The Supreme Court will next week preside over a precedent-setting case to decide if partners of limited liability partnerships (LLPs) are entitled to whistle blower protection, following a claim brought by former Clyde & Co partner Krista Bates van Winkelhof.
The hearing follows allegations by Bates van Winkelhof that she was forced to leave Clydes after she ‘blew the whistle’ on the managing partner of the firm’s Tanzanian associate firm, alleging that he was paying bribes to win clients, and also announced her pregnancy. All allegations are ‘vehemently denied’ and will not form part of the Supreme Court’s deliberations next week.
Bates van Winkelhof had brought a complaint against Clydes under the Employment Rights Act 1996 (ERA), on the basis that her expulsion from the partnership was detrimental because she had made protected disclosures.
However, the Court of Appeal ruled in September 2012 that members of LLPs are not considered ‘workers’ under the ERA, and, therefore, that Bates van Winkelhof could not pursue a whistleblowing case against Clydes because did not enjoy the relevant protection under English law.
Mishcon de Reya is representing Bates van Winkelhof at the Supreme Court hearing on Monday 24 March and Tuesday 25 March, which attempts to overturn this ruling.
The firm is being led by head of employment Joanna Blackburn, who has instructed Matrix Chambers’ Tom Linden QC and Essex Court’s David Craig.
As this is the first case to test whether an LLP member can be a ‘worker’, Public Concern at Work, the UK’s leading whistleblowing charity, has been given leave to intervene, commenting in a statement that ‘the outcome of this case will be of significant interest to solicitors, accountants, and other professionals with LLP member status.’
Public Concern at Work will be represented in the appeal by John Machell QC, Jonathan Cohen and Adil Mohamedbhai, who are instructed by niche employment and partnership firm CM Murray. All lawyers are acting on a pro-bono basis.
Should the court rule in Bates van Winkelhof’s favour next week, the allegations of whistleblowing detriment will be referred back to an employment tribunal in September, along with claims of unlawful sex and pregnancy discrimination.
Mishcon’s Blackburn said: ‘As the law stands, partners are in a double bind, as they have a regulatory obligation to report wrongdoing, but without legal protection risk losing their jobs if they do so. This is an issue that every LLP should be incredibly concerned about. The partners of LLPs are the people most likely to become aware of wrongdoing but are the most disadvantaged category of people with respect to protection. It is in everyone’s long-term interests for LLPs and their members to have the same whistleblowing protection as all employees already enjoy.’
A statement from Clydes said: ‘This is not a hearing of Ms Bates van Winklehof’s claims, which have not been tested and which we vehemently deny. Rather the Supreme Court is being invited to uphold the Court of Appeal’s decision that members of partnerships cannot be considered workers under the Public Interest Disclosure Act 1998. The Public Interest Disclosure Act has undergone 46 separate amendments since its inception, and not once has it been considered necessary, or prudent, to include LLP members.
‘Parliament is likely to have been mindful of the wider implications, such as partners’ professional and personal duties of confidentiality, when setting the legislative parameters.
‘A consequence of any proposed classification of LLP members as “workers” would be the exposure of all LLPs, whether large or small, to retrospective claims from members, in some cases dating back to 1998. Such claims would cost partnerships (such as small IFAs, tax and accountancy firms) significant amounts, rendering some insolvent, were compensation to be payable to those privileged enough to attain partnership, for non-receipt of the full gamut of workers’ rights (such as minimum paid holiday entitlements, working hours limitations and, more recently, pensions auto enrolment).
‘If the Court of Appeal’s detailed finding in favour of Clyde & Co is upheld by the Supreme Court, it would severely narrow the scope of Ms Bates van Winklehof’s tribunal claims. Restricted or not, we remain confident of successfully refuting any claim she may bring at tribunal.’
The case will be closely watched and Cathy James, chief executive of Public Concern at Work, said: ‘The nature of the workplace has changed in the UK. The ability of all members of the workforce including LLP members to speak up about dangers or wrongdoing without fear of reprisal is important to protect society. It has been an age old common law principle that those engaged in wrongdoing are not able to hide behind confidentiality clauses. This case is important as it involves important freedom of expression principles. Cases such as the collapse of Arthur Anderson and Enron demonstrate the need to encourage all workers to speak up before damage is done.’
The managing partner of CM Murray, Clare Murray, added: ‘Lawyers, accountants, doctors and asset managers are just a few of the professions that operate through LLP structures; and they are the most likely to be the first to spot possible wrongdoing by corporate or public bodies. But under current case law they risk putting their careers in jeopardy by blowing the whistle when they see that wrongdoing. That can’t be right or be in the public interest. The position needs to change and this appeal to the Supreme Court is an important step towards bringing about that change. We are very proud to be part of it.’