If a (supposedly) self-employed person can provide a substitute, does that mean that they can’t be an employee?
This was considered in a recent Employment Appeal Tribunal case. It seems that disputes over employment status will continue to rumble on!
Chatfeild-Roberts v Philips and Universal Aunts Limited
The Claimant was engaged as a live-in carer/housekeeper in respect of the first Respondent’s elderly uncle for three years. At the end of the arrangement she was issued with a letter of termination and went on to bring a number of claims against both Respondents for arrears of pay, holiday pay, notice pay and unfair dismissal.
The second Respondent was an agency which introduced prospective carers to families.
The Claimant had paid her own tax and national insurance contributions throughout the arrangement, which had been working on the basis she was a self-employed contractor.
The main question for the tribunal was whether or not she was the first Respondent’s employee and one of the key questions was whether the Claimant’s ability to ask the second Respondent to provide a substitute when she couldn’t work meant she couldn’t be an employee.
The employment tribunal found that there were many indicators of employee status in the arrangements. On the specific question of substitution, it was found that the Claimant had only organised a ‘substitute’ via the second Respondent on her usual days off, when she had a period of jury service and for periods of annual leave, for which she was paid. In the circumstances, it was found that she was an employee.
The first Respondent appealed against this decision but the EAT rejected the appeal.
The Employment Tribunal referred extensively to the case of Pimlico Plumbers Ltd and another v Smith, which was recently determined by the Supreme Court.
When that case was in the Court of Appeal, the Court carefully dissected how the right to appoint a substitute affects employment status. In summary, there are 5 key points:
- An unfettered right to appoint a substitute is inconsistent with personal service (personal service being necessary to be an employee);
- Whether a conditional right to appoint a substitute is inconsistent with personal service depends on the circumstances;
- A right to appoint a substitute only when the individual is unable to do the work is consistent with personal service (so will not defeat a claim that the individual is an employee);
- A right to appoint a substitute conditional only on the substitute being as qualified as the individual is inconsistent with personal service; and
- A right to substitute only with the consent of another person with unqualified discretion is consistent with personal performance.
When assessing any arrangements to determine the employment status of individuals, employers should work through the above to see if the ability to appoint a substitute means the individual couldn’t be considered an employee.
If you have any queries please do not hesitate to contact the employment team on 01228 552600 or 01534 548494.