28 March 2012

Weighing up employment status

Weighing up employment status

Employment status often falls to be considered by courts and tribunals, not least because so many important consequences flow from it - employment rights, for example, and tax and NI treatment. Weight Watchers v HMRC is a decision of the Upper Tribunal (Tax and Chancery Chamber) concerning the employment status of Weight Watchers leaders. It examines the key three "tools for identifying an employment relationship" of mutuality of obligation, control, and that the terms are otherwise consistent with an employment contract, and makes some interesting observations on how these apply in the particular case.

Weight Watchers leaders have contracts with the Weight Watchers organisation (WWUK) which specifically state that leaders are independent contractors. Under these contracts they run meetings, arrange hire of premises by WWUK, recruit clerks and "weighers", receive a commission based on numbers attending meetings, and are reimbursed some of their expenses.

The tribunal treated the obligation of personal service as a facet of mutuality of obligation, and considered the impact of a substitution clause in the agreement. A clause allowing freedom to get another person to carry out work on a worker's behalf negates the obligation to provide services personally and is inconsistent with the existence of an employment contract. On the other hand a clause allowing the worker to arrange for someone else to take on a task under a direct contract with the employer was not fatal to the existence of than employment contract. The present case was of this type. A leader who wished to miss a meeting had to find a qualified leader to fill in - who would be undertaking the meeting under a direct agreement with WWUK.

When looking at control, it looked at the leaders' obligations under the agreement, including:

• Restrictions on getting involved in running meetings for competitors
• An obligation to deliver only the approved weight watchers programme
• An obligation to remain at a specific weight

These factors were indicators of a sufficient degree of control, notwithstanding a term allowing leaders an element of discretion in how they ran meetings.

Finally, it made it clear that, while it was necessary to examine whether the terms of the contract were consistent with an employment relationship, that did not mean a delicate balancing exercise had to be undertaken. What is required is for the tribunal to look at the contractual relationship as a whole, and so long as no overriding contra-indication exists it is sufficient to leave it at that.