Employee status comes into question again

legal_updates

The key element here being control, if the employer/wage payer, dictates how, when, where etc, the worker does their job they will be classed as an employee.

Author: Dennis Chapman
Published:
Reading time: 4 minutes

This article is 9 years old.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

In a recent appeal case of Stringfellow Restaurants Ltd V Quashie, the topic of employee status was again discussed at length.

The Claimant worked on an intermittent basis as a lap dancer at the Defendants night club.  She was informed after 18 months of service that her services would no longer be required, as there was suspicion that she had been involved with drugs on the premises.  The Claimant brought an unfair dismissal claim against the Defendant.

The matter had been passed through the Employment Tribunal who deemed that the Claimant was not an employee of the company as per Section 230 of the Employment Rights Act 1996 and therefore was not entitled to bring a claim of unfair dismissal against the Defendant.  This was overturned by the Appeal Tribunal who deemed that the Claimant was in fact an employee.  The Defendant sought to appeal this decision, and the Tribunal decided as follows;

They first examined the definition of Employee under Section 230 (1):

  • Employee means an individual who has entered into or works ‘under a contract of employment’

Contract of Employment is defined as (Section 230(2)):

  • A contract of service or apprenticeship whether express or implied and ‘whether oral or in writing”.

Therefore if the Claimant held a valid contract of service they they would be classed as an employee and able to bring their unfair dismissal claim.  The Tribunal then applied the standard test (founded in the Ready Mixed Concrete Case) to assess if there was a Contract of Service;

1.    Wages or other remuneration are given by the wage payer in exchange for the provision of service.

2.    Performance of this service is subject to the control of the wage payer, they dictate to a significant degree how and when the service is provided.

3.    The contract that exists holds terms that are consistent with a standard contract of employment.

The key element here being control, if the employer/wage payer, dictates how, when, where etc, the worker does their job they will be classed as an employee.  In this case, the Claimant was subject to a shift rota, where they hold mandatory working shifts alongside flexible ones.  If the Claimant did not attend for one of the mandatory shifts they faced suspension from the following week’s rota.  An element of control and mutuality of obligation therefore clearly existed here. Holidays also had to be pre authorised and signed off by the employer, the Claimant could not simply inform the employer that they were taking a period of annual leave.

However, the Claimant was not restricted from working in other establishments in the contract, but it was generally felt that it would be unacceptable.  The Claimant also had to provide there own uniform of their own choice and at their own expense. The Claimant was however given details of the Respondent’s recommended supplier they should wish to use them.  Again an element of control here.

The Respondent however charged the Claimant to attend work by way of a ‘house’ and ‘tip out’ fee, as well as taking a cut of their earnings as commission. The Claimant was further subject to fine payment if they failed to undertake a task as per the Respondents instructions/procedures. Therefore in effect the Respondent never paid the Claimant any wages; they merely exchanged the vouchers they received during their shift into cash, less the fees the Claimant paid to the Respondent.

The court here found that this point was the crux of the argument, as the Claimant paid the Respondent to work and they merely took commission from her.  She paid for the opportunity to earn money, the Respondent did not pay her for doing it. The Claimant took an ‘economic risk’ by choosing to be paid by the Respondents customers and not the Respondent directly and as such the Tribunal found there to be no mutuality of obligation to formulate an employee employer relationship. The Claimant was therefore not entitled to bring a claim of unfair dismissal against the Respondent.

Further points that swayed the Tribunals decision here was that the Claimant knew when she began working that the intention was for her to be a self employed worker, responsible for her own tax, NI, holiday pay, sick pay etc.  Further the contract clearly stated that this was the working arrangement, which was signed and accepted by the Claimant.

Dennis Chapman

In remembrance of Dennis Chapman 1951 -2015

Read more by this author

Getting in touch

You can contact us via the form or you can call us on 01480 455500.