Fixed share equity partner in LLP not an employee

A fixed share equity partner in an LLP is not an employee, the Court of Appeal has held.

In Tiffin v Lester Aldridge LLP [2012] EWCA Civ 35, the court ruled that Martin Tiffin entered into a partnership agreement with the other partners at the law firm. When the firm converted to limited liability partnership status, he signed the members’ agreement and contributed capital. He had some involvement in decision making and received a share of the firm’s profits.

In 2009, he left the firm as he was unable to establish a client base. He claimed unfair dismissal, breach of contract and statutory redundancy, and asserted that he was an employee of the firm. He argued that he was not involved in management, that his profit share was too small to count, and that the firm had made him redundant.

The firm countered that he was not an employee and therefore the tribunal had no jurisdiction to hear the claim.

The court upheld the Employment Appeal Tribunal’s decision that Tiffin’s arrangement with the firm was not consistent with that of employee and employer, and that there was no minimum threshold regarding profit share or decision-making.

Jonathan Exten-Wright, employment partner, DLA Piper, said: “This decision in today's judgment is a useful reminder that although there is often what may appear to be little material difference between fixed-share and salaried partners, relatively minor differences may be determinative of employment status.

“In particular there is no minimum level of capital contribution, profit share or involvement in management decisions required before an individual may be classed as a partner. It may be significant, however, that in Mr Tiffin's case all three of those factors were present; it was not clear from the Court of Appeal's decision whether profit share alone, or capital contribution alone, or management involvement alone would denote partner status.”