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By Michael Scutt, 23/10/2009 4:42 pm

Well, would you believe it?  In the week that I gave a talk at the City Business Library about contracts of employment (see here for my slideshare presentation) and the differences between employees, workers and the self-employed, I came across a case in the Employment Appeal Tribunal (EAT) which discussed all these issues.  It is an important issue because the answer to the question will determine what legal remedies are available to the individual.

In the case of Clarkson v Pensher Security Doors Ltd [2009] UKEAT 0107_09_1606  the Applicant undertook the bulk of the electrical work for the Respondent company.  He provided most of the tools he did and although he was given jobs to do he was not told how to carry out those jobs.  He was paid hourly and kept to hours stipulated by the Respondent and, importantly, there was “mutuality of obligation” between the parties – i.e. the Respondent would supply work and Mr Clarkson would undertake it.  However, he took no part in the running of the company or attended company meetings or appraisals and was not paid when he didn’t work. He did do some, limited, work for On the facts it seems like he was, at least, a worker (which is a broader category with fewer legal rights).  However, it was finally held that Mr Clarkson was neither a worker nor an employee and, instead, he was an independent contractor or “business undertaking”.  This meant that his legal rights against the company were confined purely to the terms of the contract between them (and it isn’t clear whether that contract was in writing or purely oral).  In other words he had no right to apply to an Employment Tribunal for any remedies that might otherwise have been available to him. 

This case demonstrates the need for businesses and workers/employees to enter into clear written agreements that set out their status and thus, hopefully, avoid the need for expensive and time consuming litigation that these parties found themselves embroiled in. 

If you need assistance or advice on these issues please do not hesitate to contact me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk

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By michaelscutt, 12/08/2009 10:20 am

I  spent a good part of yesterday evening preparing a seminar that I have been asked to give at the City Business Library on 20th October next.  The topic handed to me is the title to this post: “Contracts of Employment: what you need to know”, to cover one hour.  The seminar is aimed at new businesses looking to take on staff for the first time.  At first glance I thought it would be an easy topic, one I am very familiar with, nothing too controversial and plenty of time for discussion afterwards.  Then, on my way in to work this morning, tapping out a skeleton presentation in Powerpoint on the trusty laptop, I realised just what I have let myself in for. 

The topic is huge.  You could spend an hour discussing what actually constitutes an employee before you even get on to discussing the information that has to be given to a new employee under s.1 of the Employment Rights Act 1996 (click here to view the BAILLI database for the full test of s.1). If you follow that link  you will see that s.1 requires the employer to write to the employee setting out the main terms of the employment, the name of the employer (not as silly as it might seem at first glance), the date the employment began and any periods of continuous employment to be taken into account, job title, place of work, the amount and rate of pay and many other important “housekeeping” issues.  The s.1 statement must be given within two months of the employee starting work, failing which the employee could complain to an Employment Tribunal for a declaration of the applicable terms of employment.  In other words, the ET would decide what the terms and conditions of employment will be (or were if the employee has since left); a potential double-edged sword which is why not many complaints under s.1 ERA get made to ETs.

In many cases a business will describe someone as “self-employed” when, in reality, they are an employee, in an attempt to avoid the individual acquiring the right to sue for unfair dismissal. The taxation treatment of the individual isn’t enough.  In other words, if someone is not on PAYE that doesn’t mean they are self-employed.  There are many different tests used by ETs to determine whether a person is an employee or not – none of them overridingly conclusive.  Each situation is looked at on its own facts and an ET won’t be blinded by whatever label the person has been given. 

The factors that are particularly important though concern whether there is a need for the individual to provide the services themself, or are they required to find a substitute to perform when they are sick/on holiday.  If yes, then that tends to be suggestive of an independent contractor relationship rather than an employee.  Also is there mutuality of obligation?  Is the business obliged to provide work to the individual?  If no then it is not suggestive of an employee relationship.

A massive topic and I haven’t even got onto disciplinary procedures, notice periods, PILON clauses, restrictive covenants and how to avoid being sued plus a hundred and one other considerations. At least there is scope for further seminars.  More updates to follow in due course.

Of course, if you want any advice on any of these issues please do not hesitate to contact me on 0207 464 8433 or at michaelscutt@dalelangley.co.uk