‘Worker’ - Orders in family proceedings - Limited liability partnership

Bates van Winkelhof v Clyde & Co LLP and another: CA (Civ Div) (Lord Justices Lloyd, Richards, Elias): 26 September 2012

The claimant was a solicitor and had strong professional links in Africa. In 2010, the claimant signed a deed of adherence (the agreement). The other parties to the agreement were the first defendant firm of solicitors and limited liability partnership (LLP) (the partnership), and each of the members of the partnership individually. The agreement was governed by English law and required, inter alia, the claimant to devote her full time and attention to the business and not engage or be interested in any other business or profession.

The claimant worked principally but not exclusively in Tanzania. She paid national insurance contributions in England, but tax was paid in Tanzania. The claimant’s work in Tanzania involved working with a law firm (Ako Law), the business of which was acquired by the partnership as a joint venture. It was agreed that the claimant would return to work in the UK about six times a year and would spend approximately two weeks in the UK on each occasion.

The claimant reported that the managing partner of Ako Law had been involved in money laundering and had paid bribes. Shortly after, the claimant was dismissed by Ako Law and suspended by the partnership. She was subsequently expelled as a member of the partnership.

The claimant brought claims pursuant to section 47B of the Employment Rights Act 1996 (the whistleblowing claim) and for discrimination pursuant to section 45 of the Equality Act 2010 (the discrimination claim). The partnership contested the merits of the claims. It submitted, first, that the claimant was not a ‘worker’ as defined in section 230(3) of the 1996 act and, accordingly, was not entitled to bring the whistleblowing claim. Further, the partnership contended that the claimant could not bring the discrimination claim because she worked primarily outside the jurisdiction. The employment tribunal (the tribunal) held that the claimant was not a worker because she was a partner in the LLP and therefore could not pursue the whistleblowing claim.

However, the tribunal held that it did have jurisdiction to deal with the discrimination claim on the ground that there was a clear connection with England and Wales. The partnership appealed to the Employment Appeal Tribunal (EAT). The EAT upheld the tribunal’s determination in regard to the jurisdictional issue, but held that the claimant was a worker for the purposes of the whistleblowing claim since there had been an element of subordination in the relationship between the claimant and the partnership. The partnership appealed.

The partnership submitted, inter alia, first, that the EAT erred in finding that the claimant was in a subordinate position and therefore was a worker within the meaning of section 230(3) of the 1996 act. The partnership contended that the effect of section 4(4) of the Limited Liability Partnership Act 2000 was that instead of asking whether the member of an LLP was employed by the LLP, the question was whether that member would have been so employed had the firm been a partnership with unlimited liability under the Partnership Act 1890.

Therefore, the EAT should have found that the claimant would have been neither an employee nor a worker and, therefore, could not have brought the whistleblowing claim. Second, the EAT erred in upholding the tribunal’s approach to the question of jurisdiction, since it was incumbent on the tribunal to have carried out a comparative exercise in which the factors which pointed towards a connection with the jurisdiction were compared with the factors pointing in favour of Tanzania.

The court ruled: (1) The status of a partner of an unincorporated partnership under the 1890 act was not altered as a result of incorporation. Rights were neither gained nor lost when partners under the 1890 act were transformed into members of an LLP under the 2000 act. A partner in an unincorporated partnership under the 1890 act was not a worker. It followed that a member of an LLP who, if it had not been registered as an LLP would have been a partner in an 1890 act partnership, could be neither an employee pursuant to section 230(3)(a) of the 1996 act, nor a worker pursuant to section 230(3)(b) of the 1996 act (see [48]-[50], [62], [67] of the judgment).

Since the partnership was not a separate legal entity, the parties were in a relationship with each other and, accordingly, each partner had to be employed, inter alia, by himself. Further, where the relationship was one of partners in a joint venture, the characteristic of a hierarchical relationship whereby the worker was to some extent subordinate to the employer was absent. There was lacking the relationship of service and control which was inherent in both concepts of employee, pursuant to section 230(3)(a) of the 1996 act, and worker, pursuant to section 230(3)(b) of the 1996 act (see [63], [64] of the judgment). It followed that the claimant had not been entitled to pursue her whistleblowing claim (see [67], [103] of the judgment).

(2) The comparative exercise was appropriate where the employee was employed wholly abroad. There was then a strong connection with that other jurisdiction, and parliament could be assumed to have intended that in the usual case that other jurisdiction, rather than England and Wales, should provide the appropriate system of law. In those circumstances, it was necessary to identify factors which were sufficiently powerful to displace the territorial pull of the place of work, and some comparison and evaluation of the connections between the two systems would typically be required to demonstrate why the displacing factors set up a sufficiently strong counter-force.

However, that was not necessary where the employee lived and/or worked for at least part of the time in England and Wales. The territorial attraction was then far from all one way and the circumstances needed to be truly exceptional before the connection with the system of law in England and Wales could be identified. All that was required was that the tribunal satisfied itself that the connection was sufficiently strong to enable it to be said that parliament would have regarded it as appropriate for the tribunal to deal with the claim (see [98] of the judgment). In the instant case, the employee had worked part of her time in England and Wales.

Accordingly, the finding of the tribunal, as upheld by the EAT, had not been erroneous (see [99], [100] of the judgment). Therefore, the claimant was entitled to pursue the discrimination claim (see [103] of the judgment). Decision of the EAT [2012] IRLR 548 reversed in part.

Thomas Linden QC and David Craig (instructed by Mishcon de Reya) for the employee; Andrew Stafford QC and Chris Quinn (instructed by Clyde & Co) for the employer.