Clyde & Co LLP v Bates van Winkelhof (Court of Appeal)

The Court of Appeal considered two principal issues: (1) whether a member of a limited liability partnership can be a "worker" within the meaning of section 230(3) of the Employment Rights Act 1996 for the purpose of bringing a whistle‑blowing claim; and (2) whether the Employment Tribunal had territorial jurisdiction to hear the claimant’s discrimination and whistle‑blowing complaints despite the claimant working predominantly in Tanzania.

The court held that section 4(4) of the Limited Liability Partnership Act 2000 must be read so that incorporation as an LLP does not change the pre‑existing status of members as compared with partners under the Partnership Act 1890. On the authorities (notably Ellis and Cowell) a partner in an unincorporated partnership cannot be an employee or a limb (b) worker because the partnership relationship is inconsistent with the hierarchical/subordinate relationship inherent in employment. Consequently a member of an LLP who, if the business had been carried on as an unincorporated partnership, would have been a partner, cannot be a "worker" under section 230(3) by virtue of membership alone and so cannot bring the whistle‑blowing claim under section 47B ERA.

On the territorial question the court upheld the Employment Tribunal’s conclusion that there were sufficiently strong connections with Great Britain (regular London attendance, English law governance, remuneration and administrative links, and integration into the UK partnership) for the tribunal to have jurisdiction to hear the discrimination claims. The appeal therefore succeeded on the worker point but failed on the territoriality point.

Background and parties: The respondent (the claimant) was an English‑qualified solicitor who became an equity member of Clyde & Co LLP by a deed of adherence in February 2010. She worked mainly in Tanzania but visited London regularly. After reporting alleged bribery and money laundering by a Tanzanian partner, she was expelled from the LLP and brought claims: (i) a whistle‑blowing claim under section 47B Employment Rights Act 1996 against the LLP; and (ii) sex and pregnancy discrimination claims under the Equality Act 2010 against the LLP and an individual member.

Procedural history: The Employment Tribunal held the claimant was not a worker and so could not bring the whistle‑blowing claim but found sufficient UK connections to hear discrimination claims. On appeal the Employment Appeal Tribunal reversed on the worker point and found the claimant could be a worker; that decision was appealed to the Court of Appeal.

Nature of relief sought: Protection for making protected disclosures and remedies for detriments arising from those disclosures (whistle‑blowing relief); and remedies for alleged sex and pregnancy discrimination under the Equality Act 2010.

Issues framed: (1) Can an LLP member be a "worker" for the purposes of section 230(3) ERA 1996, and, if so, was the claimant a worker on the facts? (2) Does section 4(4) Limited Liability Partnership Act 2000 prevent a member of an LLP being treated as employed (as employee or limb (b) worker) by the LLP? (3) Did the Employment Tribunal have territorial jurisdiction to hear the claims given the claimant’s principal place of work was abroad?

Court’s reasoning: The court analysed the statutory definition of "worker" in section 230(3) ERA and related domestic and European authorities on the concepts of subordination, dependence and integration (including Allonby, Ready Mixed Concrete and cases addressing limb (b) workers). It concluded that section 4(4) LLP Act 2000 must be construed so that where, on the hypothetical that the business had been carried on as an unincorporated partnership, the person would have been a partner, that person cannot be regarded as "employed" by the LLP for any purpose; that construction avoids absurdity and preserves pre‑incorporation status. The court reviewed authorities (Ellis; Cowell) establishing that a partner cannot occupy an employment relationship because partnership is not a separate legal entity and the partnership relationship lacks the requisite subordination. Applying that analysis, a member who would have been a partner under the 1890 Act cannot be a worker under section 230(3) ERA and so cannot bring the whistle‑blowing claim by reason of membership alone.

On territorial scope the court applied the statutory construction principles in Lawson v Serco and subsequent Supreme Court guidance (Duncombe; Ravat) and upheld the Employment Tribunal’s factual findings of strong connections to Great Britain. The claimant’s regular work in London, the LLP agreement governed by English law, remuneration and administrative and reputational ties to the UK justified the tribunal’s exercise of jurisdiction in respect of the discrimination claims.

Result: The whistle‑blowing claim failed for want of worker status; discrimination claims can proceed before the Employment Tribunal.

Appeal allowed in part. The Court of Appeal held that section 4(4) of the Limited Liability Partnership Act 2000 must be construed to preserve the pre‑incorporation status of partners as against incorporation: where a member of an LLP would have been a partner if the business had been an unincorporated partnership, that person cannot be treated as "employed" by the LLP — whether as an employee or as a limb (b) worker — and therefore cannot bring a whistle‑blowing claim under section 47B ERA 1996 by virtue of membership alone. However, the court dismissed the appeal on territoriality and upheld the Employment Tribunal’s conclusion that there were sufficiently strong connections with Great Britain for it to have jurisdiction to hear the discrimination claims.

Appeal from the Employment Appeal Tribunal (appeal numbers UKEAT/0568/11/RN and UKEAT/0168/12/RN) to the Court of Appeal ([2012] EWCA Civ 1207). The Employment Tribunal had found the claimant not to be a worker but that it had jurisdiction to hear the discrimination claims; the EAT reversed on the worker point. The Court of Appeal allowed the appellants' appeal on the worker point but dismissed the appeal on territorial jurisdiction.