Most senior associates and salaried partners aspire to full equity partnership and, if asked to consider this, would be unlikely to lose sleep over the possible souring of that relationship at some distant point in the future. But they are exchanging employee status for the status of equity partnership, and the obligation to provide capital is not the only potential cost to the incoming partner in this exchange.
Among other things, loss of employee status means the removal of protection from unfair dismissal, entitlement to redundancy payment and entitlement to written reasons for dismissal.
Even if they consider the disadvantages of losing their rights as employees, few prospective partners are deterred from taking the step to equity. In theory, the greater rewards from profit sharing will soon exceed the loss of a right to an unfair dismissal award, currently capped at £53,500 and subject to mitigation.
