Canada: "Partners In A Common Enterprise": The Supreme Court’s Judgment In "Mccormick v. Fasken Martineau Dumoulin LLP"

Last Updated: May 29 2014
Article by Danny J. Kaufer

Most Read Contributor in Canada, September 2016

The Supreme Court's unanimous decision of May 22, 2014 in McCormick v. Fasken Martineau DuMoulin LLP1 determined that an equity partner in a large national law firm was not an employee under British Columbia's human rights legislation. His complaint of age discrimination in employment when he was retired by the firm at 65 under its mandatory retirement policy was dismissed because no employment relationship existed between him and the firm in which he was a partner.

For any business operating as a partnership, especially large professional firms, the Court's decision that even a liberal interpretation of the definition of "employment" in the British Columbia Human Rights Code2 could not make Mr. McCormick an "employee" on the facts of his case will be of primary interest. But the Court's discussion of the tests for determining whether a person is an employee is of importance to all employers, as is the Court's emphasis that the substance of the relationship, not its legal form, must govern.

In finding that Mr. McCormick was not an employee for the purposes of the Human Rights Code, the Supreme Court's reasoning differed from that of the British Columbia Court of Appeal. That court had held that Mr. McCormick's status as a partner was sufficient of itself to defeat his claim. For the Supreme Court, the key considerations were the degree of control a putative employer exercises over the person claiming to be an employee and the degree to which the "employee" is dependant on the "employer"; the legal form of the parties' relationship is not determinative. Instead, a court must examine the "substance of the actual relationship and the extent to which control and dependancy played a role."3

In Mr. McCormick's case, the Supreme Court found that his rights under the partnership agreement, and his partners' duties towards him and under the agreement and under the law of partnership, meant that he was engaged "in a common enterprise with his partners for profit and was therefore working for his own benefit", and not for the benefit of a separate entity as in the case of an employee. The Court held that, in essence, "[f]ar from being subject to the control of Fasken, Mr. McCormick was among the partners who controlled it."4 Therefore, he was not an "employee" for the purposes of the Human Rights Code.5

The key facts leading the Supreme Court to this conclusion were that:

  • as an equity partner in the firm, Mr. McCormick had a right to vote in the election of members of its governing bodies, to be elected to them and to vote on the adoption of firm policies, including, of course, the one requiring equity partners to retire at 65;
  • his remuneration was determined by a committee of his fellow partners using criteria designed to measure his contribution to the firm;
  • his remuneration came from the firm's profits;
  • he had capital in the firm and was entitled to have it repaid to him on leaving the firm;
  • while he had to follow administrative rules established by the partnership and its governing bodies this did not mean he was subject to control by the partnership, because as a partner he had the right to participate in making those rules; and
  • his membership in the firm could only be ended prior to mandatory retirement by a vote by the partners to expel him, a vote subject to a high procedural threshold.

The Court relied as well on the duty partners have to deal with each other with the utmost good faith, both at common law and under the British Columbia Partnership Act6, and their duty as partners to render accounts to each other. This duty of good faith, the Court held, "may well capture some forms of discrimination among partners that represent arbitrary disadvantage."7

Consistent with its caution that the status of being a partner does not automatically preclude a person from being considered an employee for the purposes of the Human Rights Code, though, the Supreme Court noted that this could be the case if the "powers, rights and protections associated with a partnership were greatly diminished" under a partnership agreement for certain partners.8 For firms distinguishing between equity and non-equity partners, and which have different levels of participation in the governance of the fi depending on a partner's status, this is an important qualification. This caution by the Court could well be a source of future litigation between firms and partners whose rights to control the firm are more limited than those enjoyed by the equity partners of Faskens.

The second major aspect of the Supreme Court's decision in McCormick is the discussion and approval of a broadly stated test for determining who is an employee. Though stated with reference to the specific provisions of British Columbia's human rights legislation, the test can be expected to be applied under other human rights legislation and influence common law determinations of employee status. While not disapproving of the more elaborate lists of factors found in case law under human rights and labour relations legislation, the Supreme Court in McCormick treated them as simply alternate ways of stating its own two-part test. This test asks: "who is responsible for determining working conditions and financial benefits and to what extent does the worker have an influential say in those determinations?"9 The degree to which a person is, in fact, subject to someone else's power to decide on working conditions and remuneration, and the resulting dependancy, will determine whether or not the person is an employee. The Court describes these themes of control and dependency as the "consistent animating" themes of legislation aimed at protection of employees in Canada and internationally.10

What effect this restatement of the test for employee status will have, at least where protection of the potential employee is the legal issue, will be of interest all Canadian employers. The broadly stated nature of the test, along with the Court's emphasis on not using longer lists of factors in a "formulaic" manner and on seeking the substance of the relationship between the parties, may well result in litigation as lower courts consider whether the revised test will make someone an employee who might not otherwise have been.

The author would like to thank Thomas Brady for his assistance with this article.


1 2014 SCC 39

2 R.S.B.C.1996. c. 210

3 Paras 23-29,38.

4 Para. 46.

5 Para 42.

6 R.S.B.C. 1996, c. 348.

7 Para 48.

8 Para. 46.

9 Para. 23.

10 Paras. 25-28.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.