Fixed Share Partner Not an Employee

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Posted in:HR and Employment|March 28, 2012 | Join the mailing list

In the recent case of Tiffin v Lester Aldridge LLP the Court of Appeal held that a fixed share partner in an LLP is not an employee.

Mr Tiffin ceased to be an associate and became a fixed share partner at Lester Aldridge, a limited liability partnership. When Mr Tiffin became a fixed share partner his overall involvement in the partnership was much lower than full equity partners, who for
example, had twenty times as many voting points.

Mr Tiffin argued that the LLP had purported to dismiss him by reason of redundancy and he was an employee by reason of the number of factors consistent with an employment relationship in relation to his work.  However, he did admit that the status of fixed
share partner had been advantageous to him both financially and in terms of career advancement.
 
The Employment Tribunal held that Mr Tiffin was a "partner" within the meaning of the Partnership Act 1890 on the basis that he contributed capital and shared profits with his fellow partners.  As Mr Tiffin was not employed by the LLP within the meaning of
the Employment Rights Act 1996, all claims that relied on that status had to be dismissed.

Mr Tiffin appealed but the Court of Appeal held that Mr Tiffin had entered into a partnership agreement with the other partners at Lester Aldridge as a fixed share partner.  Upon conversion to LLP status, Mr Tiffin had remained a fixed share partner, with partial
involvement in decision making and a very small share of the firm’s profits.  The Court of Appeal upheld the decisions of the Employment Tribunal explaining that there is no minimum requirement regarding members’ rights to profits or involvement in management
decisions for the status of ‘partner’ to be found. A person cannot be an employee if they are a partner.

To discuss how we can provide further advice in connection with these issues, please contact Stephen Foster,Partner and Head of our Corporate and Commercial team,
by email to stephenf@berg.co.uk" title="" >stephenf@berg.co.uk" title="" target="_blank" >stephenf@berg.co.uk" title="" >stephenf@berg.co.uk
or alternatively you can call Stephen on 0161 833 9211.




The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice. No responsibility for this article’s (or the above link’s) accuracy or correctness is assumed by Berg or any
of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.

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