The status of partners is a risky business, says Sarah Rushton
IN BRIEF
- Partnerships and LLPs should not overlook the fact that equity partners have “employee” rights. They are protected by the Equality Act and can bring employment tribunal claims.
Prior to 2001, partnerships were governed by the terms of their deed and, in default, the terms of the Partnership Act 1890. However, since 2001 there has been an alternative structure for partners. Under the Limited Liability Partnerships Act 2000, two or more people wishing to carry on business together can do so as an LLP. The relationship between the members of an LLP is covered by the membership agreement.
There has been considerable legal debate around the issue of partnership and LLPs and whether or not different classes of partners or members are truly self employed partners or employees. To the outside world, a “partner” is simply someone who is held out as such, but the term partner can actually mean many different things: full equity, fixed share, salaried etc.
Where concerns can arise
Issues of employee/partner status typically
