Richards v Waterfield Homes Ltd and Unity Build & Repairs Ltd
Hello and welcome back to your weekly case law update. Last week we had our monthly newsletter which had features on Christmas Parties, the new National Minimum Wage rates and the right to be boring. This week we are looking at employment status. In those halcyon days before Covid and Brexit one of the major political issues related to employment status following harrowing films like I, Daniel Blake and tribunal cases such as Uber v Aslam, Pimlico Plumbers v Smith and other cases involving Addison Lee, Hermes and Deliveroo.
The test for employment status is always multi-faceted with several factors being given weight including the obligation to offer and accept work, the requirement for personal service, the degree of control and integration in the business, the level of business risk and the intentions of the parties. The aforementioned list is not exhaustive and a tribunal may decide that a person may be an employee if only some but not all of these criteria are met. Therefore…
This Week’s Question
Is the intention of the parties a determinative factor on their employment status?
Mr Richards, the Claimant, was a skilled carpenter who started working for the Respondents in 2010. Initially the Claimant was engaged as a self-employed contractor and paid via the CIS scheme. Under the scheme self-employed construction contractors have 20% of their earnings deducted and paid to HMRC. Whilst not employees under a PAYE scheme it allows independent constructer contractors to have tax concerns sorted without the cost of an accountant.
Whilst the parties understood the relationship to be that of contractor and client several factors indicated employment status including:
- A degree of consistent and regular hours five days a week.
- The Claimant not working for anyone else.
- The Respondents have a high level of control over contractors work.
The Claimant requesting a pay rise so he could afford holiday.
In 2018, the Claimant subsequently went off sick and the Respondents, who had engaged Peninsula, reorganised their labour onto employment contracts. The contract said the Claimant commenced employment in 2018. He protested stating employment commenced in 2010 and subsequently resigned and commenced Employment Tribunal claims.
When determining employment status the Employment Tribunal held that as the intention of the parties in 2010 was that of a self-employed contractor the Claimant was not an employee and therefore unable to bring a claim. The Claimant appealed and the Employment Appeal Tribunal allowed the appeal. It held that whilst intention was a relevant factor the other determinative factors of employment status strongly indicated the Claimant was an employee of the Respondents. The EAT substituted this finding for the original ET judgment.
The Takeaway Point
No, the intention of the parties is not necessarily determinative on employment status. If the other factors strongly suggest employment status then the intention of the parties will not be determinative. Given that many companies using the CIS scheme have mutuality of obligations, requirement of personal service, minimal opportunity for personal profit and high levels of integration and control could cause similar findings in other CIS sites. However, a key distinction between those sites and the Respondents in this case is that they likely will not have issued an employment contract!
