Clyde & Co LLP and another v Bates van Winkelhof

A member of a limited liability partnership may be a limb (b) worker under section 230(3)(b) of the Employment Rights Act 1996. Section 4(4) of the Limited Liability Partnerships Act 2000 concerns employment under a contract of service. It does not exclude members who otherwise satisfy the wider statutory definition of worker.

Worker status must be determined by applying the statutory language to the particular relationship. Subordination may help distinguish a worker from an independent person serving clients or customers, but it is not a freestanding or universal requirement. A professional who enjoys substantial autonomy, or participates in the organisation’s management, may still be a worker.

The appellant was a solicitor and equity member of Clyde & Co LLP. She agreed to work full time for the LLP, received a fixed share of profits and could not offer her legal services elsewhere. After reporting alleged bribery within a Tanzanian joint venture, she alleged that she suffered detriments and was expelled. She brought sex discrimination and whistleblowing claims.

The Employment Tribunal held that she was not a worker. The Employment Appeal Tribunal reversed that conclusion. The Court of Appeal allowed the LLP’s appeal, holding in [2012] EWCA Civ 1207, also reported at [2013] ICR 883, that section 4(4) of the Limited Liability Partnerships Act 2000 prevented her from being a worker.

The central issue was whether an LLP member could be a worker within section 230(3)(b) of the Employment Rights Act 1996 and thereby claim statutory whistleblowing protection.

1. Appeal allowed. Lady Hale delivered the leading judgment, with which Lord Neuberger and Lord Wilson agreed. Lord Carnwath also agreed that the appeal should be allowed for Lady Hale’s reasons. The appellant was a worker within section 230(3)(b) of the Employment Rights Act 1996. Her whistleblowing claim was remitted to the Employment Tribunal for determination alongside her sex discrimination claim.

2. Section 4(4) of the Limited Liability Partnerships Act 2000 did not exclude the appellant from worker status. In that provision, “employed by” bears its natural meaning of employment under a contract of service. The extended meaning given to “employment” and “employed” by section 230(5) of the Employment Rights Act 1996 is expressly confined to that Act and cannot control the meaning of the later Act.

3. Employment law distinguishes employees, independent persons carrying on business for clients or customers, and an intermediate class of self-employed workers who provide personal services as part of another’s undertaking. There is no single additional test capable of replacing the statutory words. Subordination can assist in distinguishing the intermediate class from independent providers, but it is not a universal or freestanding characteristic of worker status.

4. The appellant satisfied the express statutory conditions. She undertook personally to provide services for the LLP, could not market those services to anyone else and formed an integral part of its business. The LLP was neither her client nor her customer. Her participation as a member and her degree of professional autonomy did not prevent worker status.

5. The court did not decide whether a partner in a traditional partnership may also be an employee or limb (b) worker, or whether such a relationship must arise under a separate contract. Lord Carnwath emphasised that the result depended upon the hybrid characteristics of an LLP and did not necessarily resolve equivalent questions concerning other partnerships.

6. Lady Hale considered, without deciding the appeal on this ground, that the result was consistent with article 10 of the European Convention on Human Rights. Article 10 can protect responsible workplace whistleblowing, having regard to good faith, reasonable grounds, public interest, available channels of disclosure and the severity of the sanction. The statutory scheme reflected those considerations. A Convention-compatible construction was unnecessary because the appellant was protected on the ordinary construction of the legislation.

7. Lord Clarke agreed that the appellant satisfied section 230(3)(b), but took a minority view of section 4(4). He considered that section 230(5) meant that a limb (b) worker was regarded as employed “for any purpose” within section 4(4). He left unresolved whether an equivalent member of a traditional partnership would be regarded as employed.

• United Kingdom Supreme Court: In Clyde & Co LLP and another v Bates van Winkelhof [2014] UKSC 32, the court allowed the appeal, held that the appellant was a worker and remitted her whistleblowing claim to the Employment Tribunal.
• Court of Appeal: The court allowed the LLP’s appeal and held that section 4(4) of the Limited Liability Partnerships Act 2000 prevented the appellant from being a worker: [2012] EWCA Civ 1207; [2013] ICR 883.
• Employment Appeal Tribunal: Judge Peter Clark allowed the appellant’s appeal and held that she was a worker because she was integral to the LLP’s business, could not offer her services elsewhere and did not serve the LLP as a client or customer.
• Employment Tribunal: The tribunal held that the appellant was not a worker because it regarded her as being in business on her own account and receiving a share of profits.