Clyde & Co LLP & Anor v Bates Van Winkelhof

A member of a limited liability partnership who would have been a partner in an unincorporated partnership cannot, by reason of membership alone, be an employee or a limb (b) worker under section 230 of the Employment Rights Act 1996. Section 4(4) of the Limited Liability Partnerships Act 2000 preserves the employment status that the member would have had before incorporation.

For territorial jurisdiction, a person who lives or works partly in Great Britain need only show a connection with Great Britain and British employment law sufficiently strong to make tribunal jurisdiction appropriate. The exceptional-strength and comparative analysis applicable to a person who both lives and works wholly abroad does not govern such a case.

The respondent, an English solicitor and equity member of the first appellant limited liability partnership, worked principally in Tanzania but regularly worked in London. After reporting alleged money laundering and bribery by the managing partner of an associated Tanzanian firm, she was dismissed there, suspended and then expelled from the LLP. She brought a whistleblowing detriment claim under section 47B of the Employment Rights Act 1996 and sex and pregnancy discrimination claims under section 45 of the Equality Act 2010.

The Employment Tribunal held that she was not a worker but that it had territorial jurisdiction over the discrimination claims. The Employment Appeal Tribunal held that she was a limb (b) worker and upheld the territorial ruling. The appellants appealed. The issues were whether an LLP member could be a worker within section 230 and whether the respondent's work abroad excluded the tribunal's jurisdiction.

1. Appeal allowed on worker status and dismissed on territoriality. The respondent could pursue the discrimination claims against both appellants, but not the whistleblowing claim.

2. Section 4(4) of the Limited Liability Partnerships Act 2000 was construed as preserving the employment status which a member would have had if the business had been carried on as an unincorporated partnership. The word “employed” covered both employees and limb (b) workers. Incorporation was not intended to confer or remove employment rights. The respondent plainly would have been a partner under the Partnership Act 1890.

3. A partner in an unincorporated partnership cannot be either an employee or a limb (b) worker. The partnership has no separate legal personality, so a partner would otherwise be both employer and worker. Further, employment presupposes some hierarchy and subordination, whereas partners conduct a joint venture as mutual agents. Section 4(4) therefore prevented the respondent from acquiring worker status through LLP membership, notwithstanding that she personally provided services and the LLP was not her client or customer.

4. It was unnecessary finally to decide whether an LLP member could satisfy section 230 apart from section 4(4). Elias LJ was nevertheless inclined to hold that membership alone creates neither employee nor worker status. A distinct employment relationship might stand differently.

5. Territorial scope is a matter of statutory construction and connection. The demanding comparison applicable to a person who both lives and works wholly abroad was unnecessary because the respondent worked partly in Great Britain. The tribunal needed only to find connections with Great Britain and British employment law sufficiently strong to make jurisdiction appropriate. Her regular London work, English-law agreement, participation in the London business, payment and administrative arrangements, and public identification with the English LLP entitled the tribunal to find that connection.

6. The alternative arguments for a wider territorial reach for whistleblowing or discrimination rights, and for jurisdiction under the principle associated with Bleuse, were left open.

Richards and Lloyd LJJ agreed with Elias LJ.

• Court of Appeal (Civil Division): Allowed the appeal on worker status, dismissed it on territoriality, and held that the respondent could pursue the discrimination claims but not the whistleblowing claim: [2012] EWCA Civ 1207.
• Employment Appeal Tribunal: HH Judge Peter Clark held that the respondent was a limb (b) worker and upheld the Employment Tribunal's conclusion that the claims had a sufficient connection with Great Britain. The decision is identified only by UKEAT/0568/11/RN and UKEAT/0168/12/RN.
• Employment Tribunal: Held that the respondent was not a worker under section 230(3) of the Employment Rights Act 1996, but that the tribunal had territorial jurisdiction over the discrimination claims.