Members of limited liability partnerships are not ‘workers’ under employment legislation, the Court of Appeal ruled this week dismissing a whistleblowing claim made against City firm Clyde & Co.
English qualified solicitor Krista Bates van Winkelhof alleged that she had been sacked by the firm in 2011, after she made allegations that the managing partner of the firm’s Tanzanian operation Ako Law had engaged in money laundering and corruption.
Bates van Winkelhof brought a whistleblowing complaint against the firm, under Section 47B of the Employment Rights Act 1996, on the grounds that she had made protected disclosures in respect of the senior partner of Ako Law. She also claimed that she had been subject to unlawful sexual discrimination, alleging that her dismissal from the firm was related to her pregnancy.
Led by Lord Justice Elias, the Court of Appeal overturned the Employment Appeal Tribunal’s finding and ruled that a partner in an LLP could not be regarded as a worker for the purposes of the act and she had no jurisdiction to bring the whistleblowing claim.
Elias said that there were two ‘inter-related’ reasons why partners cannot have status as an employee: ‘The first is legal: since the partnership is not a separate legal entity, the parties are in a relationship with each other and accordingly each partner has to be employed, inter alia, by himself. He would be both workman and employer which is a legal impossibility.
‘The second reason is more sociological. The very concept of employment presupposes as a matter of sociological fact a hierarchical relationship whereby the worker is to some extent at least subordinate to the employer.’
He concluded: ‘In my judgment, therefore, 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, can be neither an employee nor a limb (b) worker within the meaning of Section 230 of the Employment Rights Act 1996. It follows that the claimant cannot pursue her whistleblowing claim.’
But the court ruled that Bates van Winkelhof’s sex discrimination case against the firm can continue, accepting the lower court's rulings that she has a sufficient connection with the UK for the courts to have jurisdiction.
A spokeswoman for Clyde & Co said: ‘Clyde & Co welcomes the Court of Appeal’s decision upholding employment judge Welch’s original finding in respect of Ms Bates van Winkelhof’s legal status during her former role in Tanzania.’
She said: ‘We maintain that Ms Bates van Winkelhof’s claims of detriment were without merit and we entirely refute her remaining claims of discrimination. The firm strenuously denies that she was removed from the partnership as a result of her pregnancy or gender and indeed her other claims of detriment.
‘It was only after the process which led to her departure had begun that Ms Bates van Winkelhof began to make her allegations of discrimination. We continue to believe this issue could, and should, have been resolved through arbitration or mediation, as provided for in our partnership agreement.’