Key Facts
- •Mr. Christopher Watson, an experienced tax accountant, transitioned from employee to associate partner at Wallwork Nelson Johnson.
- •The transition occurred on April 1st, 2019, without a fully executed partnership agreement.
- •Watson received a fixed profit share, ceased payroll deductions, and was issued a P45.
- •A draft partnership agreement was later presented but never fully signed.
- •Watson initially claimed self-employment status but later asserted employee status.
- •The Employment Tribunal (ET) found Watson was not an employee but a worker under section 230(3)(b) ERA.
- •Watson appealed the ET's decision on employee status.
Legal Principles
A contract of employment requires (i) agreement to provide work and skill for a master, (ii) subjection to the master's control, (iii) other contract provisions consistent with employment.
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 1 All ER 433
A partnership agreement under the Partnership Act 1890 is inconsistent with a contract of employment; one cannot be their own employer.
Williamson & Soden Solicitors v Briars UK EAT/0611/10; Ellis v Joseph Ellis [1905] 1KB 324 CA; Cowell v Quilter Goodison Co Ltd [1989] IRLR 392 CA; Tiffin v Lester Aldridge LLP [2012] EWCA Civ 35
A salaried partner may or may not be a partner depending on the facts; the substance of the relationship, not labels, determines status.
Stekel v Ellice [1973] 1 WLR 191; M Young Legal Associates v Zahid [2006] 1 WLR 2562 CA
In determining partnership status, it is critical to ascertain the parties' intentions.
Tiffin v Lester Aldridge LLP [2012] EWCA Civ 35
Parties may genuinely intend a status change, but this must be objectively assessed; it cannot contract out of employment protections.
Massey v Crown Life Insurance Company [1978] 1 WLR 676; Young & Woods Ltd v West [1980] IRLR 201 CA
The Employment Tribunal's reasoning should be read fairly as a whole; it is not required to identify all evidence or express every step of reasoning.
DPP Law Ltd v Greenberg [2021] EWCA Civ 672; Meek v Birmingham City Council [1987] IRLR 250 CA
Outcomes
Appeal dismissed.
The ET permissibly found a partnership existed, weighing parties' intentions and actions, despite the lack of a fully signed agreement. The ET correctly applied a multifactorial approach, considering all relevant factors, including tax treatment and the parties' expertise.
The ET's finding that Watson was not an employee was upheld.
The ET considered factors supporting and opposing employee status, ultimately finding the balance favored partnership. The lack of a complete agreement, particularly concerning liability for partnership debts, was not determinative.
The ET's finding that Watson was a worker was upheld.
The ET found that Watson undertook personal work and services for the respondent, not as a client or customer of his own business.