Case Alert: What LLPs need to do following the Clyde & Co decision

by K&L Gates LLP
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What happened?

In Clyde & Co LLP v Bates van Winkelhof, the Supreme Court decided that a member of an LLP (who was also a full equity partner) was a “worker” for the purposes of whistleblowing legislation. Although the judgment does not mean that all LLP members will automatically be workers, it is likely that the vast majority of members in professional services firms will meet the definition.

What does this mean?

The implications of the decision go beyond just whistleblowing and LLP members will now potentially benefit from all rights granted to workers. It was previously thought that LLP members were self-employed and not "workers" and so members of an LLP could not benefit from these rights.

Now that the Supreme Court has decided otherwise, LLPs should take immediate steps to ensure compliance with the law.

What should we do?

LLPs should review their policies, procedures and member agreements to ensure that their members are given the full range of protection afforded to workers, including the following:

  • whistleblowing policies and procedures should be updated to recognise that members can now make protected disclosures and provide an appropriate mechanism for them to do so;
  • opt-outs from the 48 hour working week may need to be obtained from members;
  • record-keeping procedures must be put in place to ensure that members who have not opted out of the 48 hour working week do not work more than an average of 48 hours over 17 weeks;
  • the National Minimum Wage must be paid;
  • members will need to provide written consent to deductions being made from drawings or remuneration;
  • rest breaks and paid annual leave (including the right to payment in lieu on termination) are now required; and
  • it is likely that pensions auto-enrolment will apply to members. If they have not already done so, LLPs will need to determine their staging date and ensure that they have a qualifying scheme in place by that date into which they will need to auto-enrol members and employees who have not chosen to opt out. LLPs would also be required to pay employers' contributions to their members' pensions.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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