The status of professional partners in the context of employment law has exercised the courts on many occasions. Are they employees, workers, or employers or, in some cases, none of the above. Is there a difference between self-employed salaried partners and employed salaried partners? From an employment perspective, probably not. Of course, the employment rights available vary from none to most, depending on which type of employment status (if any) applies.
The same issue arises in the case of members of an LLP (or limited liability partnership), who are often referred to as partners. One such member was a solicitor who worked for Wilsons Solicitors LLP and whose claim was recently considered by the Court of Appeal.
Mr Wilson became a member of the LLP in May 2008. He held the post of managing partner, as well as being the firm’s COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance and Administration).
In July 2014 the board of the LLP received a complaint of bullying made against the senior partner, Mr Nisbet. Mr Wilson investigated the complaint, reported his findings to the board and produced a report on 7 October 2014. On 21 October the board was supposed to meet to discuss the report. However, a majority of the members refused to attend the meeting. Instead, the following month, they demanded that Mr Wilson should resign. They then voted to remove him from his post. They also removed him from the posts of COLP and COFA before he was able to submit his report.
In January 2015 Mr Wilson wrote to the other members and claimed that they had repudiated the terms of the members’ agreement by their actions and he accepted the repudiatory breaches. He gave one month’s notice of his intention to leave the membership of the LLP on the basis that their actions had made continued membership intolerable.
In February the other members denied that there had been any repudiatory breaches and required Mr Wilson to return to work. He refused and in April 2015 he was expelled from the firm. In the meantime he filed a whistleblowing claim in the Employment Tribunal. He claimed compensation amounting to £3.4 million, the bulk of which was made up of future loss of earnings.
The case was listed for a ppreliminary hearing to determine whether the claim of constructive termination of membership (akin to constructive dismissal) should be struck out of the basis that it stood no reasonable chance of success. In a reserved judgment Employment Judge Salter duly struck out that part of the claim that related to termination of membership. Mr Wilson appealed, successfully, to the Employment Appeal Tribunal (EAT). Permission to appeal to the Court of Appeal was refused. However, at a further hearing, permission to appeal was granted.
In the Court of Appeal it was noted that the judgment of Mrs Justice Simler in the EAT was based on her view that an LLP member who is a worker can claim for post-termination financial losses even if lawfully expelled if those losses are attributable to the earlier unlawful detriment treatment (in the case as a result of whistleblowing). She also considered whether the losses were attributable to the lawful termination or the earlier detrimental acts. On the facts Mr Wilson “withdrew his labour because of the grave and unlawful detriments on which he relied”. Lord Justice Singh agreed with the reasoning applied by Mrs Justice Simler. The financial losses resulting from the detrimental actions were not too remote and the chain of causation was not broken by the termination of the contract. Lady Justice Hallett and Lord Justice Longmore agreed so the matter will now be remitted to an employment tribunal for a full hearing.
The case is notable for demonstrating the breadth of application of employment protection legislation. I think that most people, if asked to give a snap judgment, would have thought that Mr Wilson was in too senior a position, effectively that of an employer, to be able to avail himself of such protection. However, it is significant that he was not in overall control, as demonstrated by the actions of the other members of the LLP.
The case also serves as a reminder of how uncertain the application of employment law can be. The judgment of the employment judge showed that he thought that he was bound by a particular judgment but that turned out not to be the case. I also suspect that the firm would have approached the Court of Appeal hearing with significant confidence, particularly after being successful in the application for leave to appeal when it was initially refused.
As I indicated the case is potentially very valuable and I suspect that it may well encourage others in similar positions to take their chances.