Partnerships, directorships and dismissal

Produced by Tolley in association with

Employment Tax

Guidance

In some situations, the ordinary rules relating to dismissals do not apply or additional rules need to be considered. Two of the most important of these are when a partnership dissolves and when an employee is also a director of a company.

Partnerships

Partners in an unlimited partnership are not also employees of the partnership and do not enjoy the same statutory employment rights as employees on dismissal. A person who is employed by an unlimited partnership is employed by each of the partners acting together.

Theoretically, this means that when a partner joins or leaves, the contract of employment must come to an end, as the employee is no longer employed by the same legal entity.

Scots law has resolved this by finding that a partnership has a separate legal personality from the individual partners, whereas English law prefers to see it differently.

The situation when one or more partners leave a firm ― or new ones join ― but otherwise the partnership continues is a technical dissolution,

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Hannah Freeman

Barrister at Old Square Chambers , OMB, Employment Tax

Hannah is an experienced employment law specialist advising on all forms of discrimination, maternity and paternity rights, unfair dismissal, contractual disputes, part-time working and TUPE. Hannah acts for claimants and respondents in both the public and private sectors, including the NHS, the police, local authorities, educational institutions, financial services and the hospitality industry, as well as providing training and support to in-house legal and HR teams.

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