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Clarification on designated partner working as an employee in LLP
15-Dec-2023 (In Labour & Service Law)
Can a designated partner with a 20 percent share of an LLP firm work as an employee in the same LLP firm and enjoy employee benefits? I wanted to start a LLP firm but do not trust any 2nd person outside family so request my wife to become 2nd partner (as 2 designated partners are required to form a LLP firm). We formed the organization however for her future career prospects, she wanted to work as an employee in the same firm for which I being the Managing partner with 80% share, issued her the appointment letter and am paying her structured salary per month with tds deducted and deposited every quarter. Now she has applied for immigration to another country and provided Appointment documents as an employee.
A designated partner can very well be an employee of the partnership firm, depending on how the firm was constituted. If in your deed, if you have mentioned that the 20% shareholder is merely a shareholder for the purposes of sharing profits/losses, and then if you have hired your wife as an employee of the firm to use her expertise, then it is perfectly legal.
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Adv. Vijay Belavadi
Bangalore | 100+ Answers
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