Accountancy firms today work like giant corporations. They may as well have an LLP (limited liability partnership) member who is yet a mere employee in the organization. Thus a firm would do well to separate a genuine partner from an employee.
There are a number of reasons to be considered behind this, as far as the difference between an employee and a genuine partner is concerned. This includes the fact that a partner can dissolve a partnership while an employee is very much bound by it and cannot do anything.
An employee gets a fixed monthly income irrespective of the company’s profitability. Employees on one hand are entitled to a 52 weeks maternity leave while partners are only entitled of such a leave if the firm agrees with them. But then again when it comes to the right to pay, it is up to the firm to decide whether or not to give the employee or for that matter the partner on leave his pay.
A company better be sure of its every member’s status.
If it is not clarified as to if the member is a mere employee or for that matter a true partner then this could lead to some issues. This is truer in case of a rise of conflict between the company and the member. One of the more severe consequences as faced by a firm in case of a conflict of interests with a member is that person may ask for employment claims against the firm citing unfair dismissal a reason among others. This is if the company isn’t sure of the member’s status in the firm.
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