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I have been offered the opportunity to become a profit-sharing partner. What protection would I have?


10 January 2012

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Question in full:

My partners have offered me the opportunity to become a profit sharing partner but I am worried about giving up my employment status and associate legal protection – what protection would I have as a partner?

Answer:

Question in full:

My partners have offered me the opportunity to become a profit sharing partner but I am worried about giving up my employment status and associate legal protection – what protection would I have as a partner?

Answer:

Partners do not enjoy the majority of the statutory protections afforded to those individuals who have employee status. This means that, as a matter of law, partners do not benefit from the right not to be unfairly dismissed, the right to receive a statutory redundancy payment in the event that they are made redundant, or statutory parental rights such as the right to maternity and paternity leave.

The limited circumstances in which partners are afforded employment-related statutory protection are primarily where the partner has suffered unlawful discrimination based on a factor such as race, sex, or age.

However, in place of this statutory protection, many Partnership Agreements will include rights which are equivalent to those provided to employees under relevant legislation (eg, maternity rights), and will often enhance such rights. The extent of the protection that a partner can expect in terms of employment-related rights will therefore depend on whether such rights are granted to them in the Partnership Agreement.

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