by Duncan Bauchop, Trainee Solicitor

The recent decision of Morrison v Aberdein Considine & Co is yet another example of someone’s employment status being called into question. Given that certain remedies, such as the right to claim unfair dismissal, are only available to individuals who fall into specific categories, the employment status of individuals is coming under increasing scrutiny. And as the case of Morrison v Aberdein Considine & Co, Clyde & Co LLP v Bates van Winkelhof and the relatively recent gig economy cases demonstrate, labels can often be deceiving. As the Courts and Tribunals have stressed, it is the facts and circumstances which are relevant, not the individual’s job title or label.

The judgment

In this case the Claimant, Mrs Morrison, was a so called “salaried partner” at Aberdein Considine & Co, working in their conveyancing department. She joined as a salaried partner in 1995 and remained in that role until 2016, when she parted ways with the Respondent.  

The Claimant averred, amongst other things, that she had been unfairly dismissed. In order to be unfairly dismissed the Claimant must have been an employee, as opposed to a worker, self-employed contractor, etc. when they were dismissed. The Respondent claimed the Claimant was not an employee, but a “salaried partner”, and as a result she was not entitled to claim this remedy.

The Employment Tribunal, at first instance, applied the “multiple” test, as outlined in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, to determine whether the Claimant was an employee. The “multiple test” considers, amongst other things, whether there is a mutuality of obligations between the employer and the individual, i.e. whether the employer is obliged to provide work and the individual obliged to perform it, whether the individual can substitute another individual in their place or they have to provide the service personally, as well as a number of other factors.  

The Employment Tribunal started by analysing the Partnership Agreement, which was the basis of the Claimant’s relationship with the Respondent. It was highlighted, and the Claimant accepted, that she identified herself both within the firm and externally as a partner, had signed successive partnership agreements, which she did not at the time claim to be shams, and on joining the firm in 1995 had transferred ownership of her marital home into the name of her spouse to ring fence the property from any claim against the partnership or the partners. In addition, despite the Claimants averments to the contrary, the Employment Tribunal found that while she received a “salary”, this was more akin to a share of the profits of the firm, as it varied depending on the financial performance of the firm. For instance, there was a notable decrease during several months in 2008 and 2009 when the firm was hit by the banking crisis. Receipt of a share of the profits is prima facie evidence that the individual is a partner (section 2(3) of the Partnership Act 1890), as opposed to an employee.

However, while the Tribunal found she had a greater degree of autonomy and ability to manage her own workload than she represented, her ability to refuse and/or delegate work was more limited than you might expect of a non-employee and suggestive of there being some form of mutuality of obligations between the Claimant and Respondent more pronounced than you would expect in a partnership.  

Nevertheless, on balance, the Tribunal concluded she was not an employee and as a result the remedy of unfair dismissal was unavailable to her. On appeal, the Employment Tribunal’s decision at first instance was upheld.

While this case was decided in the negative, it is indicative of the increasing level of scrutiny Tribunals and the Courts are subjecting individuals’ employment statuses to. As this case, Clyde & Co LLP v Bates van Winkelhof, where an equity partner in an LLP was found to be a worker, and the relatively recent “gig economy” cases involving the likes of Deliveroo and Uber, where supposedly self-employed drivers were found to be workers, indicate it is not the label which matters, but the precise nature of the individual’s role, seen through the prism of the “multiple test” and statutory tests, which is relevant when deciding employment status. As more and more misleading job titles come under scrutiny, employers will have to be ever more careful how they engage individuals, or they could open themselves to potential claims from individuals they presumed not to be employees or workers.