A landmark judgment this week that LLP partners should enjoy protection under whistleblowing laws could open a 'floodgate' to disputes, employment lawyers have warned.
In Clyde & Co LLP and another v Bates van Winkelhof, the Supreme Court held that members of LLPs are 'workers' for the purpose of employment legislation.
Phil Allen, partner at national firm Weightmans, said the decision 'opens the door' for LLP members to pursue a wider range of employment-related claims against their organisations. 'On a practical level this decision may create uncertainty for businesses. Members being workers raises the possibility of wider rights,' he said.
As employees, LLP members may be entitled to receive paid annual leave or to be auto-enrolled in a pension scheme - 'a potential administrative nightmare,' Allen said. 'Many lawyers will be surprised and alarmed at this ruling.'
Darren Isaacs, partner at GQ Employment Law, agreed the ruling could lead to an increase in the number of whistleblowing disputes, as LLPs 'will be exposed to a higher risk of claims from disgruntled partners'.
Firms with offices in other countries that have a different employment culture from the UK could be at particular risk, he said. 'This has the potential to cause a significant headache to management teams.'
William Granger, partner at City firm Speechly Bircham, said the judgment may have 'opened the floodgates' to a range of new claims from disaffected partners.
The decision could lead to a fundamental change in the way partnerships are run. 'Demotion, restructuring and removal of partners will become more delicate and some will need to adjust their profit-share decision-making,' he said.
Rachel Dineley, employment partner at international firm DAC Beachcroft, said the ruling should incentivise LLPs to deal with whistleblowing issues appropriately. 'Since there is no cap on the compensation that an employment tribunal can award for losses suffered by a successful claimant in a whistleblowing case, claims are best avoided,' she said.
However, Richard Nicolle, a partner at litigation firm Stewarts Law, said the judgment is 'consistent with the underlying spirit and intention of the UK's whistleblowing legislation'.
Clare Murray, managing partner at CM Murray, which represented the intervener Public Concern at Work in the case, said: 'This will be welcomed by those concerned that the UK should take the lead on encouraging ethical business practices and the proper regulation of professional services.'