THE EMPLOYERS' EDGE
B.C. Court of Appeal Confirms that Partnerships are not Separate Legal Entities – Denies Partner the ability to file Discrimination Suit
Practice Areas:
Human Rights
The B.C. Court of Appeal recently held in Fasken Martineau Dumoulin LLP v. British Columbia (Human Rights Tribunal) that a partnership cannot be treated as a separate legal entity from its partners or as an employer of a partner. The result of this decision is that the Human Rights Tribunal does not have jurisdiction to hear a complaint by a partner of discrimination in her or his employment.
Fasken Martineau Dumoulin LLP (“FMD”) is a limited liability partnership. Mr. McCormick was an equity partner at FMD who turned 65 in 2010. FMD's partnership agreement required each partner to retire at the end of the year in which they reached age 65. As a result, Mr. McCormick filed a human rights complaint alleging that he was discriminated against on the basis of age.
The Tribunal ruled, despite the fact that McCormick was one of the partners of FMD, that it had jurisdiction to hear the complaint on the basis that the relationship between McCormick and FMD was one of employment as contemplated by the Human Rights Code. The ruling was appealed and eventually overturned by the B.C. Court of Appeal which held that there was no employment relationship between FMD and McCormick and therefore, his complaint was not within the jurisdiction of the Tribunal.
In support of their conclusion, the Court of Appeal held that there can be no doubt that 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 is a member. The court added that this legal conclusion cannot be changed, despite a broad, liberal and purposive interpretation of the Human Rights Code.
Finally, the court stated that no express exemption is required to exclude from the jurisdiction of the Tribunal under the Code a relationship to which, by law, the Code does not extend.
Employers should take from this ruling that a dispute between a partner and the partnership is a dispute among partners, with the courts not likely intervening, placing an even greater emphasis on the language originally used in partnership agreements. Employers should contact CCP for assistance with drafting clear and effective partnership agreements in order to avoid future disputes.
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