This case concerns the employment status of an equity partner, specifically relating to whether she could be considered a “worker” for the her whistleblowing claim under the Employment Rights Act 1996.
The facts in Clyde & Co Llp v Winkelhof
Mrs Winklehof commenced employment with Shadbolts (a law firm) as a solicitor in 2005 and was seconded to Tazmania, where she worked (among others) for a Tanzanian law firm, Ako Law. The managing partner of Ako law was at all times Mr Ongwamuhana (“Kibuta”). She transferred her employment to Clyde & Co (“the First Respondent”), another well-known law firm, on 21 February 2010, whereupon she became an equity member of the firm.
Mrs Winklehof became aware in November 2010 of potentially illegal activities engaged in by Kibuta and reported this to the Respondent’s Money Laundering Officers on 23 and 24 November 2010. She was dismissed by Ako Law on 25 November 2010 and suspended by the First Respondent on the same day. She was ‘dismissed’ by the Respondent on 6 January 2011 and subsequently brought claims at the Employment Tribunal for, among other things, sex discrimination and detriment because of her protected disclosure.
The law relating to the employment status of equity members (and partners generally)
Under s.230(3) of the Employment Rights Act 1996 a worker is an individual who works (or used to work) under either a contract of employment or any other contract (express or implied, oral or written) where the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
It has been established that partners can be “limb (a)” workers (or ‘employees’) for the purposes of protection against unfair dismissal (for example, the cases of Kovats v TFO Management LLP and Tiffin v Lester Aldridge LLP) but the situation presented here was, on the facts, a novel one – the question of whether a partner or equity member could be a “limb (b) worker” for the purposes of the Employment Rights Act 1996 had not been addressed before.
The Employment Appeal Tribunal’s judgment in Clyde & Co Llp v Winkelhof
An Employment Judge had initially struck out Mrs Winkelhof’s claim at a Pre-Hearing Review on the basis that she was not a “limb (b)” “worker” and therefore could not claim for detriment due to the protected disclosure she had made. The Employment Judge accepted that she was operating under a contract of employment, that she was personally providing services related to that contract, and that the services provided were to another party to the contract. However, the Employment Judge considered that Clyde & Co LLP was a client of the Claimant’s and she was therefore excluded from claiming.
The Employment Appeal Tribunal rejected this analysis. It considered that the First Respondent was not a client or customer of the Claimant as she was in a “subordinate position” (see Byrne Brothers v Baird. The Employment Appeal Tribunal therefore concluded that an equity member or partner can, dependent on the facts of the matter, be a “limb (b)” “worker” for the purpose of the Employment Rights Act 1996 and therefore qualify for protection from detriment because of a protected disclosure (or “whistleblowing”).
Our specialist employment solicitors’ view on Clyde & Co Llp v Winkelhof
This is an interesting and, as the Employment Appeal Tribunal noted, novel case. The conclusion of the Employment Appeal Tribunal appears to be a just and correct one in the circumstances – the First Respondent on the facts did not appear to have been a client of the Claimant’s. This conclusion was supported by the fact that the Claimant had been specifically recruited by the First Respondent and that she was in a subordinate position (i.e. unable to exercise unfettered discretion) in her workplace.