Pensions warning for LLPs

LLP members may need to be automatically enrolled into pension schemes as a result of the Supreme Court’s recent decision on whistleblowing.

In Clyde & Co v Bates van Winkelhof [2014] UKSC 32, the Court held that a partner, or member, of an LLP was entitled to protection under the Employment Rights Act 1996 as they fell into the definition of “worker”.

However, Ferdinand Lovett, associate at pensions firm Sackers, says the case has wider ramifications since the definition of “worker” in pensions automatic enrolment legislation has the same effect as the definition considered by the Supreme Court. 

Lovett said the “safest course” was for LLPs to assume that automatic enrolment requirements apply to members.

“However, the decision in the Clyde & Co case still leaves LLPs with unanswered questions such as how payments made to an LLP member by the LLP should be assessed for automatic enrolment purposes,” he said.

“Another grey area is whether a full equity member of an LLP, as opposed to a fixed share member, as Ms Bates van Winkelhof was, would constitute a worker. The effect of the Supreme Court decision on an equity partner in a traditional partnership, those which have not converted to LLP status, also remains somewhat unclear.”