The High Court has held that an arbitration clause in a law firm's partnership agreement was not effective to prevent a partner from bringing proceedings for whistle blowing and sex and pregnancy discrimination against her former firm (Clyde & Co LLP v Winkelhof).
Ms Winkelhof was a partner in the firm of solicitors, Clyde & Co, until she was expelled from the Firm in February of this year. There is a dispute resolution clause in Clyde & Co's Members Agreement that requires disputes between partners or former partners and the Firm to be submitted to binding arbitration if previous attempts at internal resolution and mediation have failed. Despite this clause, Ms Winkelhof decided not to follow the dispute resolution procedure and instead initiated employment tribunal proceedings against the Firm, alleging she had suffered sex and pregnancy discrimination and a detriment for making protected disclosures.
The Firm wanted to compel Ms Winkelhof to comply with the arbitration clause rather than pursue her claims and therefore sought an order from the High Court requiring her to ask the employment tribunal to put her employment claims "on hold" pending her compliance with the Firm's dispute resolution procedure.
The High Court held that the arbitration clause in the Members Agreement was unenforceable because it purported to prevent Ms Winkelhof from exercising her statutory right to bring a detriment or discrimination claim in the employment tribunal. The dispute resolution clause ultimately gave the Partnership the option of referring the dispute to binding arbitration and stated that such arbitration would be the "final resolution" of the matters (i.e. there could be no recourse to an employment tribunal to reconsider the matter once an award was made in arbitration). An agreement to submit to arbitration is only enforceable under section 203 Employment Rights Act 1996 and Section 144 of the Equality Act 2010 if it was made with the assistance of a conciliation officer, or it is set out in a qualifying compromise agreement, or the parties have submitted to an ACAS arbitration scheme.
None of those conditions applied to the arbitration clause in the Members Agreement. The High Court therefore refused to grant the order and this meant that Ms Winkelhof could proceed with her employment tribunal proceedings against the Firm, notwithstanding that she had not followed the Firm's dispute resolution procedure first.
Impact on employers
- Employers and Partnerships are reminded that the restrictions on contracting out of statutory employment claims apply not only to waivers of claims in settlement agreements, but also to any provision of an agreement that has the effect of limiting a person's right to bring employment tribunal claims.
- Whilst dispute resolution clauses in agreements are helpful in managing expectations about the internal procedures that should be followed to resolve a dispute, this case is a reminder that such clauses cannot generally be relied on to stop an individual from pursuing statutory employment claims in the employment tribunal.