Clyde & Co LLP & Anor v Bates Van Winkelhof

Factual and Procedural Background

The claimant, an English qualified solicitor, initially worked under an employment contract with a UK law firm ("Company A") and was seconded to Tanzanian law firms. After Company A terminated its joint venture with the first Tanzanian firm, it entered a new agreement with a second Tanzanian firm, where the claimant continued her work. The claimant acquired a flat in London, which she intended for personal use but occasionally rented out.

Company B, a limited liability partnership ("LLP"), sought to recruit the claimant as an equity member, contingent on acquiring parts of Company A's business. The claimant became an equity member of Company B, signing a deed of adherence binding her to the LLP's members' agreement, which required full-time devotion to the LLP's business and prohibited engagement in other businesses without consent.

The claimant's remuneration comprised a profit share from the partnership, payments linked to her employment with the Tanzanian firm, and a share of joint venture profits. She paid National Insurance in the UK, but tax was paid in Tanzania due to her primary work location.

She worked mainly in Tanzania but visited the UK regularly, maintaining an office base and secretarial support in London. After reporting alleged misconduct involving money laundering and bribery by a Tanzanian senior partner, she was dismissed by the Tanzanian firm and suspended and ultimately expelled by Company B.

The claimant brought whistleblowing and discrimination claims against Company B and a senior equity member. Company B challenged the Employment Tribunal's jurisdiction on two preliminary points: whether the claimant was a "worker" under the Employment Rights Act 1996, and whether the Tribunal had jurisdiction given her primary work location abroad.

Legal Issues Presented

1. Whether a member of a limited liability partnership can be classified as a "worker" under Section 230 of the Employment Rights Act 1996.
2. Whether the Employment Tribunal had jurisdiction to hear claims by the claimant despite her spending the majority of her working time abroad.

Arguments of the Parties

Appellant's Arguments

• The claimant was not a "worker" within the meaning of Section 230(3) of the Employment Rights Act 1996 and thus not entitled to bring a whistleblowing claim, though discrimination claims were unaffected.
• The claimant worked primarily outside the UK, and her connection to the UK was too weak to confer jurisdiction on the Employment Tribunal.
• The Employment Appeal Tribunal (EAT) erred in finding the claimant was in a subordinate position; as an equity member, she actively participated in the LLP's management, inconsistent with subordination.
• Section 4(4) of the Limited Liability Partnership Act 2000 precludes LLP members from being treated as employees unless they would be so under the 1890 Partnership Act; the claimant would not be a worker or employee under that Act.
• The Tribunal failed to perform a comparative jurisdictional exercise weighing connections to the UK against those to Tanzania.

Appellee's Arguments

• The claimant was recruited as an integral part of the LLP’s operations and agreed to devote full-time attention, indicating subordination and worker status.
• The LLP was not a client or customer of the claimant, so the exclusion in the statutory definition of "worker" did not apply.
• The claimant would have been a partner under the 1890 Partnership Act, supporting the argument that Section 4(4) does not change her employment status as a worker under the 2000 Act.
• The Tribunal had jurisdiction due to strong connections with the UK, including governance by English law, regular UK work visits, remuneration from the UK, and public representation as a member of the LLP.
• The comparative jurisdictional exercise was unnecessary because the claimant worked and lived partly in the UK, establishing a sufficiently strong connection.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Allonby v Accrington and Rossendale College [2004] ICR 1328	Definition of "worker" under EU law emphasizing subordination and direction.	Supported the principle that independent providers of services not in a subordinate relationship are excluded from "worker" status.
Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497	The "control" test to distinguish employees from other workers.	Referenced as the enduring test for employee status, focusing on hierarchical control.
Cotswold Developments Construction Ltd v Williams [2006] IRLR 18	Distinction between limb (b) workers and independent contractors based on integration into the principal's operations.	Used to argue that the claimant was integral to the LLP’s operations, supporting worker status.
James v Redcats (Brands) Ltd [2007] ICR 1006	Degree of dependence as key to determining worker status.	Supported the approach focusing on dependence rather than mere marketing of services.
Byrne Bros (Formwork) Ltd v Baird [2002] ICR 667	Clarified the intermediate class of workers who are neither employees nor genuinely self-employed.	Emphasized degree of dependence and subordination as critical factors.
Lawrie-Blum v Land Baden-Wurttemberg (Case C-66/85) [1987] ICR 483	EU autonomous concept of worker requiring subordination and direction.	Reinforced the need for subordination in defining worker under EU law.
Kurz v Land Baden-Wurttemberg (Case C-188/00) [2002] ECR I-10691	Further EU authority on worker status and subordination.	Followed in the analysis of worker status.
Jivraj v Hashwani [2011] UK SC 40	Confirmed distinction between employees and independent providers of services without subordination.	Applied to assess whether the claimant was in a subordinate relationship.
Ellis v Joseph Ellis & Co [1905] 1 KB 324	Partners cannot be employees because they cannot be both employer and employee.	Used to conclude that partners cannot be workers within the meaning of employment law.
Cowell v Quilter Goodison Co Ltd [1989] IRLR 392	Partnership relationship is sui generis and excludes employment relationship.	Supported the view that partners are not employees or workers.
Tiffin v Lester Aldridge LLP [2012] ICR 647	Interpretation of Section 4(4) LLP Act and employment status of LLP members.	Clarified that LLP members who would be partners under 1890 Act cannot be employees.
Lawson v Serco [2006] ICR 250 (HL)	Principles governing territorial scope of employment rights for employees working abroad.	Guided the assessment of jurisdiction based on strength of connection to the UK.
Ministry of Defence v Wallis [2011] ICR 617	Confirmed jurisdiction for employees working abroad with strong UK connections.	Applied to support Tribunal jurisdiction despite claimant's primary work abroad.
Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UK SC 36	Confirmed the need for a strong connection with the UK for jurisdiction over employees abroad.	Supported the Tribunal's jurisdiction in the present case.
Ravat v Halliburton Manufacturing Services Ltd [2012] UK SC 1	Broadened approach to jurisdiction for employees working abroad.	Endorsed the Tribunal's exercise of jurisdiction on facts of strong UK connection.
Jones v Governing Body of Burdett Coutts School [1999] ICR 38	Exceptional nature of allowing new points on appeal.	Referenced regarding whether new legal arguments could be heard.
Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719	Discretionary refusal of new points on appeal.	Supported the court's discretion analysis on new points.
Unison v Sheffield City Council [2006] EWCA Civ 825	Restrictive approach to new points on appeal.	Considered in the context of new jurisdictional arguments.
M Young Legal Associates v Zahid [2006] 1 WLR 2562	Determination of partnership existence under 1890 Act.	Applied to conclude claimant would be a partner if the LLP were an unlimited partnership.
Bleuse v MBT Transport Limited [2008] ICR 488	Extension of jurisdiction principles to EU-derived discrimination claims.	Referenced but not decided upon due to resolution of primary issues.
Clarke v Oceanic Contractors Inc [1983] 2 AC 130	Guidance on legislative intent regarding territorial scope.	Quoted to support statutory construction on jurisdiction.

Court's Reasoning and Analysis

The court began by examining the statutory definition of "worker" under Section 230(3) of the Employment Rights Act 1996, noting it encompasses employees and a subset of individuals who personally perform work but are not employees (limb (b) workers). The court acknowledged that many employment rights extend beyond employees to limb (b) workers, including whistleblowing protections.

The court reviewed established tests for worker status, emphasizing the importance of subordination and integration into the business. It considered whether an LLP member could be a limb (b) worker, concluding that although the claimant was integral to the LLP's operations and prohibited from working elsewhere, the legal nature of LLP membership must be analyzed in light of the 1890 Partnership Act.

Applying Section 4(4) of the LLP Act 2000, the court interpreted that an LLP member is not an employee unless they would be so under the 1890 Act. The court found that under the 1890 Act, partners cannot be employees or limb (b) workers because the partnership is not a separate legal entity, making it legally impossible for a partner to be subordinate to themselves or co-partners. The court relied on authoritative precedents (Ellis, Cowell, Tiffin) to support this conclusion.

Consequently, the court held that the claimant, as a member of an LLP who would be a partner under the 1890 Act, cannot be a worker under Section 230 and thus cannot bring a whistleblowing claim.

On the territorial jurisdiction issue, the court applied principles from leading cases (Lawson v Serco, Ministry of Defence v Wallis, Duncombe, Ravat) that jurisdiction depends on the strength of the connection between the employment relationship and Great Britain. The court found that the claimant maintained strong and substantial connections with the UK, including partial work performed in the UK, governance by English law, remuneration arrangements, and public representation as a member of the LLP.

The court rejected the appellant's submission that a comparative exercise weighing UK and Tanzanian connections was required, reasoning that such an exercise is necessary only when the claimant works wholly abroad. Since the claimant lived and worked partly in the UK, the Tribunal was entitled to exercise jurisdiction over the discrimination claims.

Finally, the court allowed a new legal argument concerning Section 4(4) despite it not being raised below, reasoning that it was a pure point of law affecting jurisdiction and did not require new factual findings.

Holding and Implications

The court's decision was as follows:

The appeal succeeds on the issue of whether the claimant is a "worker" under Section 230 of the Employment Rights Act 1996. The claimant, as a member of an LLP who would be a partner under the 1890 Partnership Act, is not a worker and therefore cannot bring a whistleblowing claim under the Employment Rights Act.

The appeal fails on the territorial jurisdiction issue. The Employment Tribunal had jurisdiction to hear the claimant's discrimination claims because the claimant maintained sufficiently strong connections with Great Britain.

As a result, the claimant may pursue discrimination claims against the respondents but not the whistleblowing claim. The decision does not establish new precedent beyond clarifying the application of Section 4(4) of the LLP Act 2000 and the territorial scope of employment rights for members of LLPs.