LLP member can be classed as worker, Supreme Court rules
A former law firm Limited Liability Partnership (LLP) member can be classed as a ‘worker’ under the 1996 Employment Rights Act (ERA) and receive legal protection from blowing the whistle on her business partners, according to a Supreme Court ruling.
Krista Bates van Winklehof was a fixed share equity partner at Clyde & Co LLP, but claimed she was fired after whistle-blowing against a fellow member who admitted to bribery. She also asserted that her dismissal came shortly after she had told the company she was pregnant.
While her sex discrimination claim was upheld, her whistle-blowing case was originally rejected.
However, Baroness Hale overturned this decision, observing the striking amount of effort required to differentiate between a worker and an LLP member.
Worker vs Employee
She cited the difference between the status of workers (the term used in the ERA) and employees, and ruled that Bates van Winklehof could be included in the former category.
Consequently, she was protected by the ERA from making protected disclosures such as whistle-blowing and providing proof of illegal activity or environmental damage. The ERA states that employers cannot seek retribution against workers for making protected disclosures, for example by firing them or unfairly overlooking them for promotion.
Baroness Hales ruling considered the definition of workers provided by the ERA, which states that a worker has a contract to perform services for a party that is not a client or customer of any profession or business undertaking carried on by the individual.
It should be noted that this is not the same as a contract of employment and as such does not offer the same level of protection against unfair dismissal.
Should this ruling influence the type of partnership you choose?
It appears that this case could set a precedent for how LLP members are regarded in future, so new businesses should certainly be aware of it when deciding whether to go with a regular partnership or LLP.
Should you opt for the latter, this ruling could become relevant if you are looking to remove a partner, or if there is a dispute to resolve.
At Ralli, we are always up to date with the latest developments in partnership law, so call us today on 0161 832 6131 to discuss your options.