LLP Members Not Workers

The Court of Appeal has held that an LLP member was not a worker and could not 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 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.  The Court of Appeal overturned the EAT decision that B was a worker, but decided the issue by reference to the Limited Liability Partnership Act 2000 (the LLP Act), which had not been considered by the courts below.  The effect of the LLP Act was that if an LLP member would have been a partner if the LLP were an old-fashioned partnership (rather than an LLP), then they could not be either an employee or a worker.  In the Court of Appeal’s view, there was no doubt that B would have been a partner if the LLP had it been an old-fashioned partnership.  She had significant rights in the running of the business and had been held out in various ways as a member of the firm.  In addition, the terms of the deed of adherence and the members’ agreement made this clear.

B was not therefore a worker and could not bring a whistleblowing detriment claim.  The Court also considered whether B would have fallen within the statutory definition of a worker under the Employment Rights Act (in view of the conflicting decisions on this issue in the courts below) and concluded that she would not.  Underlying the statutory definition of worker is the notion that one party has to be in a subordinate relationship to the other and that was not the case for LLP members. 

The decision in this case means that LLP members will not benefit from the statutory protection available to workers, including the right to paid holiday and working time rights.  However, it is understood that leave to appeal is being sought and so this may not be the last word on the matter. It is also important to remember that LLP members do have the right to bring discrimination claims as the Equality Act 2010 extends to discrimination against partners and LLP members.