The Court of Appeal has decided that LLP members do not glean employment/worker status by reason of their LLP membership alone. In the case of Bates van Winkelhof v. Clyde & Co LLP, the Court of Appeal has decided that a member of an LLP is not a 'worker' eligible to bring a whistleblowing claim.
There is no argument that LLP members have the express rights under Equality Act 2010 (in the same way as partners in general partnerships) protecting them from discrimination. However, the Court of Appeal considered whether an Employment Tribunal had territorial jurisdiction to hear a discrimination claim from an LLP member who worked mainly abroad.
In this case, Ms van Winkelhof was a member of Clyde & Co LLP (an English LLP). She worked principally but not exclusively in Tanzania via a joint venture with Ako Law.
Ms van Winkelhof was suspended, and expelled, from Clyde & Co LLP after making a money laundering report regarding Ako Law. She brought claims against Clyde & Co LLP for protection for whistleblowing and a claim for sex and pregnancy discrimination.
Status of LLP members
In deciding whether LLP members can be workers (and therefore have protection from whistleblowing), the Court of Appeal considered:
- section 4(4) of the Limited Liability Partnerships Act 2000. This "puzzling section to interpret" requires the Court to ask whether, if the member in question was a partner in a general partnership under the Partnership Act 1890, he would have been an employee;
- whether a partner in a general partnership could be a 'worker'. This took into account that a general partnership has no separate legal entity, and therefore, it was a legal impossibility for partners to be employed by themselves. Whilst an LLP has a separate legal entity, it was considered that a member could not acquire employment/worker status by reason of the incorporation; and
- the sociological fact that workers/employees are subordinate to the employer. Elias LJ found that the partnership concept is the "antithesis of subordination". This is the case even though the contractual arrangements between the partners may confer different powers on different groups of partners.
The Court of Appeal found that had Clyde & Co LLP been a general partnership, there was no doubt that Ms van Winkelhof was pursuing a business for profit in common with others and therefore would have been a partner. Applying the considerations set out above, as a partner, she could not be a 'worker'.
Accordingly, an LLP member cannot be regarded as being a worker or employee of the LLP by reason of his or her membership alone. When a partnership under the Partnership Act 1890 converts into an LLP under the Limited Liability Partnerships Act 2000, the status of a partner/member did not change.
The consequence of this is that that LLP members do not have the full range of employment-type rights (follow link for Employment notes).
LLP members have direct rights conferred on them by section 45 of the Equality Act 2010 which protect them from discrimination. Section 44 gives the same rights to partners in general partnerships.
The Court of Appeal considered the territorial scope of these rights in Ms van Winkelhof's circumstances. The Employment Tribunal had found that Ms van Winkelhof had strong connections with Great Britain including the fact she worked partly in London and she visited London for work regularly.
The Court of Appeal ruled that where an LLP member lives and/or works for at least part of her time in Britain, the test is whether there is a sufficiently strong connection to this country and this was satisfied in Ms van Winkelhof's case. If the LLP member is based wholly abroad, then the tribunal must carry out a comparative exercise to see which jurisdiction has the strongest connection.
This decision confirms that the rights of members or partners are neither gained nor lost on conversion from general partnership to an LLP. However, the Court of Appeal's decision may well be appealed so this is unlikely to be the last word on the subject of LLP member's rights.