23 June 2014

New rights for partners?


In this blog, I have often bemoaned the lack of rights available to partners, particularly junior partners. A recent Supreme Court decision means that all “workers' rights” should now be available to certain partners but which partners and how these rights will work both remain unclear…I have blogged about the case in question before. In Clyde & Co v Van Winkelhof, the Supreme Court ruled that Ms Van Winkelhof was a 'worker' with workers' rights notwithstanding the fact that she was a member of an LLP. This meant that she could proceed with her employment tribunal claim in which she asserted that she had been dismissed because she blew the whistle on wrongdoing. The case has wider implications, however, because workers have rights other than whistleblowing protection. But who gets these rights? Any member of an LLP who enters into an agreement to perform work personally for the LLP will be protected; seniority is not an issue. Members who do not work for the LLP (eg investors) will not be deemed as workers and will not benefit from the rights. It is not yet clear whether partners of traditional unlimited partnerships will also be protected.  While it is possible to agree to work 'for' an LLP, a partnership is not a legal entity and thus a partner in a partnership is working for himself. Accordingly such partners might not be workers but this remains to be decided by the courts. The first right is the right to receive the National Minimum Wage. This might affect partners who agree to take no drawings or who receive no profit share during a notice period. The second right is to be enrolled into a pension scheme under the new auto-enrolment regime. It is this right that has sent law firms across the land scurrying for counsel's advice! The Pensions Regulator has rather passed the buck by saying firms must make their own decisions. The emerging consensus appears to be that, where the partners receive only profit share, they will not have to be enrolled because they do not reveive a qualifying salary. The position is, however, far from certain. Other rights include: those under the Working Time Regulations (48-hour week, 11 hours off a night, two days off a fortnight etc); and the right to be accompanied to disciplinary of grievance hearings. Over the next few years various disgruntled partners will test exactly which rights apply to whom and what those rights mean in practice for people receiving profit share rather than salary. In the meantime, the usual uncertainty reigns! Before signing off, I should thank the excellent team at Serle Court a very educational seminar last week at which many of the points above and others were discussed at a far higher level than is suitable for this blog.

Category: Blog