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Kate Manning from CaseCheck has alerted us to a Court of Appeal (civil) judgement that confirms what many HR practitioners have believed for a while; Partners in Limited Liability Partnerships (LLP) are not employees of their firm but are equal regardless of their contractual arrangements.

Interestingly this case arises from one partner having made some pretty serious whistleblowing disclosure and alleges that they suffered a detriment as a result of the disclosure (section 47B of the Employment Rights Act 1996). The judgement found for the appellant and this places an emphasis on partners being accountable to and for each other!

Much of this case is based around the specific way the Employment Rights Act 1996 defined a worker and the legal, social and contractual complexities of defining what a worker arising from it.  Given the clear nature of this judgement, it is worth considering three points;

“Since the partnership is not a separate legal entity, the parties are in a relationship with each other and accordingly each partner has to be ……both workman and employer which is a legal impossibility.”

‘In a more sociological context the judgement considers (at length) the legal characteristic that a hierarchical relationship must exists (to some extent or other) whereby the worker is subordinate to the employer. Where the relationship is one of partners, each partner is agent for the other and is bound by the acts of the other and each partner is both severally and jointly liable for the liabilities of the partners.’ In other words, “the partnership concept is the antithesis of subordination.”

The judgement noted that contractual arrangements between the parties may confer different powers on different groups of partners but these do not the essential nature of the relationship (each partner acting as an agent for, and being responsible for the acts of other partners) places them outside the sphere of employment relations entirely.’

This case has a further sting in its tale; a reminder that employers working abroad may have actual or implied liability under UK laws.  But that is another issue.

Case: Clyde & Co LLP and Anr v Bates Van Winkelhof

Citation: [2012] EWCA Civ 1207

Interested in more on whistleblowing, read Simon Devonshire QC paper on Whistleblowing delivered at the  LexisNexis Conference:  here