Mr J Townsend v Howard Kennedy LLP — 2024

The claimant joined Howard Kennedy LLP as a fixed-share partner on 20 January 2020 and became an equity partner from 1 May 2020 under an Accession Agreement which said he would be allotted equity points to the value of £225,000 or more. The tribunal found that the parties' shared intention was to secure a profit share of £225,000, but that the Covid-19 pandemic led the respondent to revise its budget and reduce the projected profit per point figure. Against that background, Mr Emden proposed in a 10 June 2020 meeting that the claimant could either keep the risk of a point-based arrangement or accept a fixed profit share of £225,000 for FY 2020/2021. The tribunal found that the claimant accepted the fixed-share variation and that this was confirmed in subsequent emails and letters.

On the unlawful deductions claim, the tribunal held that the claimant's partnership profit share was not 'wages' within Part II ERA 1996 because he was not in employment and the payments were advances on anticipated profits. It therefore said it had no jurisdiction under the ERA. The tribunal also found, applying the most favourable reading of the Accession Agreement, that the claimant was not contractually entitled to 56 equity points. Using the April 2020 budget PPP figure of £5,291 would have produced 43 points, but the tribunal found that the parties varied the arrangement on 10 June 2020 so that his FY 2020/2021 profit share was fixed at £225,000 and he was allocated 40 points. It rejected the claimant's case that the June 2020 arrangement was imposed on him or that Mr Emden acted ultra vires.

For FY 2021/2022, the tribunal found that the claimant received an increase to 45 equity points and a discretionary award of £35,000. It accepted the respondent's contemporaneous explanation that the award reflected a strong year and underpointing, and it rejected the later case that the claimant had been entitled to a 56-point basis. For FY 2022/2023, the parties agreed to convert him to fixed-share status, and the tribunal recorded that he received a fixed-share profit of £94,407. The tribunal treated these later events as consistent with the agreed variation and with the respondent's assessment of his performance.

The holiday pay claim failed because the tribunal found no underpayment on termination and said the claimant had been paid for the 8.5 days accrued at the prevailing rate, despite some uncertainty in the way the pleaded figures were put. The consequential loss claim also failed because the tribunal said it was not sensibly pleaded or understood, and in any event depended on sums that were not due. The result was that all claims were dismissed.