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If you are a partner in a business and you blow the whistle that a fellow partner is breaking the law, should you get protection from any recriminations that might arise from your partners as a result? No you shouldn't, according to the Court of Appeal in the case of Clyde & Co LLP v Van Winkelhof which has just concluded. In my view this decision exposes a flaw in the current laws regarding Partnership and Whistleblowing. I wouldn’t be surprised therefore if we see calls for a law change in the future.
Krista Bates van Winkelhof was fired shortly after alleging bribes were being paid to gain clients for the Tanzanian Law firm Azko Law, which represented the major international firm Clyde & Co where van Winkelhof was an LLP partner. Jurisdictional questions aside, (the case also considered whether van Winklehof had a right to bring a claim in the UK at all) had van Winkelhof been an employee, or a "worker" she would have had a potentially sizeable uncapped claim for Unfair Dismissal based on Whistleblowing. She would have been protected under UK Whistleblowing legislation. But as an LLP partner, the court decided, was neither an employee or a worker and was not protected under Whistleblowing legislation.
At first glance this might seem reasonable. Partners are not typically considered as employees, or "workers" for others; they are co-owners of the business, and "self employed". Van Winklehof earned something in the region of £200,000 a year. She had a right to profit share and was, to some extent, part of the leadership of the business. If she could bring a claim wouldn't this mean she was effectively suing herself, as a co-owner of the business? Should she really have protection on blowing the whistle?
In my view, these arguments are only superficially attractive and the decision is a backward step. In the age of the Limited Liability Partnership, the concept of a handful of few equity partners owning a business on more or less equal terms is less relevant than it was. Nowadays partners come in all different shapes and forms, with huge variations in equity and pay structures. Many LLPs have countless "LLP members or partners" some of whom have no control over the running of the business or the decisions made at the top table. Many LLP members have none of the power or influence that you would expect of a partner in the traditional sense. Although there are advantages to being a partner (the firm has to pay less national insurance for example) many lower ranked partners are simultaneously disadvantaged by lacking both clout at their firm and proper Employment Rights.
Admittedly Van Winklehof was a partner of more genuine standing, but the judgment rested on a principle going back to the 1890 Partnership Act. Some might say, that an Act devised in 1890, is not fit to deal with the myriad of new business situations before us. If a judge really has to refer back to 1890 is it perhaps time to re-examine the law? And in any event, at a gut level it seems daft, at least to me, that somebody should need to claim they are really an employee in order to get any protection for making a Whistleblowing Claim, in the workplace, and that this is being argued in the courts at all.
Would it not be better and simpler if all partners and employees had the same rights to blow the whistle? After all, they have clear rights to claim they are the victims of Discrimination by other partners? Often it takes a senior person to have the werewithal and courage to blow the whistle. This decision has taken the protection available to those persons away. Time for a 2012 Partnership Act maybe?