On 21 May 2014, the UK Supreme Court handed down its judgment in Clyde & Co LLP and another v Bates Van Winkelhof. While the case involved a law firm, this highly significant decision will affect all limited liability partnerships (LLPs) and extends protection against retaliation from whistleblowing to many hundreds of members of accountancy firms.

The Supreme Court held that members of LLPs can be 'workers' for the purposes of the whistleblower legislation. This ruling chimed with the underlying purposes of the whistleblowing rules. The protection that employees already enjoy is now extended to partners in the event that they blow the whistle on unlawful conduct.

So, if a partner blows the whistle on work-related matters and then suffers reprisals as a result, including being expelled from the LLP, they will have a right of recourse.

Responding to whistleblowing

This judgment is likely to have implications for the way members of LLPs respond if they become aware of malpractice at work. It also means that LLPs need to put in place procedures to deal with any complaints that are received.

LLPs should introduce clear and transparent whistleblowing policies, or review their existing policies, and ensure that they apply to members of the LLP. By putting in place robust procedures which protect people who raise concerns, LLPs should be better placed to avoid issues arising within the firm and, in the event that problems arise, to deal properly with the complaint and to answer any litigation or regulatory investigation into their practices. 

The policy should set out the procedure for members to blow the whistle and the person(s) to whom they should make the report. It should be clear about the extent to which confidentiality will be maintained and should contain assurances that the person who raises the concern will suffer no retaliation, unless the report has been made maliciously and without foundation. LLPs should designate a member or members with responsibility for monitoring, investigating and reviewing the organisation's whistleblowing policies and any reports made under it. 

Larger organisations should consider putting together a committee of members from different parts of the business who are automatically notified of any whistleblowing complaint. This will ensure that complaints are not stifled, and that they are looked at outside the particular cultural context in which the allegedly wrongful activity took place.

Legal protection

The clarification that members of LLPs are also entitled to protection under the whistleblowing legislation potentially opens LLPs to significant potential liability if they fail to protect those who seek to point out wrongdoing in their organisation.

Workers who suffer a detriment may bring a claim in the Employment Tribunal. The claim may be against the LLP and the individual within the organisation who caused them to suffer the detriment. They are entitled to be compensated for financial losses they have reasonably suffered, and for any injury to feelings. They do not require any minimum length of service to bring the claim, and the compensation available to claimants is uncapped. As such, it is similar to discrimination claims. 

The clarification that members of LLPs are also entitled to protection under the whistleblowing legislation potentially opens LLPs to significant potential liability if they fail to protect those who seek to point out wrongdoing in their organisation

Worker rights

The Supreme Court decision was concerned exclusively with whether whistleblowing protection extended to members. However, other 'worker' rights may now also attach to members of LLPs. Some of these do not translate easily into the employment sphere, such as minimum holiday entitlements, the right to payment of the national minimum wage and, possibly, pension auto-enrolment. It remains to be seen how these rights will be interpreted in respect of LLP members going forward.

Once effective whistleblowing policies and procedures are in place, it is unlikely that the clarification made by the Supreme Court as to members' status will affect LLPs on a day-to-day basis. However, LLPs will need to ensure that they have appropriate mechanisms in place to manage disclosures and will need to watch carefully as the Courts decide on the wider impact of the ruling.

Joanna Blackburn is partner and head of the employment department and Jennifer Millins is legal director at Mishcon de Reya www.mishcon.com