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 Claimant became a Fixed Share Partner. He received a salary and a designated but a small share of the profits. He was also liable to contribute a small proportion of the capital of the Respondent. The Claimant had very limited rights to be involved in the management of the Respondent.
The Employment Tribunal held that he was a ‘partner’ within the meaning of section 1(1) of Partnership Act 1890 and not an ’employee’ within the meaning of section 230(1) of Employment Rights Act 1996.
The Claimant appealed
Held by the Employment Appeal Tribunal dismissing the appeal that:
1. For the Claimant to be a ‘partner’, a relationship has to exist between himself and other persons by which they ‘carry on the business [of the respondent] in common with a view of profit’ (section 1(1) of Partnership Act 1890). In that case, the Claimant could not be an ’employee’ if he was a ‘partner’;
2. There is no minimum threshold that has to be reached in relation to a person’s rights to (a) profits or (b) involvement in management before he can be regarded as a partner (M. Young Legal Associates v Zahid [2006] 1 WLR 2562 considered);
3. The Employment Tribunal was entitled to reach its decision and it falls a long way short of being perverse as the Claimant had failed to show any overwhelming case that the Employment Tribunal made a decision which no reasonable Tribunal could have reached (dicta of Mummery LJ in Crofton v Yeboah [2002] IRLR 634 [93] applied); and that;
4. The Employment Tribunal was not entitled to attach definitive or crucial importance to the description of the Claimant as a Fixed Share Partner and it did not do so (Steckel v Ellice [1973] 1WLR 191, 199 considered).
Silber J
[2010] UKEAT 0255 – 10 – 1611, [2011] IRLR 105
Bailii
Partnership Act 1890 1(1), Employment Rights Act 1996 230(1)
England and Wales
Citing:
Cited – Steckel v Ellice 1973
A salaried partner can be a true partner. Megarry J said that of a salaried partner that ‘I do not see why he should not be a true partner, at all events if he is entitled to share in the profits on winding up’ . . and ‘Certain aspects of a salaried . .
Cited – Zahid v M Young Legal Associates Ltd and others CA 16-May-2006
Is it possible for a person to be a partner in a firm, and thus liable jointly with the other partners to creditors of the firm, even if his agreement with them is not that he should be entitled to participate in its profits but that he should be . .
Cited – Yeboah v Crofton CA 31-May-2002
The industrial tribunal had made a finding of direct race discrimination. The Employment Appeal Tribunal found the decision perverse, and ordered a rehearing. The applicant appealed that order.
Held: The EAT must be careful not to take . .
Cited by:
Appeal from – Tiffin v Lester Aldridge Llp CA 1-Feb-2012
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 . .
Cited – Clyde and Co Llp v Van Winkelhof EAT 26-Apr-2012
EAT JURISDICTIONAL POINTS
Worker, employee or neither
Working outside the jurisdiction
Whether LLP equity member was a limb (b) worker under section 230(3). Allowing Claimant’s appeal, she was. . .
Lists of cited by and citing cases may be incomplete.
Employment
Updated: 10 November 2021; Ref: scu.425978
