ICAEW.com works better with JavaScript enabled.

Case law: LLP member can claim compensation for future loss of earnings following whistleblowing detriment

Members of LLPs should consider their potential liability to compensate a member for losses, including potential future loss of earnings, if they expel that member (even if lawful) – if the losses are attributable to unlawful treatment of the member because of their whistleblowing before expulsion.

March 2018

This update was published in Legal Alert - March 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A law firm operated as a Limited Liability Partnership (LLP). A solicitor member of the LLP held the position of managing partner, and various important compliance positions. While he was investigating a complaint of bullying against the senior partner, the other members asked him to resign as managing partner, removing him from all his positions when he refused to do.

He claimed that these actions amounted to a repudiation of the LLP agreement between him and the other members because they made his position intolerable. He said he accepted the repudiatory breaches, and gave a month's notice to terminate his membership of the LLP.

The other members refused to accept that termination and required him to return to work. When he did not return, they purported to expel him from membership.

In the meantime, he brought a whistleblowing claim (ie, compensation for detriment suffered by a worker as a result of the making of protected disclosures) amounting to nearly £3.4m, on the basis that he had been victimised because of his disclosures. Most of his claim related to loss of future potential earnings.

He also claimed that his membership had been 'constructively terminated' (the LLP equivalent of a constructive dismissal of an employee). There is constructive dismissal of an employee when an employer does something that is so fundamentally inconsistent with the employer/employee relationship – a 'repudiatory breach' – that the employee is entitled to treat him/herself as dismissed.

The Employment Tribunal (ET) decided that there was no such concept as 'constructive termination' in an LLP. The solicitor was not therefore entitled to compensation, including for loss of potential future earnings.

The Court of Appeal ruled that though the termination had been lawful. However, it also decided that the solicitor could still claim compensation for losses arising after his membership of the LLP had terminated, including loss of potential future earnings, even if his expulsion from membership was lawful – provided he could show that the losses were attributable to his unlawful detrimental treatment before the termination.

Operative date

  • Now

Recommendation

  • Members of LLPs should consider their potential liability to compensate a member for losses, including potential future loss of earnings, if they expel that member, if the losses are attributable to unlawful treatment of the member, because of whistleblowing before expulsion

Case ref: Wilsons Solicitors LLP v Roberts (Rev 1) [2018] EWCA Civ 52

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

Copyright © Atom Content Marketing