18 February 2014

Employment Status: Labels not everything

In everyday life we generally seek to place labels on items which correspond simply to the function or description of those objects, for example in an office kitchen, the labelling of a tub of sugar so as to avoid the making of a round of cuppas with salt in them.

In employment law however, the labels placed on certain work relationships can often be inaccurate and wholly misleading, even where clarity and certainty were the guiding intentions of those seeking to apply those labels. There is no area where this statement is more accurate than that of determining the employment status of the individual.

Recently in the case of Boss Projects LLP v Bragg, the Employment Appeals Tribunal ("EAT") considered the question as to whether a person who is unequivocally termed in their written contract as being self-employed was incapable of being a worker for the purposes of the Working Time Regulations 1998.

The Claimant, Mr Bragg, had been engaged as a Scaffolding Supervisor via a chain of contracts wherein the contractor (Mears) contracted with another firm (Potensis) for the provision of subcontractors. Potensis subsequently contracted with the Respondent, Boss, for the supply of individuals. The Claimant was ultimately remunerated by Boss, who itself was paid downwards from Mears and Potensis.

The Claimant's contract with Boss expressly referred to him as a ‘subcontractor' and ‘in business of his own account'. In terms of the day-to-day operating of the arrangement, the contract gave total discretion to Mr Bragg to delegate or substitute his work or indeed hire others to assist him for whom he would be financially responsible. The contract also allowed Mr Bragg the freedom to undertake other work prior, during or concurrently with the work he was doing for Boss. There was also an explicit provision that Mr Bragg was to be provided with no holiday or sick pay and that he would be responsible for his own tax and national insurance contributions.

Ostensibly then this contract appeared in the words of Mr Justice Mitting to be "watertight". It was however found that however ironclad the contractual terms may be in such cases, they never provide a complete or definitive position as to the nature of the relationship they are seeking to define.

The EAT therefore concluded, in dismissing the appeal by Boss, that the original tribunal was correct in concluding that Mr Bragg would be a worker, looking to the substance of the contract and not its form. Mr Justice Mitting also concluded that the clause allowing Mr Bragg to substitute others in place of himself in carrying out work for Boss was never intended to be used by either party and noted that Mr Bragg did not bring his own tools to work.

Conclusion
It would seem then that despite the label placed upon the working relationship, it is ultimately the substance and not form of the arrangement that will be considered paramount by the tribunal. The key point to take away from the above case would obviously be that regardless of how comprehensive the terms put in place in a contract of this nature may be, ultimately it is how the relationship operates in practice that will dictate the status of the relevant individual.