order to answer that question is that A and the other members of the LLP ‘were partners in a partnership’. That hypothesis, if it is to be read and applied literally, must in every case produce the same answer, namely that A cannot be an employee of the LLP for any purpose. If that had been Parliament’s intention when enacting section 4(4), it might just as well have ended the subsection immediately before the word ‘unless’. That, however, was plainly not its intention. The subsequent words must be contemplating a practical inquiry that, in particular factual circumstances, will yield a yes or no answer to the question whether a particular member of an LLP is an employee of it. The subsection must, therefore, be interpreted in a way that avoids the absurdity inherent in a literal application of its chosen language so that it can be applied in a practical manner that will achieve the result that I consider it obviously intended. The presumption is that Parliament does not intend to enact legislation whose application results in absurdities, and section 4(4) must therefore be interpreted with that in mind.
In my judgment the way section 4(4) is intended to work is as follows. Subject to the qualification which I mention below, it requires an assumption that the business of the LLP has been carried on in partnership by two or more of its members as partners; and, upon that assumption, an inquiry as to whether or not the person whose status is in question would have been one of such partners. If the answer to that inquiry is that he would have been a partner, then he could not have been an employee and so he will not be, nor have been, an employee of the LLP. If the answer is that he would not have been a partner, there must then be a further inquiry as to whether his relationship with the notional partnership would have been that of an employee. If it would have been, then he will be, or would have been, an employee of the LLP. I consider that it is implicit that the primary source material for the purpose of answering these questions will be the members’ agreement although this will not necessarily represent the totality of what may be looked at. The inquiry thus requires a consideration of the circumstances in which a person may become a partner in a partnership under the Partnership Act 1890 . .’
Judges:
Sir Nicholas Wall P, Rimer, Jackson LJJ
Citations:
[2012] ICR 647, [2012] 2 All ER 1113, [2012] EWCA Civ 35, [2012] IRLR 391, [2012] 1 WLR 1887, [2012] WLR(D) 19
Links:
Statutes:
Partnership Act 1890, Limited Liability Partnerships Act 2000 4(4)
Jurisdiction:
England and Wales
Citing:
Cited – Stekel v Ellice ChD 1973
The question of whether persons are in partnership is a question of substance and not form: the label which the parties choose to give to their relationship is not determinative.
Megarry J considered the status of a salaried partner: ‘Certain . .
Appeal from – Tiffin v Lester Aldridge Llp EAT 16-Nov-2010
EAT CONTRACT OF EMPLOYMENT – Whether established
The Claimant, who is a solicitor, became a salaried partner in a partnership, which became a Limited Liability Partnership, which was the Respondent. The . .
Cited – Kovats v TFO Management Llp and Another EAT 21-Apr-2009
EAT JURISDICTIONAL POINTS: Worker, employee or neither
Can a partner in a limited liability partnership be an employee? The EAT decided that on the facts of the case the Appellant was a partner in a limited . .
Cited by:
Cited – Clyde and Co Llp and Another v Bates van Winkelhof CA 26-Sep-2012
The claimant was a solicitor partner with the appellant limited liability partnership at their offices in Tanzania. She disclosed what she believed to be money laundering by a local partner. She was dismissed. She had just disclosed her pregnancy . .
Lists of cited by and citing cases may be incomplete.
Employment, Company
Updated: 04 October 2022; Ref: scu.450534