In a long-awaited judgment, the Supreme Court has confirmed that Ms Bates van Winkelhof, a former member of Clyde & Co LLP, is a 'worker' for the purposes of the Employment Rights Act and is therefore entitled to the benefit of the protection given by employment law to whistleblowers.
The term "worker" is used in a number of aspects of employment legislation where protection is afforded to a group wider than just those who are employees. There was no suggestion that Ms van Winkelhof was or could have been an employee for statutory purposes.
The definition of "worker" for the purposes of many statutory provisions includes an individual who works under a contract "whereby the individual undertakes to do or perform personally any work or services for any other party to the contract whose status is not by virtue of the contract that of a client of any profession or business undertaking carried on by the individual".
Typically, a member of an LLP contracts, via the members agreement, to perform services personally. So, as a matter of common sense, it is clear that the LLP, in this case a law firm, was not a client or customer of Miss Bates van Winkelhof.
The Court of Appeal gave a rather strained analysis of the statutory definition in finding that LLP members were not workers. As Lady Hale states in the judgment "the immediately striking thing about this case is how much hard work has to be done in order to find that a member of an LLP is not a worker". The Supreme Court dispensed with the idea that a "worker" had to be in any way a subordinate in order to gain the protection.
In the context of whistleblowing, it is often the most senior members of an organisation who are best placed to uncover wrongdoing. It follows that those most likely to detect wrongdoing should be protected for blowing the whistle in the public interest.
Beyond the issue of whistleblowing, as members of LLPs now clearly have worker status, they will qualify for a wider range of protections, including National Minimum Wage and Working Time Regulations. Neither of these are, perhaps, in practice likely to cause concerns for the major professional practices conducting their businesses through the LLP structure but they could give rise to claims in structures where regular payments are foregone in favour of a later sharing of profit.
Perhaps of more interest is that the Employment Relations Act, which provides a right to be accompanied at a disciplinary or grievance hearing, applies to workers. This now includes LLP members as well as a range of other workers who supply their own services under contract.
A reduction in profit share or commission payments as a result of poor performance may be now within the scope of disciplinary proceedings for the purpose of granting these rights. This case also has potential ramifications for pensions auto-enrolment.
Finally, organisations which have used an LLP structure in order to avoid minimum wage rights for lower paid workers will now need to be aware that such workers are governed by minimum wage obligations, including obligations to make payments within a prescribed period of the work being carried out which cannot be longer than one month.
Action points to consider
- LLPs in particular will clearly wish to review their policies and procedures to ensure that they are tailored appropriately for and published to those among their workers who are not employees but are now entitled to the broader range of employment rights.
- Other organisations who use workers who are not employees should review their arrangements in order to assess whether any of those workers are now entitled to the additional protections arising as a result of this judgment.
- Contracts for provision of confidential whistleblowing reporting systems and ways in which reports are made by providers made may also require consideration and review.