LLPs and partnerships should pay attention to a Supreme Court decision on the question of the employment status of LLP members.
The case of Clyde & Co v Bates van Winkelhof decided that a member of an LLP (in this case, a fixed-share equity partner of a firm of solicitors) has “worker” status and is therefore entitled to the various employment law protections that such status attracts.
The rights afforded to workers include:
- Protection from detriment based on whistleblowing (the point in issue in this case)
- An entitlement to the National Minimum Wage
- Rights under the working time and part-time working legislation
- The right not to suffer unauthorised deductions from wages (so any clawback provisions in LLP agreements need to be carefully drafted)
Further, it is likely that LLP members will be classed as eligible “jobholders” for the purposes of pension auto enrolment.
As an aside, the Court considered that there was a “serious challenge” to the rule that a partner can never be an employee of a partnership. As that point was not open for consideration in this case, no opinions were expressed but this is likely to become an area of dispute going forward.
If you are an LLP, you would be wise to take employment law advice if you are looking to exit one of your members, to ensure that you do not put yourself at unnecessary risk!