Partners in LLPs are protected by whistleblowing laws

Posted by Max Craft on
In a case which could have implications well beyond the legal sector, the Supreme Court has held that a fixed-share partner in a Limited Liability Partnership (LLP) law firm was a 'worker' who was protected by whistleblowing laws.

Ms Bates van Winkelhof was a partner in law firm Clyde & Co, which was an LLP. She was seconded to a Tanzanian law firm which Clyde and Co had bought. When she told Clyde & Co that the managing partner of the Tanzanian firm had accepted bribes, her secondment was ended and she was expelled from the partnership. She brought a claim that she had suffered a detriment for blowing the whistle. However, only 'workers' (including employees) as set out in the Employment Rights Act 1996 are protected by whistleblowing laws. In general the partners of a partnership are not employees, but are classed as self-employed. There has been little case law on whether they could fall within the narrower definition of 'workers'. The question arose as to whether partners of an LLP could be deemed workers, therefore protected by whistleblowing laws.

'Workers' in this context are those who have a contract to do or perform personally any work or services for another party under the contract, but which are not the individual's clients or customers. A similar concept appears in other legislation, such as the Working Time Regulations 1998, which is why 'workers' are also entitled to holiday pay even if they are not 'employees'.

The Supreme Court ruled that Ms Bates van Winkelhof did have a contract to perform work or services personally, that those services were for the LLP, and that the LLP was not her client or customer. She could not market her services as a solicitor to anyone else other than the LLP, and was an integral part of their business. The Supreme Court also rejected the idea that the LLP legislation, introduced after whistleblowing laws, prevented LLP members from being 'workers'. The substance of Ms Bates van Winkelhof's claim will now be heard by an Employment Tribunal.

As pointed out by the whistleblowing charity, Public Concern at Work, it would be very odd if whistleblowing legislation did not operate to protect partners of LLPs, which includes many solicitors, accountants, doctors and financial services advisers, when they blow the whistle. Otherwise there would be no protection where instances of corporate wrongdoing are reported at the highest level in such organisations. In successful whistleblowing claims, potential compensation is uncapped.

The ruling will mean that fixed-share (or 'junior') LLP members are considered 'workers' for other rights under the Employment Rights Act 1996 (such as unlawful deductions from wages), and is likely to extend to other legislation covering, for example, part-time workers, working time, and potentially even auto-enrolment (although there are questions over whether the member would have any 'qualifying earnings' as defined). LLP members are already protected from discrimination.

LLPs affected will need to review their whistleblowing and other policies to ensure LLP members are treated in the same way as other workers, and, in particular, that no retaliatory action is taken when a member reports perceived wrongdoing which is in the public interest. 

About the Author

Max is a Consultant in our employment team.

Max Craft
Email Max
023 8085 7451

View Profile