Employment tribunals often have to consider the employment status of individuals whose contracts describe them as "self-employed contractors". Are they truly self-employed or are they in fact workers or employees?
There is a series of cases which try to make sense of how to approach the issue of "sham contracts". The case of Autoclenz Ltd v Belcher [2009] is the latest one. The Court of Appeal in Autoclenz Ltd v Belcher has held that tribunals must focus on the actual legal obligations of the parties and not just take into account express contractual provisions. This means looking at all the relevant evidence, including the written terms, evidence of how the parties conducted themselves in practice and what their real expectations of each other were.
The mere fact that a particular contractual provision has never been used does not automatically mean that it is not genuine. Before reaching that decision, the tribunal must identify other evidence to demonstrate this conclusion.
For example, in this case, Autoclenz tried to argue that its team of car valeters were all self-employed contractors and therefore not entitled to be paid the national minimum wage or to receive holiday pay under the Working Time Regulations.
In support of this argument, Autoclenz relied on the sub-contractors agreement which described the worker as self-employed and stated that neither party was under any obligation to offer or to accept work from the other. The right to provide a substitute was also expressly stated. The tribunal concluded, however, that from the evidence it heard, in reality the right to provide a substitute was not known and in any event the individuals had to turn up to work unless they had given appropriate notice as an indicator of mutuality of obligation.
Therefore, the employment tribunal's decision that the car veleters were employees. Make sure you are clear about the employment status of people working for you.
