For Employees

Partnership Agreements

Are you an employee who has been asked to join a partnership?

A partner being forced to leave?

Either way, you should be aware of Fasken Martineau DuMoulin LLP v. British Columbia (Human Rights Tribunal), a recent British Columbia Court of Appeal decision that ruled that partners are not employees.

The case involved John Michael McCormick, who was a partner at the law firm of Faskin Martineau DuMoulin LLP. As a partner, Mr. McCormick had to sign a partnership agreement, which gave him an ownership interest in the firm, and entitled him to a share of the firm’s profits. Mr. McCormick turned 65 in March, 2010, and pursuant to a partnership agreement, was obligated to retire on January 31, 2011. Mr. McCormick wished to continue to work for Faskin Martineau, but the firm and Mr. McCormick were unable to come to an agreement that would allow him to continue to practice.

Mr. McCormick then filed a complaint with the Human Rights Tribunal claiming that he was discriminated against on the basis of age in his employment. The Human Rights Tribunal found that it had jurisdiction and that Mr. McCormick was discriminated against in his employment.

Faskin Martineau sought a judicial review of this decision in the Supreme Court of British Columbia arguing that the Human Rights Tribunal did not have jurisdiction as Mr. McCormick was not an employee. (Note: a judicial review is not the same as an appeal. A judicial review considers the procedural fairness and correctness of the decision Human Rights Tribunal). The judge ruled that the Human Rights Tribunal did have jurisdiction to consider the matter, and that Mr. McCormick was discriminated against in his employment.

Faskin Martineau appealed the Supreme Court decision and took the matter to the British Columbia Court of Appeal. The Court of Appeal ruled that partners are not employees of the partnership in which the person is a partner. In making its decision, the Court of Appeal ruled that a person cannot be their own employee. As such, the Human Rights Tribunal was without jurisdiction to consider the matter.

The McCormick case concerned the Human Rights Code. It is important to note that it’s possible that for a person to be an employee for the purposes of one piece of legislation, but not for another. That being said, courts and tribunals often use similar tests when determining whether an individual is an employee.

In practice, particularly in mid to large sized partnerships, some partners take on a role that is much more similar to that of an employee than a partner. The McCormick decision tells us that the rights available to a partner (an owner of the business) versus the rights of a non-owning employee upon being forced or required to leave the business can be quite different. While employees may be able to make human rights complaints and claim severance, it appears that partners are left without such remedies.

If you are about to sign a partnership agreement, you should ensure that you are fully aware of its terms, and that you will be satisfied with those terms in the future – you may not be able to renegotiate those terms later on. You should also be aware that by becoming a partner, you may be signing away some of the rights you would otherwise have as an employee. If you would like to have legal advice about entering into a partnership, please contact us today.

If you are a partner who has been or is being forced to leave the partnership, your rights and remedies will depend on whether you have an agreement with your fellow partners. As the facts will make each situation unique, we encourage you to get legal advice regarding your situation. Please don’t hesitate to contact us for a consultation today.

This blog is produced by Waterstone Law Group LLP. This blog is intended for information purposes only and is not offered as legal advice for a specific claim. Subscription to or use of this site does not establish a solicitor – client relationship between the user and Waterstone Law Group LLP or any of the individual contributors. For advice relating to your employment law claim, please contact us to arrange for a consultation.

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