Can a fixed share equity partner be an employee?
01 February 2012
In Tiffin v Lester Aldridge LLP Mr Tiffin was a fixed-share partner in Lester Aldridge LLP. When Mr Tiffin was dismissed in February 2009, Mr Tiffin brought claims in the Employment Tribunal (“ET”) and in doing so sought to establish that he was an employee.
The ET and the Employment Appeal Tribunal (“EAT”)both found that Mr Tiffin was a partner as opposed to an employee and so was not entitled to pursue his employment claims.
Factors which were consistent with him being a partner were:
- He had entered into a membership agreement with the other partners.
- He received a salary which was expressed to be a fixed share of equity.
- He received a small profit share.
- He was an authorised signatory on the bank account.
- He was entitled to benefits which employees were not entitled to, namely life insurance and health insurance.
- He was entitled to attend management meetings and had limited voting rights in relation to a small number of matters.
- He was required to contribute a small amount of capital (£5,000) to the partnership.
- On dissolution of the partnership, he was entitled to a proportion of the profits, albeit the amount was twenty-five times less than that of a full equity partner.
The Court of Appeal upheld the EAT`s decision, rejecting Mr Tiffin’s argument that the ET’s decision was perverse. The Court of Appeal described Mr Tiffin`s position as "an impossible one" given that the relationship Mr Tiffin had with Lester Aldridge LLP was quite inconsistent with an employer/employee relationship.
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