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Former LLP Member Strikes Important Blow in Whistleblowing Case

In an important decision for limited liability partnerships, the former managing partner of a law firm who claimed that he was persecuted for whistleblowing had his hopes of winning £3.4 million in compensation boosted by the Court of Appeal.

The man had prepared a report after the firm’s board received a complaint of bullying against its senior partner. Before he could submit it, however, his resignation from his positions as managing partner and compliance officer was demanded. The board subsequently voted to remove him from those posts.

The man’s response was to give one month’s notice of his departure on the basis that the firm, a limited liability partnership, had repudiated his membership agreement. He said that the firm’s conduct towards him had rendered his continued membership intolerable. The firm, however, refused to accept that it was in repudiatory breach and informed him that he was expected to return to work. He did not do so and was ultimately expelled from the firm.

He lodged a complaint with an Employment Tribunal (ET) under the Employment Rights Act 1996, claiming that his membership had been constructively terminated and that he had been subjected to detriment as a result of making a protected disclosure. Following a preliminary hearing, the ET struck out that part of his claim that related to the termination of his membership and losses – primarily loss of earnings – that were said to have arisen from that termination.

That ruling was, however, subsequently overturned by the Employment Appeal Tribunal (EAT), enabling him to proceed with his claim in respect of post-termination losses. That was despite the man’s acceptance before the EAT that his claim that his membership of the firm had been terminated by his acceptance of an alleged repudiatory breach had been appropriately struck out.

In dismissing the firm’s challenge to the EAT’s ruling, the Court found that the man could claim compensation for post-termination losses even if he had been lawfully expelled as a member, provided that such losses were attributable to the earlier unlawful detrimental treatment. If all the facts were assumed to be true, in the man’s favour, his claim in respect of post-termination losses should not have been struck out.