Forced to Retire Involuntarily

January 14th, 2013 by

IT TAKES A LONG TIME TO BECOME YOUNG – PICASSO

In a recent British Columbia Court of Appeal decision, a lawyer attempted to challenge his law firm’s mandatory retirement practices before the British Columbia Human Rights Tribunal.  Mr. McCormick was a partner at Fasken Martineau Dumoulin LLP (“Fasken”), a limited liability partnership.  The Fasken partnership agreement provided for a mandatory retirement provision once partners, such as Mr. McCormick, turned 65.  Upon turning 65 Mr. McCormick was forced to retire involuntarily.

The central issue before the British Columbia Court of Appeal was whether a partner in a limited liability partnership is an employee of the partnership for the purpose of claiming the protection of human rights legislation against age discrimination.

The British Columbia Human Rights Tribunal and a British Columbia Supreme Court chambers judge on judicial review held that for the purposes of human rights legislation, a partnership may be treated as a separate legal entity from its partners and as the employer of a partner, with the result that the British Columbia Human Rights Tribunal has jurisdiction to hear a complaint by a partner concerning discrimination in his employment.

Madam Justice Levine writing on behalf of a unanimous three-judge panel disagreed and held that the “fundamental and well-established principle of law that a partnership is not, in law, a separate legal entity from, but is a collective of, its partners, and as such, cannot, in law, be an employer of a partner.”

Mr. McCormick has filed an application for leave to appeal.

While I am inclined to agree with Justice Levine’s position I would like to canvass three additional issues.

The first issue is the comprehensive post-mandatory-retirement framework provided for in the Fasken partnership agreement.  Subject to the discretion of the managing partner, the agreement provides for transitioning equity partners to stay on board either as equity partners or in various other capacities after they reach the mandatory age of retirement.  While I do not take issue with the managing partner’s unfettered discretion to run the business and make personnel decisions that are incident thereto, I would prefer to see a mechanism in place whereby an equity partner such as Mr. McCormick may appeal the managing partner’s decision.

The second issue, which is crystallized in this case in particular, is the relative bargaining power of the parties.  In this day and age, few lawyers, or any person for that matter, can say they have spent nearly four decades working at the same place like our protagonist.  That type of tenure has both its advantages and disadvantages and I can’t help but wonder whether any additional safeguards at common law or otherwise over and above the Fasken partnership agreement should have been further explored.

The last issue I will consider is a theme borrowed from corporate law.  As many of you may know, in corporate law courts have disregarded the separate legal status of the corporation and imposed personal liability on directors, officers and shareholders where the corporation is used solely for personal benefit, this is referred to as piercing or lifting the corporate veil.  While this is an extraordinary measure that typically stems from fraud or a similar type of misconduct the underlying analytical framework should not be thrown out with the proverbial bathwater.  Indeed, while I am not suggesting that there was any wrongdoing in the instant case, I can’t help but feel as though Justice Levine’s analysis could have gone beyond the form and substance of the Fasken partnership agreement.

Share your thoughts about mandatory retirement, the differing treatment of equity partners of law firms versus officers of corporations and whether you agree with the British Columbia Court of Appeal.

 


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