In the recent case of McCormick v. Fasken Martineau DuMoulin LLP, the Supreme Court of Canada has unanimously ruled that generally speaking, an equity member of a partnership is not an “employee” under the Human Rights Code (“Code”), and therefore a Human Rights Tribunal had no jurisdiction over the relationship between a partner and their partnership. In this case, Mr. McCormick was an equity partner at Faskens and was a party to the partnership agreement that governed the relationship. The Faskens partnership agreement, like most professional partnership agreements, required all partners to mandatorily retire at the end of the year in which they turned age 65.
In 2009, when McCormick was 64, he brought a discrimination complaint against Faskens under the Code, alleging, amongst other things, that the mandatory retirement provisions of the partnership agreement discriminated against him on the basis of age, and therefore infringed his human rights under the Code.
Given the parties involved in the case, it is not surprising that this case slowly wound its way up to the Supreme Court of Canada. Faskens argued that Mr. McCormick, as an equity partner in the law firm, was not in an employment relationship, and therefore not protected by the Code. In deciding who was an “employee” for the purposes of the application of the Code, the Court focussed on two “synergistic aspects” of the employment relationship:
1. Control exercised by an employer over working conditions and remuneration; and
2. A corresponding dependency on the part of the worker.
Based on these two “synergistic aspects”, the Court outlined the following question as being central to the determination of an employment relationship, “who is responsible for determining the working conditions, who determined financial benefits, and to what extent does the worker have an influential say in these decisions”.
In applying the factors, the Court found that Mr. McCormick was more someone that was “in control” of, rather than subject to, decisions about workplace conditions. The Court looked specifically at Mr. McCormick’s ability as an individual equity partner to participate meaningfully and equitably in the decision-making process affecting his working conditions. Therefore, the Court held the Code did not apply in this case.
Interestingly, Mr. McCormick had been an equity partner with Faskens when the partnership voted to bring in mandatory retirement and had benefitted personally from 30 years of partnership retirements. The Court was careful to leave the door open by stating that there may be some cases where the Code may apply to partnerships, but that such a finding would only be justified in a situation where the powers, rights and protections normally associated with a partnership were greatly diminished. The Court also referenced that the statutory duty of “utmost fairness and good faith” under the Partnerships Act might provide some recourse to Mr. McCormick for the alleged discrimination but that it did not have to decide the issue.
This blog is provided as information and a summary of workplace legal issues.
This information is not intended as legal advice.