Appeal No. UKEAT/0611/10/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 20 May 2011

Before
THE HONOURABLE MR JUSTICE LANGSTAFF
(SITTING ALONE)

WILLIAMSON & SODEN SOLICITORS	APPELLANT

MR J J R BRIARS	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR MARK WHITCOMBE
(of Counsel)
Instructed by:
Williamson & Soden Solicitors
Stanton House
54 Stratford Road
Shirley
Solihull
B90 3LS
	
For the Respondent
	MR SIMON HARDING
(of Counsel)
Instructed by:
Oxford Employment Law Solicitors
7200 The Quorum
Oxford Business Park North
Oxford
OX4 2JZ

SUMMARY
JURISDICTIONAL POINTS – Worker, employee or neither

A Tribunal determined that a solicitor who had been an employee, but who then accepted remuneration calculated as a “profit share”, remained an employee and did not become a partner.  It did so without express reference to the Partnership Act 1890, and was contended to be wrong in law to fail to do so, and to have failed to ask at the outset whether the test of conducting business in common with a view of profit under that Act had been satisfied. The appeal was dismissed, since neither was required; the question was whether the solicitor was an employee, which was a question of fact to be determined (and was) by applying the appropriate legal tests, and the answer to which was in any event plainly and obviously right.
THE HONOURABLE MR JUSTICE LANGSTAFF
Introduction
1.	This is an appeal against a decision of Employment Judge Batten, sitting at Birmingham, whose Reasons for deciding she had jurisdiction to hear the case were promulgated on 15 September 2010.  The question before the Tribunal was whether the Claimant (now the Respondent) worked as a solicitor for the then Respondent (now Appellant) and was an employee.

The facts
2.	It was common ground that he had been an employee of the employer with effect from 14 November 2001, when he entered into a contract of employment.  On 1 May 2003 he became what was described as a salaried partner of the employer.  Although the description included the word ‘partner’, it was common ground that he remained an employee of the firm.  In May 2004 new arrangements were agreed between the Claimant and the firm.  Those arrangements included and were to the effect, so the Tribunal found, that, instead of the employee being paid £55,000 per year by way of salary, he would instead be paid what was described as a guaranteed profit share of £55,000 together with one‑third of one‑sixth (one‑eighteenth, in effect) of the net profits of the firm, which it was anticipated might well be in the region of a further £10,000.  Those arrangements were confirmed by a letter of 1 September 2004.  The letter was:

“[...] to be read in conjunction with the Williamson & Soden Partnership Agreement, and the Deed of Indemnity which [the claimant] signed, but the terms of the letter are to prevail over the terms of the Agreement and Indemnity in so far as they are inconsistent with it.”

3.	The Tribunal resolved as a matter of fact what was the partnership agreement there referred to.  There were two candidates.  The first was the Agreement entered into in 2003.  The claim that it was the Agreement referred to in the letter of September 2004 rested upon a number of planks: the first was that in small type on each page there was a computer reference by way of footnote which read “Partnership Agreement 17/03/03” (see paragraph 14 of the Tribunal Reasons); second, there was only one such agreement which contained, though only as one clause, an indemnity, thus making it sensible to read ‘Agreement and Deed of Indemnity’ as one document; thirdly, that the Claimant had not been invited to sign or otherwise accede to the Partnership Agreement which the five equity partners of the firm (so described) had between themselves; fourthly, that the equity partners continued to treat the Claimant as somebody who was not within their hierarchy (see paragraph 55, second sentence); fifthly, the Claimant said that he thought the reference was to the Agreement of 1 May 2003.

4.	The argument for the rival agreement was that it was the Agreement between the equity partners, and the Respondent employer gave evidence that that was what had been intended by the letter.  

5.	The Tribunal noted further that the letter did not state that the Claimant’s title or status would change from one of salaried to one of equity partner, or from employee to self‑employed.  It concluded that the Claimant’s evidence as to the Agreement was to be preferred.

6.	The Tribunal went on to establish these relevant facts: the benefits of the existing contract were to continue as before; the Claimant had no risk of losses that the firm might incur in the ordinary course of business; he had no capital stake, nor did he build up a capital stake in the firm; he had been, as a solicitor, Head of Commercial Property, but the Respondent firm appointed another solicitor in his stead and moved him “sideways”;  the firm subjected him to the requirement that he meet targets; he was challenged when those were not achieved; he was said to be, on one occasion, at risk of redundancy; he was not consulted about significant events in the life of the firm, such as an impending audit by the Solicitors’ Regulation Authority, before they occurred; the firm raised concerns about his performance.  The Tribunal found as a fact that the firm had not intended that the Claimant be an equity partner, and had intended that the effect of the arrangements in May 2004 would be that the Claimant would be subject to the same terms as before except in respect of remuneration.

7.	At paragraph 46, the Tribunal summed up in this way:

“In the circumstances, the tribunal finds that the new arrangements which the respondent put in place with effect from 1 May 2004 amounted, at most, to a change in the way the claimant was remunerated.  From 1 May 2004, instead of a fixed salary, the claimant was paid a minimum fixed amount by way of a share of the respondent’s profits and the claimant’s minimum fixed share was guaranteed to be paid apparently regardless of whether the respondent made a loss.”
47. The economic reality of the new arrangements were that both parties benefitted financially – the claimant by the deferment of tax and the respondent through no longer having to pay employer’s national insurance on a sizeable salary.  The claimant was not subject to the liabilities of the respondent in the manner that the equity partners were but consequently the reward for the claimant’s efforts was limited to the guaranteed amount of £55,000, together with a small percentage of the respondent’s profits whilst the equity partners enjoyed the potential for much greater reward.”

8.	They went on to note that an effect of the change was that the Claimant paid tax and National Insurance on a self‑employed basis.  As a matter of fact, the Tribunal concluded that the contractual arrangements between the Claimant and firm imposed obligations on him to serve them, to devote the whole of his time and attention to the business of the Respondent, to perform such duties as might be assigned to him by the firm, and to comply with all reasonable requests from it.  It regarded those obligations as indicative of a significant degree of control being retained by the firm over the Claimant and his work, and that those obligations and that control had survived after the new arrangements in 2004 had been entered into.  When matters arose that led the parties to part, the Tribunal set out that he had first been approached to accept them upon the basis that he would sign a compromise agreement which, it noted, was a phrase applicable to an employment relationship, which would not obviously be appropriate to the retirement of a partner or someone who was self‑employed.

The Tribunal Decision
9.	The Tribunal approached its analysis of those facts which it had found by reference to section 230(1) of the Employment Rights Act 1996.  That defines an employee as, “an individual who has entered into or works under [...] a contract of employment,” section 230(2) of the Employment Rights Act 1996 providing that a “contract of employment” means, “a contract of service [...], whether expressed or implied, and (if it is expressed) whether oral or in writing.”  It directed itself that it must consider all aspects of the relationship between the putative employee and the putative employer, no single factor being in itself decisive, each of which might vary in weight or direction, and having given such balance to the factors as seemed appropriate.

10.	The case for the Respondent employer set out in the ET3 grounds of resistance dealt with the merits of the claim from paragraph 11 onward, but from paragraphs 1 to 10 it maintained that the Claimant was a partner and not an employee.  The way that it summed the historical matters up was at paragraph 9, by reference to what it described as the Claimant’s self‑employment, and at paragraph 10 said this:

“It is contended that the Tribunal has no jurisdiction to hear the claim submitted by the Claimant on the basis that the Claimant was engaged under terms of self‑employment and such terms were entered into at the Claimant’s request for his own personal benefit.  The Claimant enjoyed the benefits of self‑employment for some time and therefore to subsequently attempt to claim he was an employee is entirely inequitable.”

11.	The Tribunal did not however directly approach the question as if it were a stark choice between employee or self‑employed, although that choice, having been suggested to it by the employer in the ET3, was never far away from its reasoning.  Rather, what it did was to note the agreement that the Claimant had been an employee from the date of joining the firm and until at least 1 May 2004, by which date he was also described as a partner in the firm, but nonetheless an employee too (paragraph 44):

“By 1 September 2004, new arrangements were put in place by the respondent with effect from 1 May 2004 and reduced to writing by the respondent in its letter of 1 September 2004.  The issue arises as to whether the new arrangements changed the fundamental nature of the relationship between the parties and, if so, whether the claimant then ceased to be an employee of the respondent.”

12.	Having begun at paragraph 45 to answer that question by noting that after 1 May 2004 the Claimant continued to be a partner in the Respondent firm, and that in that regard his title did not change and he did not become an “equity partner” on a par with other partners of the Respondent who had the title “equity partner,” nor had it been intended that he should become an equity partner, the Tribunal set out an analysis of many of the factors which I have summarised already in this Judgment.  It looked carefully at the facts which had been put before it and those which it had determined.  At paragraph 55 it considered the parties’ own view of the relationship.  It said:

“For the [firm], Mr Williamson accepted that the claimant was not seen as a full equity partner.  The tribunal considered that such had never been the respondent’s intention.  The claimant’s evidence was very much that he was confused and did not really understand the legal significance of his position until he sought advice in 2009.  The claimant appeared to have been motivated by the financial benefits of the new arrangements from 1 May 2004 and did not give much thought to anything else.  That was because, apart from the claimant’s remuneration arrangements, little else changed in practice.”

13.	At paragraph 57 the Tribunal summarised its conclusions in these terms:

“In all the circumstances of this case, having regard to the terms of the contractual documentation between the parties, the intentions of the parties and in particular the intention of the respondent concerning the status of the claimant, the new financial arrangements put in place by the respondent in 2004 and the manner in which the parties conducted their relationship in reality, the tribunal considered that the claimant had been engaged by the respondent under a contract of employment from the outset and that, on balance, nothing arose, either in 2004 or otherwise, to change the claimant’s position as an employee of the respondent.”

14.	Thus, overall, what the Tribunal did was to ask whether the events of May 2004 had changed the relationship from one of employee which implicitly therefore, it considered, would otherwise continue, and concluded it had not.  That approach, and one matter of alleged material misapprehension of fact are challenged as the grounds of appeal before me.

The Appellant’s case
15.	Mr Whitcombe, who appears for the Appellant firm, argues grounds of appeal that were not of his drafting.  The grounds themselves do cover what he submitted to me.  I should, however, set them out.  The first ground in the Notice of Appeal was that the Tribunal:

“[...] erred in law in that:
(a) it failed to direct itself in accordance with section 2(3) of the Partnership Act 1890 that receipt of a share of the profits of the firm is prima facie evidence of partnership;
(b) it failed to direct itself in accordance with Palumbo v Stylianou [1966] 1 ITR 407 or with Cowell v Quilter Goodison [1989] IRLR 392 that an equity partner in a firm is not an employee;
(c) its finding of fact at paragraph 20 of the reasons that it was not clear whether the Respondent had ever seen a copy of the Appellant’s Partnership Agreement was perverse in that it was the evidence of both parties, and in particular the Respondent’s own evidence at paragraph 42 of his witness statement, that he had been provided with a copy of such agreement;
(d) it failed to find that the Respondent was an equity partner in the Appellant firm by reason of his entitlement to be paid a percentage share of the firm’s profits;
(e) it found that the Respondent was employed by the Appellant notwithstanding the fact that:
(i) his previous employment had been brought to an end;
(ii) he had been admitted as an equity partner with effect from 1 May 2004;
(iii) he had capital at risk in the Appellant firm;
(iv) he was, by agreement, bound by the firm’s partnership deed;
(v) he was involved in management of the firm; and
(vi) he was not treated as an employee in respect of hours, holidays, sickness and disciplinary issues.”

16.	It will immediately be apparent that the Tribunal did not identify the Claimant at any time as being an equity partner, and indeed were careful to draw a distinction between those who were termed as such and him.  It will also immediately be apparent that some of the specific matters referred to under ground (e) were contrary to the findings of fact of the Tribunal, and it has not been suggested before me that the Tribunal were in error in finding those as facts.  Essentially the appeal is advanced before me under ground (a), coupled with the case of Cowell, (Mr Whitcombe rightfully disavowing reliance upon Palumbo as authority of no weight upon which he could properly rely) and the argument as to paragraph 20 of the Reasons.  What he said here was that the case of Kovats v TFO Management LLP and Another [2009] ICR 1140 at paragraph 18 endorsed the approach that would ask as a preliminary question whether or not an individual was a partner.  He contended that being a partner within the Partnership Act 1890 necessarily excluded the person concerned from being at the same time an employee of the partnership.

17.	Kovats was a case involving a Limited Liability Partnership.  Accordingly, section 4(4) of the Limited Liability Partnerships Act 2000 applied.  That provides that:

“A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.”

18.	The challenge in Kovats was a challenge by a Claimant who had been determined not to be an employee against that determination by the Employment Tribunal.  This Tribunal, presided over by HHJ Birtles, concluded that the Employment Tribunal had been correct first to consider whether the Claimant was a partner in the partnership; having found that he was a partner in the partnership, that it correctly then considered the common law tests and decided it would not have conferred employment status upon him.  The submission made by Mr Whitcombe was that to address whether or not the Claimant was a partner is a necessary, logical starting point, and it should have been the starting point here of the Tribunal.

19.	He draws further support for this as being the proper approach from the case of Tiffin v Lester Aldridge LLP [2011] IRLR 105, a decision of this Tribunal presided over by Silber J.  That again was a case in which the Claimant had been determined by the Tribunal not to be an employee.  The question was thus that in Kovats: whether the Tribunal had been entitled to reach that conclusion.  This Tribunal held that it had.  It regarded the question whether a partnership existed within the definition in the Partnership Act 1890 (“a relationship which subsists between persons carrying on business in common with a view of profit”) as being a question of fact.  No definitive or crucial importance should be attached to the labels attached to the relationship by the parties themselves.  The Tribunal observed that persons who were described as “salaried partners” had in the cases often been found to be employees but could in some cases be true partners, and that it was not necessary to be held a partner that a person should receive any part of the profits or contribute to the capital.  The Claimant in that case was a “fixed‑share partner,” a description that might be thought applicable to the Claimant in the present case.  The argument before the court in Tiffin on appeal was that the conclusion as to employee was perverse because, it was said, his share of the profits, contribution to capital and involvement in management were too limited to justify a conclusion that he met the definition of partner; that the Tribunal had attached undue weight to the label “fixed‑share partner,” and had failed to take account of the fact that the Claimant worked under the direction of the partners.

20.	At paragraph 12 Silber J for the Tribunal noted that it had in that case been common ground between the parties that in order to ascertain if a person were a partner in a limited liability partnership, such as was the Respondent in that case, an Employment Tribunal was first required to consider whether the person concerned would be a partner in the partnership and, if that answer were in the negative, it had then to consider whether the common law tests would have conferred employment status on him, citing for that proposition the case of Kovats.  It is thus apparent that there was no argument in Tiffin directed specifically to that point, and the reliance on Kovats, it must be said, could only be reliance on the paragraph drawn to my attention, paragraph 18, which itself did not propound the proposition that a Tribunal could only reach a correct conclusion if it first considered whether a Claimant was a partner in the partnership, merely that the Tribunal in that case had done.

21.	Mr Whitcombe points out, however, with greater force in my view, that in the discussion of the factors which it took into account there was no reference whatsoever by the Tribunal here to the Partnership Act 1890.  At paragraph 8 there was an express reference to it having been shown an extract from ‘Lindley and Banks on Partnership’; there were frequent references to the labels of ‘equity partner’ and ‘salaried partner’; there was frequent reference to ‘the partnership’; but there was no analysis which asked in terms whether the relationship between the Claimant and the firm was one in which he and they were carrying on business in common with a view of profit.  Thus, he says, the Tribunal took the approach of ignoring a relevant question, which necessarily meant that some of its findings were suspect, and that it might well have attributed rather greater significance to some of the factors had it appreciated the need to deal with the Partnership Act.  For instance, section 2(3) of the Partnership Act provides in terms that, “the receipt by person of a share of the profits of a business is prima facie evidence that he is a partner in the business.”  It may not be conclusive, but it is evidence, and the Tribunal here did not analyse this point in terms that appear to recognise that.  Accordingly, he submitted, its decision got off on the wrong foot, and its findings cannot properly stand.

22.	Secondly, but with some effect upon the conclusions properly to be drawn in respect of the first submission, he argues that paragraph 20 contains an error.  It reads as follows:

“The letter [of 1 September 2004] does not make clear which document or documents are referred to as ‘the Williamson & Soden Partnership Agreement, and the Deed of Indemnity’. The claimant thought this was a reference to the agreement dated 1 May 2003 which he had signed.  It was the respondent’s evidence that ‘the Williamson & Soden Partnership Agreement’ was a reference to the existing partnership agreement between the 5 equity partners in the respondent although it was not clear that the claimant had ever seen a copy of such.  It was the respondent’s evidence that the ‘Deed of Indemnity’ was a reference to the agreement with the claimant dated 1 May 2003 even though an indemnity comprises only one clause of that agreement which contains many other provisions governing the relationship between the parties.”

23.	The Tribunal thus regarded it as being unclear whether the Claimant had ever seen a copy of the Partnership Agreement made between the five equity partners.  I have been shown today by Mr Whitcombe the witness statement of the Claimant, paragraph 42 of which reads as follows:

“I was also given another contract, which seemed to relate to the equity partners, which is undated, not signed or witnessed, and I was told that the benefits pack arrangements in it would not apply.  This document is contained at pages 67‑83 of the bundle.  However, the Respondent had provided a dated but unsigned extract, which I have not seen before (pages 84‑98 of the bundle).”

24.	It is not crystal clear what reliance upon which document was being placed by the employer.  I am told, as I would have expected, by Mr Harding, who appears for the employee and who was present at the Tribunal hearing as Mr Whitcombe was not, that there was considerable cross‑examination about the documents.  I have not been invited to look at any of the Notes of Evidence.  The Tribunal heard the evidence in June 2010 and deliberated on 13 August 2010 as to its conclusion.  The view expressed at paragraph 20, “although it was not clear that the claimant had ever seen a copy of [the agreement between the five equity partners],” may contain an error of fact, but it may be faithful to the way in which the evidence appeared to the Tribunal given the uncertainties as to what precisely paragraph 42 means upon the face of it, and what, if any, gloss was placed upon it in the course of evidence.  This was however relevant to the question as to what the agreement between the parties actually was.  But I am not here in the position in which it can be said that the Tribunal had clear evidence before it that the Claimant had adopted the Partnership Agreement made and signed between the five equity partners constituting them equity partners - and indeed if he had done one would have expected that to have been reflected in the behaviour of the parties thereafter.  To qualify as a material misapprehension of fact, the tests in E V Secretary Of State For The Home Department [2004] EWCA Civ 49 fall to be satisfied: in particular that the mistake is as to an established fact which is uncontentious and objectively verifiable.  This is not.  Further, I cannot be satisfied here that this is such a misapprehension of fact as had a material impact upon the decision as a whole so as to vitiate the conclusions which the Tribunal reached.  I turn, then, back to the central point of principle which is raised by Mr Whitcombe’s submissions.

Discussion
25.	The question to be determined for the purposes of jurisdiction is not whether a given individual is a partner; it is not whether he is self‑employed.  It is whether he comes within the definition of employee.  The rights which he claimed were rights which could only be accessed by an employee, so defined by section 230 of the Act.  Section 230 may have an element of circularity about it in that a contract of employment is defined as a contract of service, and ‘employee’ defined in relation to contract of employment: but it is clear that, whatever the circularity may be, a contract is essential.  Therefore the question is: what is the nature of the agreement?  As to this, there are too many cases here to review, but it is worth reminding oneself of the requirements concisely stated as to a contract of employment by Stable J, using one sentence in Chadwick v Pioneer Private Telephone Co Ltd [1941] 1 All ER 522 at 523D: “A contract of service implies an obligation to serve, and it comprises some degree of control by the master.”  That was expanded by McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515:

“A contract of service exists if these three conditions are fulfilled. 
(1) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. 
(2) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.
(3) The other provisions of the contract are consistent with its being a contract of service.”

26.	The third of those requirements operates not so much by identifying those provisions which are consistent, but is in its practical application directed towards those provisions of the contract which are inconsistent and would therefore negate there being a contract of employment.  Thus, for instance, a contract which required the contracting party to provide his services personally would be consistent with there being a contract of employment, but one that gave him full liberty to use substitute employees would in general negate the contract being one of service.  So too, as it seems to me, would it negate there being a contract of service if the contract, properly construed, provided that the individual was a partner who was operating together with others in common with a view of profit, so as to come within the Partnership Act 1890.

27.	The determination of those issues involves the determination of matters of fact.  It has been established by Carmichael v National Power PLC [1999] ICR 1226, in the House of Lords, that if the entire relationship of the parties is contained in documents then the construction of those documents is a matter of law for the courts.  But in so far as it is not, then it is a matter of fact for the determination by the Tribunal as to precisely what the relationship is.  Thus the way in which the parties conduct themselves where the documentary evidence may not be full or clear is evidence upon which a Tribunal may properly found its conclusions, always provided that it has approached the matter correctly in law.  I do not accept the primary submission of Mr Whitcombe that the only starting point here would be to address the question of partnership first.  As I have already indicated, I do not think this derives properly from the authorities of Kovats and Tiffin, but that is to assume that he intended the submission to be taken as widely as I have put it.  I do not accept that there is a rule of law to that effect, and a principle that a Tribunal should generally have regard to the terms of the Partnership Act 1890 in resolving any disputed question of employee status where that is relevant must not be elevated into a rule of law.  It seems to me, rather, to be a matter of logic, whose appropriateness will vary depending on all the circumstances and on the particular context.  It is up to the Tribunal how best logically to address the specific questions that arise for determination in its particular case upon the particular circumstances of that case when it deciding whether the individual is or is not an employee, which is the overall question it has to resolve.

28.	The Tribunal here necessarily had to ask if there were any reasons for the Claimant’s contract was such that he was not to be regarded as an employee, having already been agreed to be such within the service of the Respondent prior to 1 May 2004.  Mr Harding argues that the starting point which the Tribunal adopted was proper and logical; rather than address in a vacuum whether the Claimant had established that he was not a partner, it asked whether the new arrangements changed the fundamental nature of the relationship between the parties as it had previously existed.  The Tribunal undoubtedly had in mind that labels can be misleading; that is particularly so in this area of the law.  Modern economic circumstances are such that many employment relationships will vary in their content from one to another, though they may be described using the same terms.  It is no surprise that in the case of Stekel v Ellice [1973] 1 WLR 191 Megarry J  should have said this:

“I have found it impossible to deduce any real rule from the authorities before me, and I think that, while paying due regard to those authorities, I must look at the matter on principle.  It seems to me impossible to say that as a matter of law a salaried partner is or is not necessarily a partner in the true sense.  He may or may not be a partner, depending on the facts.  What must be done, I think, is to look at the substance of the relationship between the parties, and there is ample authority for saying that the question whether or not there is a partnership depends on what the true relationship is, and not on any mere label attached to that relationship.  A relationship that is plainly not a partnership is no more made into a partnership by calling it one than a relationship that is plainly a partnership is prevented from being one by a clause negativing partnership.  If, then, there is a plain contract of master and servant, and the only qualification of that relationship is that the servant is being held out as being a partner, the name ‘salaried partner’ seems perfectly apt for him, and yet he will be no partner in relation to the members of the firm.  At the other extreme, there may be a full partnership deed under which all the partners save one take a share of the profits, with that one being paid a fixed salary not dependent on profits.  Again, ‘salaried partner’ seems to me an apt description of that one.  I do not see why he should not be a true partner at all events if he is entitled to share in the profits of a winding‑up [...].” 

29.	As long ago as the 1940s, Wright LJ observed that the control test in its starkest form might not represent the sole test by which one could determine employed status, given modern economic circumstances.  In Cowell the Court of Appeal were considering whether or not an employee Appellant could show that his service with the Respondent employer was continuous with service he had had before the transfer of the business and assets of its predecessor to that Respondent.  The answer to that question depended upon whether during his prior service, in which he was described as an equity partner, he was nonetheless to be regarded as an employee within the meaning of the Transfer of Undertakings Regulations (regulation 2(1)).  He was determined not to be by an Industrial Tribunal, and this Tribunal had affirmed that decision on appeal.  In rejecting a further appeal, Donaldson MR said this at paragraph 7:

“It has been customary in recent years, since the 1960s at least, to eschew the old term ‘master and servant’, and quite right too.  Now we talk about employers and employees, and we talk about employment relationship.  But it is the terminology, not the relationship, which has altered, and it is quite impossible to say in my judgment that the Appellant was the servant of anybody when he was an equity partner, or that he was the employee of anyone or that he had any employment relationship with any of the other partners, or perhaps with all the partners including himself.  The firm was not a corporate entity; it had no separate identity.  His relationship with other partners was governed by the concept to which the Partnership Act applies: namely, of people who are carrying on business in common with a view to profit; a very well‑known and well‑understood relationship in law, and one which is wholly different from the employment relationship.” 

30.	All these extracts demonstrate these propositions: first, that what it is essential to focus upon is the true nature of the relationship; secondly, that will primarily be a matter for the determination evaluation of fact; thirdly, as to that, the labels that parties place upon the relationship may be relevant factors, but are in no sense determinative.  I note that in Tiffin Silber J described some of the “different types of partners” that could exist; demonstrating, again, that such are the differing roles that persons occupy within undertakings whilst being described as “partners” that the words are at best an unreliable guide to whether they fulfil the definition of ‘partner’ under the Partnership Act or ‘employee’ under the Employment Rights Act.  There is no clearly defined litmus test; everything must necessarily depend upon all the facts and circumstances.

31.	Principal among those facts and circumstances however, I would accept, would be the question of control; not in the sense so much of practical control, but as in the sense noted in Zuijs v Worth Brothers Proprietary Ltd [1955] 93 CLR 561 at 571: that what matters is lawful authority to command so far as there is scope for it.  It may be said that those persons who truly “carry on business in common with a view of profit” are persons who are central to the business itself; that the role so described reflects the distinction between those who are bosses and those who are bossed, which is broadly the difference between those who are not employees but who employ, on the one hand, and those who are not employers but are servants (to use the old‑fashioned phrase) on the other.  

32.	Be that as it may, I note that section 5 of the 1890 Act makes every partner: 

‘[...] an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and its partners [...].”

Further, partners are bound by acts on behalf of the firm (section 6); partners are liable jointly with other partners (section 9, and see section 10); liability is joint and several, (under section 12), for everything for which the firm, while a person is a partner therein, becomes liable (under sections 10‑11).  For someone to be a partner thus involves heavy obligations: and a change from the previously acknowledged status of employee would be one which involved being subject to those obligations, which one might therefore expect to be both clearly and cogently agreed if it were what was intended.

33.	I return to ask whether here the Tribunal was entitled to come to the conclusion it did.  It was, in my view, entitled to find the facts it did: the question then is whether, having determined those facts, it was required to analyse them not only by reference to whether there had been a change in status after May 2004 but by reference specifically to the Partnership Act.  Mr Whitcombe, rightly in my view, acknowledges that the use of the words ‘Partnership Act’ are not themselves necessary to show that the Tribunal had that in mind.  He argues, rather, that the Tribunal must demonstrate that it had regard to the appropriate matters.  Here he may point to a degree of understatement by the Tribunal of the case for the employer as it had been advanced before it: at paragraph 46, the Tribunal found the new arrangements, “amounted, at most, to a change in the way the claimant was remunerated.”  At paragraph 47:

“Apart from the claimant’s tax affairs, the tribunal found few [my emphasis] other aspects of the parties’ relationship that supported the respondent’s pleaded contention that the claimant was not an employee.”

34.	This, he says, minimises the evidence that there had been a change in the description of the remuneration; it was now described in terms of profit share.  That had the implication to which I have already referred under section 2(3) of the Partnership Act.  Mr Briars was someone who after that change attended meetings of all the partners when those took place (paragraph 53), so he played a part in the organisation.  The Tribunal might by contrast have overstated the matters that persuaded them that this Claimant was truly an employee.  It would be inevitable that a partner might seem, for instance, to be integrated into the Respondent’s organisation (paragraph 53).  Partners nowadays, Mr Whitcombe emphasised, may often operate under the control or one or other or all of them as, for instance, under the control of a managing partner, without losing their status as true partners.

Conclusions
35.	In my view, the Tribunal cannot be said in the particular circumstances of this case to have been wrong to approach the matter as they did from paragraphs 42 to 44 by asking whether the new arrangements had changed the fundamental nature of the relationship.  The Tribunal cannot be faulted for examining the facts against a comprehensive statement of the various tests that might be applied to determine if someone was employed.  The reference to self‑employment (by contrast with employment) seems to me to be unnecessary, save that it was the way in which the Respondent itself had posed the question in the grounds of resistance, and it might be said that although self‑employment connotes the idea that one is one’s own boss it has a natural affinity with the position of those who are conducting a business as partners, and therefore as principals, in a firm in which others are servants.  I do not therefore think that it was capable of misleading this Tribunal into error.  The Tribunal had well in mind the fact that Mr Briars now received a profit share.  It specifically addressed whether the receipt of that share meant that it should no longer regard him as an employee.

36.	As to conducting business, I accept Mr Harding’s point derived from paragraph 55 that for Mr Williamson, himself undoubtedly an equity partner as so described, to have accepted that the Claimant was not seen as a full equity partner meant at the very least that there was a hierarchy operating within the firm: equity partners at the top, conducting the business in common, and those underneath not “conducting” the business; therefore, by definition, and in the Tribunal’s findings of fact, the directing of the Claimant to take a sideways move and excluding him from decisions made by the equity partners alone (paragraph 53), including consideration whether the firm should expand into new premises, were capable of being symptomatic of a status which was lesser than that of those conducting a business together with a view of profit.

37.	In those circumstances, it might be thought that the parties’ view of the relationship was of limited materiality, but in so far as the principle in Carmichael is applicable here, and in so far as there might have been any doubt about the way in which the written agreements applied, it seems to me that the Tribunal was entitled to rely upon that too, such that the conclusions it reached at paragraph 57 were conclusions which, notwithstanding the absence of express reference to the Partnership Act 1890, were conclusions to which the Tribunal was entitled to come.  

38.	If I am wrong in that conclusion, and if the Tribunal were here required to make specific reference to the alternative, proposed by Mr Whitcombe, of partnership, instead of simply asking whether in all the circumstances the Claimant was or was not an employee, then I would have to allow the appeal unless satisfied that the Tribunal had in any event reached a decision that was plainly and obviously right.  

39.	Here, I would have concluded that on the facts as found by the Tribunal there was no other conclusion to which the Tribunal could reasonably come.  My reasons are these: the Claimant took no risk of loss; his share of the profits was not in modern economic times determinative of status as a partner, though it might have been persuasive toward it; he was subject to the directory control of the firm, the government of which on essential matters was (see paragraphs 53 and 57) within the hands of the equity partners. The Tribunal itself found that the parties conducted themselves in the way in which they would have done had the Claimant been an employee; had the Respondent determined to change the status, it would be surprising, given the onerous responsibilities that rest upon a partner, that the paperwork did not more clearly reflect that change, as it plainly did not on any showing.  Thus, focussing upon those matters, but, I hope, taking into account all the findings of fact, I would have concluded that here the Tribunal in any event came to the correct conclusion.  

40.	For those reasons, this appeal must be dismissed.  First, however, I must pay tribute in particular to the succinctness, clarity and quality of the submissions of Mr Whitcombe.