Van Winkelhof v Clyde & Co LLP & Anor

An equity member of an LLP may be a limb (b) worker under section 230(3) of the Employment Rights Act 1996. The question is not resolved merely by profit sharing or membership. The exclusion applies only if the individual carries on a profession or business undertaking and the LLP is that undertaking’s client or customer.

Where an individual is recruited to work exclusively and as an integral part of the LLP’s operation, rather than marketing services independently, the LLP is not a client or customer. Territorial jurisdiction may extend to claims by a person principally working abroad where the working relationship has a sufficiently strong connection with Great Britain and British employment law.

The claimant, an English-qualified solicitor and equity member of the first respondent LLP, principally worked in Tanzania in connection with its joint venture with a Tanzanian law firm. After reporting alleged bribery, she was suspended and expelled from the LLP. She brought whistleblowing and sex and pregnancy discrimination claims.

At a pre-hearing review, the Employment Tribunal held that it had territorial jurisdiction over both claims but held that she was not a limb (b) worker for whistleblowing purposes. The claimant appealed that ruling. The respondents cross-appealed on territorial jurisdiction and separately appealed a disclosure order. The central issues were whether an LLP equity member could satisfy section 230(3)(b) and whether the Tribunal could hear claims arising from work principally performed abroad.

1. The claimant’s appeal was allowed. The Employment Judge had erred in treating equity membership and profit sharing as sufficient to engage the exclusion in section 230(3)(b) of the Employment Rights Act 1996. The claimant satisfied the first three statutory requirements: there was a contract, she undertook personally to perform services, and those services were performed for the LLP.

2. The exclusion contains two cumulative elements. The individual must carry on a profession or business undertaking, and the other contracting party must be a client or customer of that undertaking. The useful distinction is between a person who markets independent services generally and a person recruited to work as an integral part of the principal’s operation.

3. The claimant had agreed to devote her full-time attention to the LLP’s business and was prevented from offering her professional services elsewhere. She was recruited by, and worked for the benefit of, the LLP. Although she had a profit-related element of remuneration, she also had guaranteed remuneration. The LLP was therefore not her client or customer. She was declared to be a limb (b) worker.

4. The cross-appeal was dismissed. Applying the territorial connection approach in Lawson and Ravat, the Tribunal was entitled to find a sufficiently strong connection between the working relationship, Great Britain and British employment law. The claimant worked for a London-based global firm, worked partly in London, and had firm and substantial British connections. The Tribunal accordingly had jurisdiction over the claims under the ERA and the Equality Act 2010.

5. The disclosure appeal was dismissed. It was contingent on the unsuccessful jurisdictional challenges. The proceedings were remitted to the Employment Tribunal for a substantive hearing of all claims.

• Employment Appeal Tribunal: The claimant’s appeal against the worker ruling succeeded. The respondents’ cross-appeal on territorial jurisdiction and their disclosure appeal were dismissed.
• London Central Employment Tribunal: At a pre-hearing review, Employment Judge Welch held that the claimant was not a limb (b) worker, but that the Tribunal had territorial jurisdiction over the whistleblowing and discrimination claims. The ruling was promulgated on 1 July 2011.