LLP Member Could Bring Whistleblowing Detriment Claim

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Posted on 31 May 2012

An LLP member was a worker within the Employment Rights Act 1996 ("ERA") and could therefore bring a claim that she had been subjected to a detriment for blowing the whistle.

In Bates van Winkelhof v Clyde & Co LLP, B was an equity member in Clyde & Co LLP.  She received both a profit-related element of remuneration and a guaranteed level of remuneration.  She was expelled from the partnership after she reported to Clyde & Co that the managing director of the Tanzanian firm to which she was seconded had paid bribes to secure work.  She alleged that her expulsion was due to her having made a protected disclosure and that this amounted to detrimental treatment on whistleblowing grounds.

In order to be able to bring her claim she needed to show that she was a worker. S230(3) ERA defines a worker as an individual employed under a contract of employment, or any other contract whereby they undertake to do or perform personally any work or services for another party to the contract who is not a customer or client of a business carried on by the individual. 

The employment tribunal held that she was not a worker.  Although she was employed under a contract personally to do or perform work or services for the LLP, she was in business in her own right receiving a share of the profits and so the last part of the definition was not met.  

The EAT upheld B’s appeal. Under the LLP agreement B agreed to devote her full-time to Clyde & Co’s business, she was an integral part of their business and was precluded by the agreement from offering her professional services to anyone else.  Clyde & Co was not her client and she therefore fell squarely within the definition of a worker.    

The question of whether an LLP member or equity partner is a worker and therefore able to benefit from the statutory protections available to workers has been unclear.  In this case an LLP member was found to be a worker and she was therefore able to proceed with a whistleblowing detriment claim.  However, the EAT did suggest that the position might be different for full equity partners.  

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