Clyde & Company Llp and Another v Krista Bates Van Winkelhof

This is a renewed application for permission to appeal the judgement of Slade J dated 21 March 2011. In her judgement Slade J dismissed the claimant's claim and made a costs order in favour of the respondents.

The issue between the parties is the effectiveness of clause 41 of an agreement between the respondent on the one side and the first claimant, which is a firm of very well known city solicitors and which is a limited liability partnership, and the second claimant who is a senior equity partner of the first claimant on the other. Differences arose between the parties and the respondent was expelled from the partnership. She has brought claims in the Employment Tribunal for discrimination on grounds of sex and pregnancy and she has also claimed that she has been subject to a number of discriminatory acts, including being expelled from the partnership because in November 2010 she had made a number of "protected disclosures", within the meaning of section 43A of the Employment Rights Act 1996.

Clause 41 of the agreement has a series of provisions for dealing with disputes. The clause envisages, in effect, three possible stages. The first is a reference to a management board, the second is ADR and the third is the possibility of arbitration.

The judge ruled that the whole of the clause fell foul of section 144 of the Equality Act and section 203 of the Employment Rights Act 1996. The judge also found that the procedure that had been adopted by the claimants, which was to seek from the High Court an injunction to make the respondent stay the proceedings of the employment tribunal, was ill founded. The judge also said that she would have exercised her discretion against the claimants in any event.

It seems to me that the question of whether or not the first two stages in clause 41 fall foul of the relevant statutory provisions is a matter of public importance and that also there are reasonable prospects of success on the arguments of the applicants—now appellants—in respect of the those two parts.

It is accepted by Mr Quinn, who appears on behalf of the appellants this morning, that if the third section were to be triggered by Clyde & Co then that would fall foul of the statutory provisions in the Employment Act and Equality Act preventing such procedures from being activated. It seems to me that if the appellants are right in their argument of the construction of the first two parts of clause 41 then the question of how that is to be "enforced", as it were, is a matter which should be considered by this Court. Then in the light of the answer to that, the question of the exercise of the judge's discretion may need to be considered also.

For those reasons I grant permission to appeal on all three grounds. However Mr Quinn has undertaken to ensure that ground one is amended so as to reflect the fact that he accepts that if the third part of clause 41, ie the arbitration provision proper, were to be triggered then that would fall foul of the relevant statutory provisions.

Order: Application granted

Hearing date : 18 July 2012

Can a member of a limited liability partnership be a worker within the meaning of Section 230 of the Employment Rights Act 1996? That is the question of principle which arises in this case. The second issue arising is whether, on the facts, the Tribunal had jurisdiction to hear the claims advanced by the claimant notwithstanding that she spent the majority of her time working abroad.

The background.

Ms Bates Van Winkelhof, whom I shall call the claimant although she is the respondent to this appeal, is an English qualified solicitor. She worked for a number of firms in London before joining Shadbolt and Co LLP ("Shadbolts"), a UK firm, in 2005. Initially she was employed as an associate pursuant to a contract of employment and was hired specifically for the purpose of moving to Tanzania in order to develop Shadbolts' relationship with a Tanzanian law firm, FK Law. At that time the claimant was married to a Dutch national and she and her husband wished to bring up their son in Tanzania. Her contract with Shadbolts specified that she was to be working on secondment at FK Law's offices. In addition to her contract with Shadbolts she had a separate employment contract with FK Law, which was necessary to comply with Tanzanian law.

In early 2009 Shadbolts terminated its joint venture agreement with FK Law and entered into a new agreement with a different Tanzanian law firm, Ako Law. The claimant became engaged with that firm on essentially the same basis as she had been with FK Law.

The claimant purchased a flat in London in August 2009 which the Tribunal found she had intended to acquire for her own use, although from time to time she rented it out on short term lets.

The first appellant, a firm of solicitors, ("the appellant") is a limited liability partnership ("LLP") registered under the Limited Liability Partnership Act 2000. It was keen to recruit the claimant and to exploit her African links. She was offered a membership of the LLP as an equity member, but conditional upon the firm taking on certain parts of Shadbolts' business. She was told that senior equity partner membership would be proposed once favourable results from the joint venture with Ako Law had been demonstrated. The appellant did acquire part of Shadbolts' practice and the claimant duly became an equity member.

She signed a deed of adherence on 1 February 2010. The other parties to the deed were the LLP itself which in law has a legal status separate from its members, and each of the members individually. The agreement was governed by English law. It provided that the claimant would be bound by the terms of the appellant's members' agreement. This required, amongst other matters, that except with consent in writing, each member should devote his or her full time and attention to the business and would not be engaged or interested in any other business or profession, and should be just and faithful to the LLP in all transactions relating to the business.

The claimant's remuneration was calculated in a complex way. She was paid annually £103,000.00 as a profit share of the partnership; $85000, which continued a payment she had received from Shadbolts attributed to her employment with Ako Law; and 20% of the profits of the joint venture. She paid National Insurance contributions in England, but tax was paid in Tanzania. This was because although she worked part of the time in London it was not sufficiently frequent to trigger any obligation to pay UK tax.

She worked principally but not exclusively in Tanzania. It was agreed that she would return to London about six times a year and she would spend approximately two weeks in the UK on each occasion. In fact from 1 February 2010 to 1 January 2011 she spent 100 days in London, 78 in the London office and 22 for personal reasons. Although her work was substantially for the Tanzanian operation, she did some work for the London office. She had an office base and access to a secretary when working in London. She was in various ways held out to be a partner of the appellant.

The source of her complaints is that on 23 November 2010 she reported that the managing partner of Ako Law had been involved in money laundering and had paid bribes both to secure work and to affect the outcome of cases. She was dismissed by Ako Law on 25 November and suspended by the appellant the following day. There was an investigation which culminated in her being expelled as a member on 13 January 2011.

She brought two claims against the firm and one against Mr Morris, a senior equity member directly involved in her expulsion.

First, she brought, solely against the firm what is colloquially known as a whistle blowing complaint pursuant to Section 47B of the Employment Rights Act 1996, alleging that she had suffered a number of detriments, in particular being expelled as a member, on the grounds that she had made protected disclosures in respect of the senior partner of Ako Law.

Second, she contended with respect to both appellants that she had been subject to unlawful sex discrimination in that a male partner would not have been treated in the same way as she was, and/or that her expulsion from the firm was pregnancy related because she had recently informed the firm that she was...