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The rise of the partnership tribunal

17 September 12

A blog type comment on the growth of partnership claims before employment tribunals

by Ronald Mackay

Employment tribunals were originally called industrial tribunals. The new name was felt to describe the organisation more accurately. Indeed, employment tribunals have jurisdiction to hear statutory claims affecting the whole spectrum of the employment relationship.

Not just the employment relationship though. Increasingly, the employment tribunal is being used as a forum for claims by partners in traditional and limited liability partnerships.

One of the most important age discrimination claims this year – looking at the question of compulsory retirement – was brought by a partner in the employment tribunal before reaching the Supreme Court. The case is a reminder that partners (whatever their status) benefit from pretty much the whole suite of discrimination law protection. Recent economic circumstances have seen more partners being removed, and an increasing number reach for discrimination claims as a means of maximising termination packages to supplement what may be limited rights under partnership agreements. The uncapped nature of discrimination compensation and the associated PR risks mean that the majority of claims threatened (or raised) are resolved prior to a hearing.

The employment tribunal also deals with disputes over the status of partners. Are they employees or are they self-employed? Do they have the intermediate “worker” status? These cases are fact-sensitive, but one which looked at employee status and reached the Court of Appeal earlier this year identified the relevant considerations as including voting rights, the right to any profit (as opposed purely to salary), and the existence of a requirement to contribute capital. Partners who have no voting rights, receive a fixed salary and do not contribute capital are likely to have employment status whether or not that is recognised in the partnership agreement. That status brings with it, amongst many other things, the right not to be unfairly dismissed.

Earlier this year, we have also seen the employment appeal tribunal hold for the first time that equity members (partners) of a limited liability partnership have the requisite worker status to benefit from whistleblowing protection. Whilst the firm in that case has appealed further, the decision as it stands gives partners another potentially highly valuable claim to make before the employment tribunal. Whistleblowing legislation is couched in the language of public interest, but as the law currently stands, a whistleblowing complaint can be one which relates to the contractual terms of the worker himself (although the Government plans to narrow the scope). As with discrimination claims, whistleblowing claims can attract uncapped compensation.

As an employment lawyer, the territory is so familiar, I find myself acting as adviser to partnerships and partners almost seamlessly.

As for changing the name of the employment tribunal again, how about workplace tribunal?

Ronald Mackay, partner, Burness
t: 0141 273 6769

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