Generic selectors
Exact matches only
Search in title
Search in content
Back to all news

CA decides that LLP members are not workers

The Court of Appeal has today handed down judgment allowing the appeal in respect of the whistleblowing claim in Clyde & Co and another v Bates van Winkelhof  in which Andrew Stafford QC and Chris Quinn of Littleton were instructed on behalf of the successful Appellants, Clyde & Co.

The decision has major implications for members of LLPs in that the CA [Lloyd, Richards and Elias LLJ] held that if, had the LLP not been registered as an LLP, they would have been partners in an 1890 Act partnership then they are not workers within the meaning of section 230 of the Employment Rights Act 1996. Accordingly they do not enjoy the rights that are afforded to workers in various employment statutes, including the protection granted to “whistleblowers” not to be subjected to detriment and/or dismissed by reason of any alleged “protected disclosures”.

The Claimant/ Respondent to the Appeal [C] had been expelled by Clyde & Co [R]. In relevant part she brought a whistleblowing complaint pursuant to section 47B of the ERA alleging that she had suffered a detriment, namely being expelled as a member, on the grounds that she had made protected disclosures. R strongly contests the merits of that claim. However the appeal centred on a preliminary point that Chris Quinn had taken on its behalf before the Employment Tribunal that it had no jurisdiction to hear the claim because members of LLPs are not workers as defined by section 230(3) of the ERA. The ET had agreed but the EAT had subsequently allowed C’s appeal against that decision.

 The definition of worker in section 230 embraces both employees and a sub-set of those who personally undertake to provide work for another party but do not qualify as employees known as “limb (b) workers” after the subsection which sets out the requirements that they most satisfy to qualify. Subsection 230(3) provides that in the Act “worker” means an individual who has entered onto or works under (or, where the employment has ceased, worked under)-

“(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.”

The significance of section 230 is that many employment rights are conferred only upon employees and therefore limb (b) workers cannot take advantage of them. However other rights are conferred more generally on workers thereby extending the protection beyond employees to include limb (b) workers. These rights include, apart from the right to be protected from suffering a detriment for whistle blowing, the right to basic labour standards in relation to minimum wages, working hours, and protection from unlawful deductions from ay as well as many of the rights derived from the EU such as the right to equal pay and the right not to be discriminated against on certain grounds.

This was the first case to consider whether or not members of LLPs fall within the class of limb (b) workers. In deciding that they did not, Elias LJ [with whom Richards and Lloyd LLJ agreed] first recounted those cases in which a distinction has been drawn between limb (b) workers and independent contractors working on their own account in both domestic and EU law. He then accepted the Appellants’ first ground of appeal which was that the EAT had erred in finding that C was in a subordinate position.

Elias LJ also upheld the Appellants’ second ground of appeal which was that C could not be a worker because of the effect of section 4(4) of the Limited Liability Partnerships Act which relates to the employment status of LLP members. It provides:

“A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.”

Elias LJ detemined that under the Partnership Act 1890 C would be a partner as she was plainly pursuing a business for profit in common with others. He then accepted the Appellants’ submission that a member of the partnership can only be a limb (b) worker under the 2000 Act if he or she would have been a limb (b) worker under the 1890 Act.

The Court of Appeal did allow C to pursue her second cause of action, pregnancy/ sex discrimination, in the Tribunal on the basis that she had shown a sufficient connection with the United Kingdom. Pending any applications for permission to appeal, Clyde & Co will dispute that claim at a full hearing.

You can read the judgment first here.

Relevant Members
Shortlist Updated