An employee sharing profits in the firm is nonetheless not necessarily a partner

Williamson & Soden Solicitors v Briars EAT [2011] UKEAT/2011/0065_10_2705

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• Receipt of a share in a firm's profit does not necessarily make a partner.
• Control by the employer is central, whether the employee is 'a boss or bossed'.
• A tribunal does not have to refer expressly to a particular Act when making its decision, especially when that decision is patently right.

Langstaff J in the EAT has ruled in Williamson & Soden Solicitors v Briars that even though an employee during the course of his employment receives a share in a firm's profit this does not necessarily make him a partner.

This issue of control by the employer is central in determining whether an employee may be defined as an employee so as to distinguish between "those who are bosses and those who are bossed".

The Claimant was an employee who agreed on a "profit share" remuneration. Despite this the ET decided that he remained an employee. The respondent employer objected that the ET had not expressly referred to the Partnership Act 1890 nor did it decide whether that Act had been satisfied or not as to the definition of a partnership that carries "on a business in common with a view of profit".

The EAT rejected the Respondent's claim that the tribunal had erred in law by not considering the Act. A tribunal is not compelled to refer expressly to a particular Act when making its decision.

Whether the solicitor was an employee was a question of fact determined by the application of appropriate legal tests and in any case the answer was "in any event plainly and obviously right."

The appeal was dismissed.

• E V Secretary Of State For The Home Department [2004] EWCA Civ 49
• Carmichael  v National Power PLC[1999] ICR 1226, in the House of Lords, that if the entire relationship of the parties is contained in documents then the construction of those documents is a matter of law for the courts.  But in so far as it is not, then it is a matter of fact for the determination by the Tribunal as to precisely what the relationship is. 
• Chadwick v Pioneer Private Telephone Co Ltd[1941] 1 All ER 522 at 523D: “A contract of service implies an obligation to serve, and it comprises some degree of control by the master.”  as expanded by:
McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515:  “A contract of service exists if these three conditions are fulfilled.
(1) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.
(2) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.
(3) The other provisions of the contract are consistent with its being a contract of service.”
• Stekel v Ellice [1973] 1 WLR 191 Megarry J: "  a salaried partner is or is not necessarily a partner in the true sense.  He may or may not be a partner, depending on the facts.  What must be done, I think, is to look at the substance of the relationship between the parties, and there is ample authority for saying that the question whether or not there is a partnership depends on what the true relationship is, and not on any mere label attached to that relationship. "
 
• Zuijs v Worth Brothers Proprietary Ltd [1955] 93 CLR 561 at 571: "what matters is lawful authority to command so far as there is scope for it.  It may be said that those persons who truly “carry on business in common with a view of profit” are persons who are central to the business itself; that the role so described reflects the distinction between those who are bosses and those who are bossed, which is broadly the difference between those who are not employees but who employ.."

© 2011 Workrep