Partnership Structure Limits Employee Status: Anglian Windows Ltd v Allister Webb Case Analysis

Citation: [2023] EAT 138
Judgment on

Introduction

The recent judgment of Anglian Windows Ltd (t/a Anglican Home Improvements) v Allister Webb has brought to the forefront the issue of employment status and its implications on unfair dismissal claims within the framework of a partnership structure. The Employment Appeal Tribunal (EAT) has rigorously analyzed the interplay between the Employment Rights Act 1996 (ERA) and the Partnership Act 1890 (PA 1890) to address whether a partner providing services through a pre-existing partnership can be considered an employee under a contract of employment.

Key Facts

In this case, Allister Webb, through a pre-existing partnership (Webb Consultants), provided services to Anglian Windows Ltd and was paid for these services through the partnership. Following the termination of his engagement, Webb claimed unfair dismissal, and the respondent applied to have the claim struck out on the basis that Webb was not an employee but a partner. The Employment Tribunal (ET) initially sided with Webb, concluding the existence of the partnership did not rule out the possibility of him being an employee for the purposes of the ERA. The respondent appealed against this decision.

The EAT scrutinized several legal principles, predominantly centered around the definitions within Section 230 of the ERA and the implications of partnership law as per the PA 1890.

Employment Status and Section 230 ERA

The EAT underscored that for an individual to qualify as an employee under the ERA, there must exist a contract of employment, which is constituted by a contract of service or apprenticeship. This legislative definition necessitates a multi-factorial assessment focusing on the intent of the parties, with mutuality of obligation and the right of control emerging as necessary pre-conditions.

Partnership Act 1890 and Agency

Sections 5 and 6 of the PA 1890 elucidate that a partner acts as an agent for the partnership and his other partners for business purposes. Thus, a contract signed by a partner typically binds the partnership and all other partners. The ET’s acceptance that the claimant acted on behalf of the partnership meant that the legal relationship formed was not with an individual, but between the respondent and the partnership as a whole.

Precedent Case Law

Significantly, the EAT deliberated on the impact of the precedent set by Firthglow Ltd v Descombes [2004] UKEAT/0916/03, which stated that if contractual work is being conducted under an agreement with a partnership, it precludes the existence of an individual employment contract. The EAT found this binding, contrasting it with the Catamaran Cruisers Ltd v Williams [1994] IRLR 386 decision, which dealt with the introduction of a limited company and not a partnership.

Outcomes

The EAT allowed the appeal, concluding that the ET erred by not following the precedent in Descombes, which made it clear that a contract with a partnership does not allow for the individual partners to simultaneously be employees under a contract of employment. Consequently, Webb’s claim was dismissed as it had no reasonable prospect of success, given his services were provided within the context of a partnership structure and not as an individual employee.

Conclusion

The EAT ruling in Anglian Windows Ltd v Allister Webb reaffirms the legal principle that where services are provided through a genuine partnership, the partners are unable to claim individual employee status with respect to the entities they serve under a partnership agreement. The case underscores the importance of properly understanding the relationship between the structures of partnerships and the rights attendant upon employment status. This decision provides legal professionals with clarity on the status of partners as non-employees under the ERA, fortifying the need to analyze the true nature of the relationship between parties when discerning employment relationships.

Related Summaries