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Pamela Sayers looks at a recent case concerning whether
a partner had employment or partner status for tax
purposes.
A recent case heard in the Employment Appeal Tribunal (EAT),
which upheld the decision of the Employment Tribunal, has provided
welcome relief for LLPs with fixed share equity partners.
In Tiffin v Lester Aldridge LLP, Tiffin who, although a
fixed share equity partner, considered himself to be an employee
rather than self-employed and wanted to seek compensation for
unfair dismissal. The EAT dismissed the case, satisfying LLPs that
individuals who enter into members' agreements cannot seek
claims in employment tribunals.
However, partnership agreements should be reviewed as the EAT
considered Tiffin to be a partner because he:
made a capital contribution to the LLP
was entitled to a profit share
had a say in the management of the firm
would share in the LLP's surplus assets of the firm on a
winding up.
The degree of these did not seem to matter (for example, Tiffin
received a very small profit share) and no emphasis was placed on
any one of these criteria. However, in the case of Williamson
& Soden Solicitors v Briars, the EAT held that the fact
that someone receives a share of the profits will not, in itself,
point to partnership status. But it should be noted that in the
case of Williamson, not much had changed for the
individual when he moved from being an employee to a member of the
LLP.
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Employers who fail to inform and consult employees in connection with a TUPE transfer may have to pay a penalty of 13 weeks’ gross pay to all affected employees.
Many employers will have experienced the situation whereby a senior employee leaves the company and shortly afterwards begins to solicit key clients in breach of his/her restrictive covenants.
Failure to follow the Acas Code of Practice on Disciplinary and Grievance Procedures will usually increase the risk of a dismissal being found to be procedurally unfair and can result in increased compensation being payable to a dismissed employee.
BIS has published an updated indicative timetable of the planned key dates for the Enterprise and Regulatory Reform Act 2013 and the introduction of financial penalties for employers who breach workers rights will now not be in October 2013.
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