Bates van Winkelhof v Clyde and Co LLP

The Supreme Court considered whether a member of a limited liability partnership (LLP) can be a "worker" within the meaning of section 230(3)(b) of the Employment Rights Act 1996 and so benefit from the whistle-blowing protections in sections 43A to 43L. The court held that the appellant satisfied the statutory wording of section 230(3)(b): she undertook personally to perform services for the LLP, the LLP was not her client or customer, and she was integrated into the LLP's business. Section 4(4) of the Limited Liability Partnerships Act 2000 does not have the effect of excluding LLP members from limb (b) worker status. The court rejected the view that a general requirement of subordination is a freestanding element of the limb (b) definition, although subordination may be persuasive in some cases.

The court therefore allowed the appeal and remitted the claims to the Employment Tribunal to determine the merits of the whistle-blowing and related discrimination claims. The court did not decide the wider and more difficult question whether a partner can ever be an employee of the partnership.

Background and parties:

• The appellant, an English-qualified solicitor, became a member of Clyde & Co LLP in February 2010 under a Deed of Adherence to the LLP's Members' Agreement. She was described as an "Equity Partner" with a fixed annual profit share and agreed to devote her time and attention to the LLP's business.
• In November 2010 the appellant made disclosures about alleged bribery in a Tanzanian joint venture. She alleges she suffered detriments culminating in expulsion from the LLP and brought claims in the Employment Tribunal under the whistle-blowing provisions of the Employment Rights Act 1996 and under sex discrimination provisions.

Procedural history:

• The Employment Tribunal held she was not a "worker" under section 230(3) of the 1996 Act.
• The Employment Appeal Tribunal (Judge Peter Clark) allowed her appeal and held she was a limb (b) worker.
• The Court of Appeal ([2012] EWCA Civ 1207) reversed, holding that section 4(4) of the Limited Liability Partnerships Act 2000 precluded LLP members from being treated as "employed" by the LLP, and that the partnership context lacked the necessary characteristics of employment.
• The case reached the Supreme Court on the construction of section 230(3)(b) ERA and the effect of section 4(4) LLPA.

Nature of the claim and issues before the Supreme Court:

• (i) Whether a member of an LLP can be a "worker" under section 230(3)(b) of the Employment Rights Act 1996 and so bring whistle-blowing claims under sections 43A to 43L.
• (ii) Whether section 4(4) of the Limited Liability Partnerships Act 2000 implicitly restricts the meaning of "employed by" so as to exclude limb (b) workers among LLP members.
• (iii) Whether a notion of subordination is an essential, independent element of limb (b) worker status.
• (iv) Whether the appellant's Convention right to freedom of expression (article 10 ECHR) and the duty under section 3 Human Rights Act 1998 required a rights-protecting construction.

Court's reasoning:

• The court applied ordinary principles of statutory construction and considered the broader statutory context. Section 230(3)(b) plainly covers an individual who undertakes personally to perform services for another party who is not the individual's client or customer; it was common ground that the appellant satisfied those words.
• The court construed section 4(4) LLPA as referring to the conventional meaning of "employed by" (employment under a contract of service) and not as an express modification extending to all limb (b) workers. The 2000 Act contains no text comparable to section 230(5) ERA, which expressly extends the concept of "employment" within the 1996 Act to limb (b) workers. Accordingly s4(4) does not exclude limb (b) worker status for LLP members.
• The court considered domestic and European authorities about the distinction between workers and independent contractors and the relevance of integration and subordination tests. It concluded there is no single, freestanding requirement of subordination in limb (b), although the degree of integration or dependence may be determinative on the facts.
• The court observed that construing the statute to give the appellant protection was consistent with article 10 ECHR and with the duties under the Human Rights Act, but the appeal could be decided on ordinary principles of construction without invoking human-rights-based reinterpretation.

Disposition:

• The Supreme Court allowed the appeal, held that the appellant was a limb (b) worker within section 230(3) of the Employment Rights Act 1996, and remitted the claims to the Employment Tribunal for determination of the substantive issues.
• The court declined to decide the broader question whether a partner can ever be an employee of the partnership.

Appeal allowed. The Supreme Court held that the appellant was a "worker" within section 230(3)(b) of the Employment Rights Act 1996 and entitled to rely on the whistle-blowing provisions. Section 4(4) of the Limited Liability Partnerships Act 2000 does not have the effect of excluding LLP members from limb (b) worker status. The case was remitted to the Employment Tribunal to determine the substantive claims; the court did not decide whether a partner can ever be an employee of the partnership.

Employment Tribunal: claimant held not to be a worker; Employment Appeal Tribunal (Judge Peter Clark): appeal allowed, claimant held to be a limb (b) worker; Court of Appeal: [2012] EWCA Civ 1207, held section 4(4) LLPA precluded worker status; Supreme Court: [2014] UKSC 32, appeal allowed and remitted to the Employment Tribunal.