In the UK, whistleblowing law is based on a statute prohibiting a “worker” being dismissed or subjected to any other detriment because of having made a “protected disclosure”.  Until this week, the general view was that the definition of “worker”, and therefore whistleblowing protection, did not extend to partners. There were many reasons for this view, such as the fact that discrimination legislation (which protects partners as well as other workers), is, in contrast to whistleblowing legislation, explicit as to its application to partners.  However, this week, a landmark Supreme Court decision, Clyde & Co. LLP v. Van Winkelhof (overturning a decision of the Court of Appeal) held that partners were “workers” and therefore legislation protecting whistleblowers applies to partners in the same way that it applies to employees. This decision has some very significant consequences, especially in the financial and professional services industries where so many individuals are engaged as partners. 

A heightened risk of litigation from partners

Most obviously, this decision means that partners have whistleblowing protection. This was not a case where a partner sought to gain employment rights by alleging she had been misclassified as a partner when in fact she was an employee.  Rather, it was a clear ruling that all partners are entitled to whistleblowing protection.

Based on our experience, where an individual’s job is at risk, they frequently raise allegations of whistleblowing – even where such allegations are without merit – as a defensive and protective measure.  Under UK law, the scope for an individual to exploit whistleblowing protection in this way is made easier because: the protection applies even if the underlying concern is not upheld; and the recent change to legislation which removed the requirement for a disclosure to be made in “good faith” in order for whistleblowing protection to apply. Our expectation is that we will see partners who are involved in contentious situations to start adopting this tactic.

Update policies and procedures and provide training

Although it is good practice for whistleblowing policies and procedures, including whistleblowing hotlines, to extend to partners, especially in the financial services industry, where there are regulatory requirements to have procedures in place to deal with whistleblowing, it is now more important than ever for businesses, especially those that engage partners, to ensure that they have clear and robust whistleblowing policies and procedures and that they expressly apply to partners.  In addition, we would strongly recommend providing training to partners to ensure compliance with these policies. In our experience, the existence of robust policies and procedures together with training  makes it far easier to effectively deal with whistleblowing issues when they arise.

The overriding of express provisions on forum, arbitration and governing law

It is very common for partnership agreements to contain arbitration provisions and explicit provisions about governing law and forum. However, these will be largely irrelevant in relation to a claim for whistleblowing.

A partner’s (and any other worker’s) entitlement to whistleblowing protection is a right derived from statute. This creates a right for any worker with a sufficient connection to the UK (broadly a worker must work wholly or mainly in the UK), to have a complaint relating to whistleblowing to be determined by an Employment Tribunal (specialist UK employment courts) under UK law.  This statutory right supervenes over arbitration clauses, governing law and forum provisions contained in contractual documents. This means that arbitration clauses or governing law and forum provisions cannot be relied upon to prevent a partner with sufficient connection to the UK from bringing a complaint for whistleblowing under UK law before an Employment Tribunal.

Summary – further erosion of the distinction between partners and employees

This decision is a further example of the erosion of the distinction between partners and employees. It follows recent changes to the interpretation of tax and social security legislation which means many individuals previously classified as partners must now be treated as employees from a tax and social security perspective.  In practical terms, this erosion demonstrates the increasing need for businesses to treat partners and employees in the same way, especially from a regulatory and compliance perspective.


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Photo of Lloyd B. Chinn Lloyd B. Chinn

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative…

Lloyd B. Chinn is a partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd’s practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media, education and technology, he focuses a substantial portion of his practice on the financial services sector. He has tried to final verdict or arbitration award substantial disputes in this area.

Due to Lloyd’s litigation experience, clients regularly turn to him for advice regarding the full range of employment matters, including terminations, whistleblower policy and procedure, reductions in force, employment agreements, and employment policies. For example, in the wake of the financial crisis, he has counseled a number of firms through reductions in force and related bonus and deferred compensation disputes. Lloyd has also been retained to conduct internal investigations of allegations of workplace misconduct, including claims leveled against senior executives.

Lloyd has represented global businesses in matters involving Sarbanes-Oxley and Dodd-Frank whistleblower claims. He has taken an active role in the American Bar Association on these issues, currently serving as Co-Chair of the Whistleblower subcommittee of the ABA Employee Rights and Responsibilities Committee. Lloyd has spoken on whistleblowing topics before a numerous organizations, including the American Bar Association, ALI-ABA, Association of the Bar of the City of New York, and New York University School of Law. He has testified twice before Congressional subcommittees regarding whistleblower legislation and has also published blog postings, articles and client alerts on a variety of topics in this area, including the Dodd-Frank Act’s whistleblower provisions. Lloyd is a co-editor of Proskauer’s Whistleblower Defense Blog, and he has been widely quoted by on whistleblower topics by a number of publications, including the New York Times, the Wall Street Journal, the National Law Journal and Law 360.

Lloyd has also become active in the International Bar Association, presenting on a variety of subjects, including: the #MeToo movement, the COVID-19 pandemic and employment law, and cross-border harmonization of employment provisions in transactions. Lloyd also hosts a quarterly roundtable discussion among financial services industry in-house employment lawyers. He has also published articles and given speeches on a variety of other employment-law topics, including non-solicitation provisions, FINRA arbitration rules, cross-border discovery, e-discovery, and the use of experts.