Terms Matter.

In this bulletin, we look at two recent cases regarding employment status, a subject which has been a hot topic for employers and those they engage alike for some time now.

The first case of Hafal Ltd v Lane-Angell considered whether a bank worker was in fact an employee under an umbrella contract of employment, and is a rare example of an employment status case that ends in a favourable result for the employer. Hafal is a charity that provides vulnerable adults with access to the support of an appropriate adult if they are held in police detention. Ms Lane-Angell was engaged by Hafal from 2012 as an appropriate adult on a bank basis with no guaranteed hours of work and they would only use her services when they needed them and if she was available.

In May 2015, Hafal introduced a requirement that all people carrying out the appropriate adult role must be available for ten shifts a month and must respond to call outs. Ms Lane-Angell was alleged to have failed to respond to call-outs and, in January 2016, Hafal informed her that she would not be offered any further work. Ms Lane-Angell claimed unfair dismissal. The main issue before the ET was whether the nature of the engagement was such that there was sufficient or any ‘mutuality of obligation’ to create a contract of employment.

The ET found that there was, pursuant to an umbrella contract, but the EAT disagreed. Whilst the ET had looked at the facts surrounding the relationship, it had paid little regard to the terms in the letter of appointment which unambiguously stated there was no requirement to provide or accept work. The EAT found the relationship between the parties was not consistent with an intention to create an employment relationship, so the unfair dismissal claim failed.

In the second case of Pimlico Plumbers Ltd v Smith, the Supreme Court upheld the judgments of the ET, the EAT and the Court of Appeal that a plumber was a worker for the purposes of the Employment Rights Act 1996 and the Working Time Regulations 1998 and an employee under the Equality Act 2010.

Although Mr Smith’s contract stated that he was an independent contractor, he was VAT-registered and paid self-employed tax, the court determined that the dominant feature of Mr Smith’s contract was that he should perform the work himself, with only a very limited right to provide a substitute. It was also clear from the tight controls to which Mr Smith was subject (Pimlico Plumbers controlled his uniform and his administrative duties, as well as when and how much payment he received) that Pimlico Plumbers was not just a client of Mr Smith.

These decisions highlight the difficulties that parties can face in determining an individual’s legal status for employment law purposes. In the first case, the contractual documentation proved crucial in determining Ms Lane-Angell’s status as a bank worker, whereas the second case found the facts surrounding the relationship prevailed over the written terms. Each employment status case will of course be decided on its facts, as employers all have different ways of operating, different contracts and make different demands on those they engage. However, these cases emphasise the importance of ensuring the contractual documentation reflects the reality of the working relationship, with a view to ensuring there is no ambiguity over the status of the person engaged.

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