Friday, May 23, 2014

Mandatory Retirement for Law Firm Partners Not Discriminatory

John Michael McCormick became an equity partner at Fasken Martineau DuMoulin LLP (“Faskens”) in 1979.  In the 1980s the equity partners of Faskens voted to adopt a provision in their partnership agreement whereby equity partners were required to retire and divest their ownership shares in the partnership at the end of the year in which they turn 65.  In 2009, when he was 64, Mr. McCormick brought a claim before the British Columbia Human Rights Tribunal (“Tribunal”) alleging that the provision in the partnership agreement constituted age discrimination contrary to the British Columbia Human Rights Code (“Code”).

Faskens applied to have the claim dismissed on the grounds that the complaint was not within the jurisdiction of the Tribunal and that there was no reasonable prospect that that it would succeed.  Faskens argued that McCormick, as an equity partner, was not in the type of workplace relationship covered by the Code. 

The Tribunal  concluded that there was an employment relationship and concluded that Faskens had discriminated against McCormick.  Faskens' application for judicial review was dismissed by the British Columbia Supreme Court.  However, the British Columbia Court of Appeal allowed Faskens’ appeal, concluding that McCormick, as a partner, was not in an employment relationship with Faskens pursuant to the provisions of the Code. 

McCormick ‘s further appeal to the Supreme Court of Canada was dismissed.

The Supreme Court, with reasons written by Justice Abella, unanimously held that the Code was a quasi-constitutional legislation which should be “generously” interpreted to permit it to achieve its broad public purposes.  Those purposes include the prevention of arbitrary disadvantage or exclusion based on enumerated grounds so that individuals deemed to be vulnerable by virtue of a group characteristic can be protected from discrimination.  The Code achieves these purposes by prohibiting discrimination in a context such as employment. 

Deciding who is in an employment relationship for the purposes of the Code means examining the “two synergetic” aspects in the relationship:    control exercised by an employer over working conditions and remuneration, and corresponding dependency on the part of the worker.  The test is who is responsible for determining working conditions and financial benefits and to what extent does a worker have an influential say in those determinations.  The more the work life of individuals is controlled, the greater their dependency and, consequently their economic, social and psychological vulnerability in the workplace. 

Control and dependency are a function of whether the worker receives immediate direction from or is effected by the decision of others and also whether he or she has the ability to influence decisions which critically affect his or her working life.    Ultimately, the key is the degree of control and the extent to which the worker is subject and subordinate to someone else’s decision-making over working conditions and remuneration. 

Applying the control/dependency test to this case, Justice Abella found that in addition to the right to participate in the management of the partnership, McCormick benefited from other control mechanisms, including the right to vote for and stand for election to the firm's board; the duty that the other partners owed him to render accounts; the right not to be subject to discipline or dismissal; the right on leaving the firm to his share of Faskens' capital account; and the protection that he could only be expelled from the partnership by a special resolution passed by a meeting of all equity partners and a regional resolution in his region.     

The court found that as an equity partner and based on his ownership sharing of profits and losses and the right to participate in management, McCormick was part of the group that controlled the partnership, not a person vulnerable to its control and for over 30 years had benefited financially from the retirement of other partners.  McCormick was not ever in a subordinate relationship with the other equity partners.

Interestingly, the court held that it is not to say that a partner in a firm can never be an employee under the Code but in the absence of any genuine control of McCormick in the significant decisions effecting the workplace, in this case there was no employment relationship between him and Faskens under the provisions of the Code.  Accordingly, the court found that the Tribunal had no jurisdiction over McCormic’s relationship with Faskens.  

Regards,

Blair

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