Williamson & Soden Solicitors v Briars

Employee status depends on the true nature of the contractual relationship, assessed by applying the ordinary legal tests to all the facts. A person may receive a share of profits, or be described as a partner, without thereby ceasing to be an employee.

There is no universal rule requiring an Employment Tribunal to decide partnership status before employee status. The Partnership Act 1890 may be relevant, but the logical order of analysis depends on the circumstances. Control, obligations, exposure to liabilities, contractual terms and the parties’ conduct may all be relevant. A change from employee to partner would ordinarily require clear agreement because partnership carries substantial obligations.

The claimant had been employed as a solicitor by the respondent firm. He was later described as a salaried partner, while remaining an employee. New arrangements replaced his salary with a guaranteed profit share and a percentage of the firm’s profits.

An Employment Tribunal found that the arrangements altered remuneration only and that the claimant remained an employee. The firm appealed, arguing that the Tribunal had failed to apply section 2(3) of the Partnership Act 1890, had adopted the wrong analytical starting point, and had made a material factual error concerning the partnership agreement. The central issue was whether the claimant’s status had changed from employee to partner.

1. Appeal dismissed. The Employment Tribunal was entitled to conclude that the claimant remained an employee.
2. The jurisdictional question was whether the claimant came within the definition of employee in section 230 of the Employment Rights Act 1996. That required examination of the nature of the agreement and the true relationship between the parties.
3. The ordinary contract-of-service principles required consideration of personal service, control and whether the other contractual provisions were consistent with employment. The Tribunal was entitled to assess the relationship as a whole, with no single factor being decisive.
4. There was no rule of law requiring a Tribunal to determine partnership status first. The definition of partnership in the Partnership Act 1890 could be relevant, but the appropriate order of analysis depended on the facts and context. The Tribunal’s approach of asking whether the 2004 arrangements had changed the fundamental relationship was permissible.
5. The labels applied by the parties were relevant but not determinative. The profit share was not conclusive evidence of partnership. The claimant’s lack of exposure to losses, continuing directory control, exclusion from essential management decisions, and the absence of clear documentation changing his status supported the finding that he remained an employee.
6. The alleged factual error concerning the partnership agreement was not an established, objectively verifiable error and was not shown to have materially affected the decision. In any event, on the facts found, the Tribunal’s conclusion was plainly and obviously right.

• Employment Appeal Tribunal: appeal against the Employment Tribunal’s jurisdictional decision dismissed.
• Employment Tribunal: determined that the claimant remained an employee and that it had jurisdiction to hear the claim.