In Tiffin v Lester Aldridge LLP, the Court of Appeal had to consider the employment status of a fixed share equity partner in an LLP. Mr Tiffin was a salaried partner and then a fixed share partner before the business became a limited liability partnership. On the creation of the LLP, Mr Tiffin signed a members' agreement and contributed to the capital of the LLP.
Mr Tiffin was dismissed for failing to attract sufficient clients and work for himself and his colleagues. He brought a number of employment tribunal claims and attempted to establish employee status for the purpose of some of these claims.
On analysis of the facts, the Court of Appeal agreed with the EAT that a fixed-share partner was not an employee. Mr Tiffin had entered into a membership agreement with the other partners and received some of the profits. This was consistent with him being a partner.
The Court of Appeal found that the partners' agreement and the members' agreement were not a sham. The members' agreement was clearly intended to set up a partnership relationship between the equity partners and the fixed share partners.
Mr Tiffin alleged that he had no "real voice" in the management of the firm. The Court of Appeal disagreed with this argument. Employees are not normally involved in management decisions of partnerships but Mr Tiffin was allowed to vote on 22 out of a possible 52 resolutions. The Court found this to be inconsistent with the employer/employee relationship and found that Mr Tiffin was not an employee.
Best Practice
This case shows that the benefits of employee status will not be bestowed without sufficient evidence to establish it. The fact that Mr Tiffin was involved in management decisions was damning evidence against his assertion of employee status.
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