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Court of Appeal overturns an EAT decision that an LLP equity partner is not a worker.

 SUMMARY: The Court of Appeal has overturned an Employment Appeal Tribunal decision and has held that an LLP equity partner is not a worker.

In this quarter’s FGazette, we reported that in the case of Bates van Winkelhof v Clyde & Co LLP, the Employment Appeal Tribunal (“the EAT”) held that an LLP equity partner (“B”) was a worker.  We stated that this decision was subject to appeal; now the Court of Appeal has allowed Clyde & Co LLP’s (“the LLP”) appeal and held that the LLP equity partner was not a worker.

Facts

B became an equity partner of the LLP in February 2010.  She received a profit-related element of remuneration and a guaranteed level of remuneration.  In November 2010, B reported to the LLP that the managing director of the company she was seconded to had admitted that he paid bribes.  On the following day she was suspended by the LLP and subsequently expelled from the LLP in January 2011.

B brought a whistleblowing claim and a sex/pregnancy discrimination claim (as she was pregnant at the time).

The Employment Tribunal held that it could not consider B’s whistleblowing claim because she was not a worker.  However, the EAT overturned this decision and held that B was a worker.

Decision

At the Court of Appeal, the LLP put forward a new argument about the Limited Liability Partnership Act 2000.  Based on this argument, the Court of Appeal held that if an LLP member would have been a partner under a general partnership (if it had not been registered as an LLP), the LLP member cannot be a worker.  The Court of Appeal held that B would have been a partner under a general partnership and therefore she was not a worker and could not proceed with her whistleblowing claims against the LLP.

The Court of Appeal also noted that a worker has to be in a subordinate position and this is not the case with an LLP member.

B will be able to proceed with her discrimination claim, however, as she is protected by the Equality Act 2010.

What does this mean for LLPs and Partnerships?

This means that LLP members and partners of general partnerships do not benefit from the rights available to workers.  These rights would include protection if they “blow the whistle” and protection against less favourable treatment for part time workers, as well as entitlement to annual leave and auto-enrolment in a pension scheme.

This does not affect an LLP member’s right to bring a discrimination claim, as LLP members have specific protection from discrimination under the Equality Act 2010.

We understand however that both parties are seeking leave to appeal this decision.  We will keep you updated!

Hazel Robbins, Solicitor

Contact Information

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Updated: by FG Solicitors
Call us on:  0808 172 93 22

COURT OF APPEAL OVERTURNS AN EAT DECISION THAT AN LLP EQUITY PARTNER IS NOT A WORKER.

 SUMMARY: The Court of Appeal has overturned an Employment Appeal Tribunal decision and has held that an LLP equity partner is not a worker.

In this quarter’s FGazette, we reported that in the case of Bates van Winkelhof v Clyde & Co LLP, the Employment Appeal Tribunal (“the EAT”) held that an LLP equity partner (“B”) was a worker.  We stated that this decision was subject to appeal; now the Court of Appeal has allowed Clyde & Co LLP’s (“the LLP”) appeal and held that the LLP equity partner was not a worker.

Facts

B became an equity partner of the LLP in February 2010.  She received a profit-related element of remuneration and a guaranteed level of remuneration.  In November 2010, B reported to the LLP that the managing director of the company she was seconded to had admitted that he paid bribes.  On the following day she was suspended by the LLP and subsequently expelled from the LLP in January 2011.

B brought a whistleblowing claim and a sex/pregnancy discrimination claim (as she was pregnant at the time).

The Employment Tribunal held that it could not consider B’s whistleblowing claim because she was not a worker.  However, the EAT overturned this decision and held that B was a worker.

Decision

At the Court of Appeal, the LLP put forward a new argument about the Limited Liability Partnership Act 2000.  Based on this argument, the Court of Appeal held that if an LLP member would have been a partner under a general partnership (if it had not been registered as an LLP), the LLP member cannot be a worker.  The Court of Appeal held that B would have been a partner under a general partnership and therefore she was not a worker and could not proceed with her whistleblowing claims against the LLP.

The Court of Appeal also noted that a worker has to be in a subordinate position and this is not the case with an LLP member.

B will be able to proceed with her discrimination claim, however, as she is protected by the Equality Act 2010.

What does this mean for LLPs and Partnerships?

This means that LLP members and partners of general partnerships do not benefit from the rights available to workers.  These rights would include protection if they “blow the whistle” and protection against less favourable treatment for part time workers, as well as entitlement to annual leave and auto-enrolment in a pension scheme.

This does not affect an LLP member’s right to bring a discrimination claim, as LLP members have specific protection from discrimination under the Equality Act 2010.

We understand however that both parties are seeking leave to appeal this decision.  We will keep you updated!

Hazel Robbins, Solicitor

Contact Information

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice.