UK Court of Appeal: Fixed-Share LLP Member Was Not an Employee

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This DechertOnPoint reports on the Court of Appeal’s recent decision confirming that, on the particular facts of the case, a member of a fixed share Limited Liability Partnership (LLP) was not an employee and was not therefore entitled to the statutory rights — such as to claim unfair dismissal — that attach to employee status. Whilst each case must always be considered on its own facts, this decision will be welcomed by both professional services firms and businesses in the financial services sector which utilise the LLP structure.

Introduction

The LLP, as a business structure, is widely used not only by professional services firms but also in the financial services sector. One concern for those establishing and operating LLPs is whether a member of an LLP can argue that he or she enjoys the statutory rights to which employees are entitled. This is a particular concern with regard to the removal of a partner/LLP member and has been addressed in several cases over recent years, the most recent of which is Tiffin –v- Lester Aldridge LLP in which the issue of whether Mr Tiffin, as a fixed share partner of an LLP, was an employee was considered by the Employment Appeal Tribunal (“EAT”) and now the Court of Appeal.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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