Employment Law Speed Read – 08/10/18
8th October, 2018
In Morrison v Aberdein Considine & Company, the Employment Appeal Tribunal held that when determining whether an individual was an employee or a partner, the Employment Tribunal was entitled to consider the partnership agreement as the starting point.
Ms Morrison was a solicitor at Aberdein Considine & Company and had worked at the firm for 25 years. On 1 May 1995, Ms Morrison became a ‘salaried partner’ and signed a partnership agreement. Under the terms of the agreement, Ms Morrison was not required to pay a capital sum towards the partnership but she was entitled to a share of the profits.
Ms Morrison was classed as self employed for national insurance and income tax purposes. Additionally, Ms Morrison attended quarterly business meetings which were also attended by other partners. Unlike other employees, Ms Morrison was not subject to the employer’s appraisal system and she did not have to submit holiday requests.
Following her departure from the firm, Ms Morrison brought a number of complaints against her employer. The complaints included claims for unfair dismissal and a statutory redundancy payment. In order to be eligible to bring these claims, the individual must first establish that they are an employee. Ms Morrison’s employer rejected her complaints on the basis that Ms Morrison was a partner and not an employee.
The Employment Tribunal (ET) found in favour of the employer and held that Ms Morrison was a partner, not an employee.
The ET stated that the partnership agreement must be the starting point to determine the relationship between the parties. The ET held that the agreement, which described Ms Morrison as a ‘partner’, expressly and unequivocally set out the relationship between Ms Morrison and her employer. Ms Morrison confirmed that the partnership agreement formed the basis of her relationship with her employer and additionally, there were no suggestions that the agreement was a sham.
The ET attached significance to the fact that Ms Morrison transferred the legal ownership of her jointly owned house to her spouse. The ET held that this was a clear indication that Ms Morrison knew that she was more than an employee. Ms Morrison appealed to the Employment Appeal Tribunal (EAT).
Employment Appeal Tribunal
The EAT dismissed Ms Morrison’s appeal and held that the ET was entitled to find that Ms Morrison was a partner and not an employee.
The EAT held that in order to determine the employment status of an individual, the Tribunal must carefully examine the facts and circumstances of the case. Although there was not a requirement for the ET to examine the terms of the partnership agreement first, the ET was permitted to do so.
Further, the EAT confirmed that although the label attached to the employment relationship is only one factor to be taken into consideration; it is for the ET to determine what weight to attach to each of the relevant factors.
This case demonstrates the significance that the tribunal will attach to the contractual documentation between the parties when determining employment status.
Although there is not necessarily a ‘correct’ approach when determining an individual’s status, the contractual documentation is usually the starting point.
If you have any questions on the above and how it will affect you, please do not hesitate to get in touch with a member of our employment team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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