Are Equity Partners Employees? Mandatory Retirement in Law Firms

September 6, 2012 | Jill W. Wilkie

For some time now, it has been a settled principle of human rights law that employers cannot force employees to retire unless the age of an employee amounts to a bona fide occupational requirement. While mandatory retirement used to be commonplace, this practise is now largely prohibited, as discrimination in employment practises on the basis of age is prohibited by human rights legislation across Canada.

However, workers are only protected from this prohibition where they are found to be employees. The question of whether an equity partner at a law firm is an employee for the purposes of s. 13(1) of the British Columbia Human Rights Code (the “Code”) was considered and determined by the British Columbia Court of Appeal in Fasken Martineau DuMoulin LLP v. British Columbia (Human Rights Tribunal), 2012 BCCA 313.

Fasken Martineau DuMoulin LLP (the “Firm”) has a partnership agreement with each of its equity partners that, absent an individual agreement to the contrary, requires its equity partners to retire at the fiscal year end of the year in which the equity partner turns 65. The Complainant, John Michael McCormick, was expected to retire on January 31, 2011, in accordance with the partnership agreement. Prior to reaching this retirement date, Mr. McCormick filed a complaint with the British Columbia Human Rights Tribunal (“BCHRT”) alleging discrimination on the basis of age.

The Firm made an application to dismiss the complaint and argued that Mr. McCormick could not avail himself of the protections of the Code, as he was not an employee. If the BCHRT were to find that Mr. McCormick was not an employee, then the BCHRT would not have jurisdiction to hear the complaint. The BCHRT dismissed the Firm’s application and found that Mr. McCormick was an employee for the purposes of the Code, based on a broad, liberal and purposive interpretation of the Code. The BCHRT’s decision in this regard was upheld upon judicial review.

On appeal to the British Columbia Court of Appeal, the Court noted that the Code must be given a broad, liberal and purposive interpretation and that the provisions of the Code in several cases have been extended to cover relationships that are not considered employment relationships at common law. However, the Court of Appeal cautioned that this interpretative approach that the Code does not give license to the Court to simply prevent discrimination whenever it is found, ignoring the words of the Code. The Honourable Madam Justice Levine, speaking for the Court, noted that it is a well-established principle of law that “a partnership is not, at law, a separate legal entity as is, for example, a corporation. Nor can it be: under Canadian Law, a partnership is not a legal entity separate from the partners who are its members. … [A] partner cannot be an employee of the partnership of which he or she is a member, because he or she cannot employ him or herself.”

As such, the issue for the Court of Appeal to determine was whether this well-established principle of law should be overridden by a broad, liberal and purposive interpretation of the Code. In answer to this issue, it was found that it is a legal impossibility for a partner to be employed by the partnership that the partner is a member of and no interpretation of the Code could change that conclusion. The Court found that the complaint was not within the jurisdiction of the BCHRT. In so finding, the Court stated “[t]he interpretation of the Code, like all statutes, is a legal exercise, where well-established fundamental principles of law apply. If the result of that exercise is that there are gaps in the legislation, it is the task of the legislature to remedy them.”


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