The Supreme Court has recently announced their decision in a case to determine whether 20 car valeters whose written contracts stated they were self-employed were actually workers or employees.
An employee is defined as an individual who has entered into, or works under, a contract of employment (Employment Rights Act 1996). There are other factors which will be considered when deciding this such as mutuality of obligation ie for the employer to provide work for pay and for the employee to undertake work for pay. The employee should carry out the work themselves and not substitute another person.
Under the National Minimum Wage and Working Time legislation, a worker is defined as someone who works under a contract of employment, or who works under any other contract under which he undertakes to perform any work or services personally for another party to the contract.
Mr Belcher brought the claim seeking a declaration that they were either workers or employees which would give them an entitlement to holiday pay and the national minimum wage.
The tribunal concluded that, notwithstanding the wording of the contract, the actual nature of the relationship was different. Although the case was appealed ultimately the Supreme Court has agreed with the Employment Tribunal’s judgement regarding the importance to look, not only at the wording and intent of the contract, but also review how the relationship between the parties works in practice.
Many of you will use the services of sub-contractors as part of your business and may well have a subcontractors contract that you use. However, this case highlights that, whatever the wording and the intention of the contract, if someone decides to challenge their employment status they can take their case to an employment tribunal and the courts will look at the true intention of the parties of a working relationship and not just the wording of a contract.
If you have any concerns regarding written contracts please contact me and I will assist you with this.