Employment Appeal Tribunal (EAT) decision on partner status

Year Published: 2013

The Employment Appeal Tribunal has handed down its decision in the case of Williamson and Soden Solicitors v Briars. Mr Briars was remunerated by way of a minimum guaranteed amount plus a further small percentage of the profit of the firm. Williamson and Soden appealed against a ruling that Mr Briars was an employee and that the Employment Tribunal was entitled to hear his claim. The appeal was dismissed and Mr Briars was held to be an employee.

Previously but recently, the Employment Appeal Tribunal had handed down its decision in Tiffin v Lester Aldridge LLP. Mr Tiffin was remunerated by way of an annual fixed share of profit plus five profit share points in the profits of the LLP. Mr Tiffin appealed against a ruling that he was not an employee. His appeal was dismissed and he was held to be a Self employed Member of the LLP / Partner.

What were the differences between Mr Tiffin and Mr Briars?

Mr Tiffin contributed capital; was entitled to vote at Members’ Meetings; was a cheque signatory; made his own pension arrangements; had Permanent Health Insurance and Life Assurance paid for him by the firm and would have been entitled to a share of profit on winding up. He also signed the Membership Agreement and The Business Transfer Agreement which transferred the Partnership’s assets to the LLP.

Mr Briars on the other hand did not contribute capital; had no risk of sharing losses; was not consulted about significant events in the life of the firm and does not appear to have any of the other advantages enjoyed by Mr Tiffin.

In the Briars case, Counsel for Williamson and Soden submitted that the starting point for the Tribunal should be to establish whether or not Mr Briars was a Partner under the definition in Section 1 of the Partnership Act 1890 as the EAT did in the Tiffin case. However the EAT decided that the question to be determined was not whether or not a given individual was a Partner or self employed. It is whether or not he comes within the definition of employee under section 230 of the Employment Rights Act 1996. Principal among the factors to be considered is the question of control, i.e. lawful authority to command.

The cases of Mr Briars and Mr Tiffin do not conflict. Establishing the true status of so called salaried or fixed share partners has troubled the Courts and Tribunals for many years and these cases are further examples of cases being decided on their own facts although it seems that Employment Tribunals will approach cases via Section 230 of the Employment Rights Act rather than via section 1 of the Partnership Act. It remains to be seen as to whether or not the Courts will follow the same route.

What is certain is that if a salaried/fixed share partner is held to be a true partner in law, he cannot also be an employee. What has not, so far, been decided is whether a salaried/fixed share partner in such circumstances might be held to be a “Worker” under section 230(3)(b) of the Employment Rights Act.

For further information please contact the employment team at SAS Daniels Solicitors on 0161 475 7676 .

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