The Supreme Court has ruled this morning in the long running case of Clyde & Co LLP v Bates van Winkelhof that LLP members are workers. They are therefore covered by whistleblowing protection as well as benefitting from part time worker, pension auto-enrolment, national minimum wage and working time rights. The judgment reads in many ways like a victory for common sense and, whilst its implications will give LLPs pause for thought, it does seem to resonate with the reality of the working relationship between (most) LLPs and their members.
Many of you will have been following the twists and turns of this case. In the Supreme Court judgment, Ms Bates van Winkelhof was held to be a worker under section 230(3)(b) ERA 1996 (despite being a LLP member) in essence because she could not market her services as a solicitor to anyone other than the LLP and because she was an integral part of the LLP’s business. The Court of Appeal had placed much emphasis on the concept of subordination but the Supreme Court did not see this as essential to the existence of worker status. Interestingly, whilst the Supreme Court did not expressly overrule the judgment in Tiffin v Lester Aldridge LLP (2012) (that a fixed share partner was not an employee), it clarified that the approach taken in that case to the construction of (the vexed) section 4(4) of the Limited Liability Partnerships Act 2000 was wrong. The correct position was “all that it is saying is whatever the position would be were the LLP members to be partners in a traditional partnership, then that position is the same in an LLP”.
The leading judgment in the Supreme Court was given by Lady Hale, who made it clear in very common-sense terms that the law distinguishes between self-employed people contracting with customers or clients in business on their own account, and those self-employed people who provide their services as part of a professional business undertaken carried on by someone else. There is no reason at all why worker protection should not apply to the second category of people, depending of course on the precise circumstances of the individual case. She also clarified that some of the arguments in the case had raised a “serious challenge” to the established rule that a partner can never be an employee of the partnership. However since had not been necessary in this case to resolve the question, she did not express an opinion on the point - which she described as being of “some complexity and difficulty”. That key issue therefore remains unresolved and as it stands, partners in firms are not entitled to protection from ‘standard’ unfair dismissal. But Ms Bates van Winkelhof’s case now travels back to the Employment Tribunal in September for a full determination on the validity of her allegations of unfair dismissal due to whistleblowing (as well as her sex discrimination complaints).
LLPs should ensure that they update their whistleblowing policies to ensure they apply to members as well as employees, and should obviously guard against any retaliatory action against members who blow the whistle on perceived wrongdoing. This means that they should carefully document any actions they do take, in order to be able to show a genuine objective reason for the treatment, and thus ensure that there is evidence to show that the behaviour at issue was not a response to the LLP member having blown the whistle. Since partners are often the most likely people to become aware of wrongdoing in LLPs, the judgment in this case restores the balance of power somewhat, in giving members the same whistleblowing protection as employees.