John Michael McCormick (“McCormick”) was a lawyer and an equity partner at the Vancouver office of Fasken Martineau DuMoulin LLP (“Firm”). McCormick worked at the Firm for his entire legal career since 1970 and became an equity partner in 1979.
As an equity partner at the Firm, McCormick was a party to the partnership agreement that governed all partners. In particular, absent an individual arrangement to the contrary, the partnership agreement required him to retire at the fiscal year end of the year in which he turned 65. He turned 65 in 2010.
No individual arrangement was reached between McCormick and the managing partner of the Firm, and so, prior to his mandatory retirement from the Firm, he filed a complaint to the British Columbia Human Rights Tribunal (“Tribunal”) alleging that the Firm discriminated against him in employment on the basis of age, contrary to the British Columbia Human Rights Code (“Code”)1.
The Tribunal agreed with McCormick that he should be considered an employee for the purposes of the Code and upheld his complaint. The Firm sought judicial review of the decision, but the Chambers Judge concurred with the Tribunal and upheld its decision.
On July 19, 2012, the British Columbia Court of Appeal (“Court”) allowed the appeal and unanimously decided that a partner in a limited liability partnership is not an employee of the partnership for the purpose of claiming the protection of human rights legislation from age discrimination.2 The Court found that McCormick’s complaint was not within the jurisdiction of the Tribunal, which is tasked with the enforcement of the Code to protect employees from discrimination in employment on the basis of age.
In Canadian law, a partnership is not a separate entity from its partners, and a partner cannot be an employee of, or employed by, a partnership of which he or she is a partner. In other words, a partner cannot employ him or herself. That is not to say that partnerships such as law firms cannot employ others, since most do employ associate lawyers and staff. However, these persons are not partners.
The Court also found that a broad, liberal and purposive interpretation of the Code cannot change this legal conclusion. The management of the firm, as constituted by election by the partners from time to time, may exercise aspects of control over the partners in accordance with the partnership agreement (i.e., working conditions, remuneration and other aspects of the operation of the business) that are in virtually all ways similar to the control that may be exercised by the executive and management of a corporation over its employees.
However, that does not change the relationship from one of partners running a business to one of employment by a group of partners over an individual partner. Put another way, the elected group of partners (i.e., managing partners and executive committee members) which exercise management responsibilities from time to time do not employ the other partners during that time.
This case offers welcome clarity to the relationship between partners and the partnerships to which they belong, for the purposes of human rights legislation. Miller Thomson LLP will keep you apprised of any further developments in this area.