The Supreme Court decided on 21 May 2014 that members of limited liability partnerships (LLPs) can be workers and covered by the UK's whistleblowing protection laws. Whistleblowers who suffer a detriment can claim uncapped compensation from employment tribunals Employees and "workers" benefit from this protection.
The case, Clyde & Co LLP v Bates-van Winkelhof, concerned a solicitor who was a fixed-share member of an LLP and working in Africa. When she reported that the managing director of a connected Tanzanian law firm had admitted taking part in money laundering activities and paying bribes, she was dismissed from the Tanzanian firm and suspended and finally expelled from the LLP. The Supreme Court held that she was a "worker" since she could not market her services as a solicitor to anyone other than the LLP, and that she was an integral part of the LLP's business. The law now distinguishes between self-employed professionals who contract with clients on their own account, and self-employed people who provide their professional services as part of an undertaking carried on by someone else, in this case Clyde & Co LLP itself. The latter have "worker" protection; the former do not.
As a result of the decision, many regulated professionals who are also LLP members will have some increased protections and benefits at work. Workers are protected not just from retaliation for whistleblowing, but also discrimination as part-time workers. They are entitled to minimum holidays, working hours and rest breaks under the Working Time Regulations, and from unauthorised deductions from wages. The LLP might also be obliged to auto-enrol them into pension schemes and to provide employer contributions (subject to opt-out rights).
The judgment does not answer whether partners in traditional partnerships under the Partnership Act 1890 could be a "worker", and does not mean that LLP members necessarily have employment related rights or are properly to be treated as Schedule E tax payers. The case means it is possible for LLP members to be workers, but it does not mean that all LLP members must necessarily be workers. The Finance Bill's Salaried Member Rules (which are still before Parliament) mean that many LLPs are reviewing their arrangements at present. Firms may want to review whether structural changes caused by amendments to the tax treatment of partnerships will make it more or less likely that partners will be brought into the category of workers.