News - UK

UK - October 2012

LLP member found not to be a worker - is there a gap in your compliance documents?

The Court of Appeal has recently held that a member of an LLP is not a "worker". As a result, they cannot bring a whistle-blowing claim against the LLP.

This ruling also means that LLP members cannot claim other worker-related rights under the part-time workers legislation, the working time regulations (including statutory holiday entitlement) and unlawful deduction from wages.

While this decision (summarised below) is helpful for UK LLPs, there is a downside. If a member of an LLP does not have protection under the UK whistle-blowing legislation he or she may be less likely to risk their career in order to expose legal or regulatory malpractice.

This could cause difficulties if members are not expressly included within the protection offered under internal whistle-blowing policies. It might be argued in a Bribery Act case that the LLP did not meet the requirement to have adequate procedures to prevent bribery taking place.

It could also mean that LLPs are not advised by members of any hidden malpractice and that an embittered member, aware that they do not have legal protection if they made their disclosure on an internal basis, could decide to disclose malpractice in a public forum.

LLPs may therefore still choose to provide protection for members of an LLP either in the LLP agreement or under internal whistle-blowing policies.

Facts of the case

  • Krista Bates van Winkelhof was an equity partner at the law firm Clyde &Co ("Clyde") and was seconded to a law firm called Ako law in Tanzania as part of a joint venture arrangement.
  • She claimed that she told Clyde on 23 November 2010 that the managing director of Ako law was accepting bribes.
  • She was dismissed by Ako law and suspended (and subsequently expelled) from Clyde on 25 November 2010.
  • She argued that both the dismissal and expulsion were detriments under the UK whistle blowing legislation as they resulted from her allegations.
  • Clyde disputed her allegations and argued that, in any event, she was not able to bring a claim under the UK whistle-blowing legislation as she was not an employee or a worker.
  • The Employment Tribunal held that she was not a worker but, on appeal by Ms Bates van Winkelhof, the Employment Appeal Tribunal ("EAT") disagreed.
  • The Court of Appeal has now overturned the EATís decision.
  • The Court of Appeal interpreted the relevant (but poorly drafted) wording in section 4(4) of the Limited Liability Partnership Act 2000 ("LLP Act") to mean that Ms Bates van Winkelhof would have been considered to be a partner (and not an employee or a worker) in the event that Clyde had been a traditional partnership. As such, the relevant section in the LLP Act was to be interpreted as meaning that there was no reason to adopt a different approach to a member of an LLP. Her whistle-blowing claim could therefore not proceed.
  • Ms Bates van Winkelhof has brought a separate claim for sex and pregnancy discrimination and the Court of Appeal held that these claims could proceed to a full hearing.
  • Discrimination rights are afforded to members of LLPs and partners as well as to employees and workers. The Court of Appeal held that she had a "sufficiently strong" connection to Great Britain to ensure that the UK courts could consider her claim at a full hearing.

Resources

Clyde & Co LLP and John Morris v Krista Bates Van Winkelhof

Contact

For further information or to discuss the issues raised, please contact Emma Clark or David Widdowson on +44 (0)20 3051 5711.