Employment Status is Determined on Actual Working Relationship

While sometimes it will be obvious – for example, if an employment contract exists – how to determine the true legal status of someone working for an employer is not clearly set out in employment laws. The general various statuses are a worker, an employee, or a self-employed person, the employee getting most protection in employment law, with workers & self-employed people being afforded respectively less rights.

Some employers like to think they can thwart the legal system, and instead enter a contract that presents the employment status in a classification of less legal value to the person providing their services than the status actually is. This was the failed approach adopted in Autoclenz Limited v Belcher, a case involving 20 claimants that had, as determined by the Supreme Court, been employed as car valeters.

The contract that existed between the parties described the valeters as self-employed sub-contractors – which brings with it options such as the valeters being able to substitute their own attendance with that of another person; have more responsibilities for their own tax & NI; have no right to a minimum wage or holiday pay; and generally having less rights than an employee. In reality, this description of the relationship was not found to be what was required of them in practice.

The Supreme Court found that, regardless of what was said about the employment status, considering what is actually expected or required between the parties should be the focus of any future test by employment tribunals.

Employers cannot avoid their legal obligations simply by drafting a contract that represents the working relationship in a preferred manner, without applying that in practice, and an easy option to avoid problems of this nature is getting your contracts done for you.

This case will very possibly play a role in any future claims on the status of interns, where the purported relationship is entirely voluntary & the intern is not deemed by the employer to be a worker/employee, but in practice is expected to complete specific duties in person, and attend a workplace at specific times.

Filed under: Contracts of Employment, Employment Tribunals, General News, Laws & Regulations by Employment Law Clinic           Post created on: August 2nd, 2011