Employment Status – Genuine Self-Employment

The Employment Appeal Tribunal (“EAT”) has issued another judgement on the current hot topic of “employment status” – whether an individual working for a business is an employee, or worker, or genuinely self-employed.   There has been considerable recent litigation on this point, with key decisions being issued in cases such as Uber and Pimlico Plumbers. The point is an important one, as an individual’s legal rights depend on their status. 

In Waters v The Moat Cricket Club the EAT considered an individual claiming to have been an employee, or at least a worker, of the Respondent cricket club.  If he was an employee, he would be entitled to claim unfair dismissal; if he was a worker he would have been entitled to holiday pay and notice pay.

The Moat cricket club had initially had an employed groundsman.  They then moved to a different model, by appointing a self-employed contractor (A) to do the work.  At the same time, they rented out a property on their grounds to the Claimant, who lived there and carried on his business Green Hand Gardens, which carried out garden and grounds work including for another cricket club (but not for the Respondent).

The club then parted ways with contractor A and entered into a contract with Mr Waters of Green Hand Gardens.  His services were paid for in exchange for him submitting invoices, and he was responsible for his own tax.  There were minimum requirements in terms of the number of hours he was to personally spend on the club’s ground, but not all the work had to be done by him personally.   He would generally use the club’s grounds equipment.  Three months’ notice was required either way to terminate the contract.

A dispute arose and a claim was submitted to the employment tribunal.  The issue for the tribunal was to analyse the relationship and decide whether Mr Waters was:

  1. An employee, with a contract of employment
  2. A worker, having a contract to work personally but not being an employee
  3. Self-employed, the club being a client/customer of Mr Waters’ business

As ever, the tribunal had to look at the reality of the parties’ relationship, and not place too much weight on the title or “label” given to the relationship by them.  

There were factors that could be suggestive of employment, or worker status (the obligation of personal service, mutual obligations etc), but ultimately the tribunal considered the key facts were that Mr Waters did genuinely run his own business, Green hand Gardens. Although the club was the main customer of that business, there were other customers too. Green Hand’s revenue from the club was £22,000 out of a total turnover of £40,000. There was nothing to suggest that this was a “sham” and the tribunal concluded that Mr Waters was genuinely in business on his own account, and that the cricket club was a customer of that business. This prevented Mr Waters being an employee or even a worker, so his claims could not proceed further.

The EAT upheld this decision, finding that the employment tribunal had correctly identified the legal issues and applied them appropriately.

What does this mean for you?

It is important to note that these cases on employment status all depend on their own individual facts and circumstances, but it is interesting to see how the tribunal analysed the issues in this case. While the trend does seem to be towards tribunals granting “worker” status to individuals in more and more cases, this decision shows that will not always be so, and where the relationship is truly one of customer and independent external provider, worker status may not apply. This decision is important given the consequences of an individual being a worker – protection against discrimination and the right to paid annual leave, as outlined in our recent blog: Holiday Pay Revisited.

Businesses who use “independent contractors” should take note of this decision and may wish to ensure that their contractors are genuinely operating an independent business and do have other customers as well. 

To discuss this matter, please contact our expert team of employment lawyers.

This update contains general information only and does not constitute legal or other professional advice.

Douglas Strang, Senior Associate: dst@bto.co.uk / 0141 221 8012

Tags