On May 22, 2014, the Supreme Court of Canada released its
decision in McCormick v Fasken Martineau DuMoulin
LLP. The Court found that John McCormick, an equity
partner in Faskens, was not an employee for the purposes of the
British Columbia's Human Rights Code and that his
mandatory retirement at age 65 was not contrary to the
Faskens' partnership agreement, like many professional
services firms' partnership agreements, provided for mandatory
retirement of all equity partners when they turned 65. In 2009,
when McCormick was 64, he commenced a claim against Faskens
alleging that the mandatory retirement provisions of the
partnership agreement discriminated against him on the basis of age
and, as such, infringed his human rights under the
Faskens argued that McCormick, as an equity partner, was not in
an employment relationship and therefore not protected by the
Code. The B.C. Human Rights Tribunal disagreed. In its
view, McCormick was utilized, controlled and compensated like an
employee. The B.C. Supreme Court agreed. The B.C. Court of Appeal
allowed the appeal, holding that because a partnership is not a
separate legal entity from its partners, it is not possible for a
partner to be "employed" by a partnership.
The Supreme Court of Canada, in a unanimous decision, also
dismissed the appeal, but for different reasons. In its view,
partners may be employees of a partnership, but the outcome depends
on two "synergetic aspects" of the employment
relationship: "control exercised by an employer over working
conditions and remuneration, and corresponding dependency on the
part of a worker". In other words, "who is responsible
for determining working conditions and financial benefits and to
what extent does a worker have an influential say in those
determinations?" Though the Court did not reject the
Tribunal's use of the utilization, control and compensation
factors, it viewed those factors as aspects of the
In McCormick's case, the Court held that he was "more
as someone in control of, rather than subject to, decisions about
workplace conditions" given his ownership, sharing of profits
and losses and his right to participate in management. Though
McCormick was subject to certain administrative rules, that fact
did not persuade the Court that he was dependent on the firm. In
its view, as a partner, he had a say in the firm's policies,
including its mandatory retirement policy, and benefitted from
those policies. As such, he was not in an employment relationship
that would make Faskens subject to the Code.
In passing, the Court noted that the statutory duty of utmost
fairness and good faith on partners might provide recourse to
McCormick for alleged discrimination but it did not have to decide
This case comes in the same week as the United Kingdom Supreme
Court's decision in Clyde & Co LLP v Winklehof. In
that case, the appellant was an equity partner in Clyde & Co
LLP. She claimed protection under the United Kingdom's
statutory "whistle-blower" protection for
"workers" after reporting financial improprieties in the
firm's Tanzania associate firm. Although the U.K. statute which
defines a worker as employment under contract is not applicable to
Canadian employers, the decision is a timely reminder that the
determination of a partner's employment status may differ
depending on the specific factual circumstances or applicable
The McCormick decision will likely be treated as a
victory for partnerships, but the outcome is more complex than
that. In rejecting the B.C. Court of Appeal's bright line test
in favour of a more nuanced control/dependency test, the Court is
requiring each case to be determined on its facts, and keeping the
door open to discrimination claims by partners who have less say in
working conditions and are more financially dependent on the
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
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