A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
We are no more than a few weeks into 2019, but already we are launched into the 'employee status' debate once again.
Mutuality of obligation and personal service were always the twin peaks of the employment relationship; if an individual couldn’t turn down work and always had to perform it themselves, they were an employee or a worker. The future, however, is not looking quite so certain, as the Employment Appeal Tribunal (EAT) has recently decided in the case of Chatfeild-Roberts v Phillips & Universal Aunts Limited. This case is particularly interesting, as it is concerned not with delivery or taxi drivers, but rather with a live-in carer.
Mr Chatfeild-Roberts’s care was organised by his nephew, and he engaged an agency, Universal Aunts Limited (second respondent in the case), who subsequently engaged the carer, Ms Phillips. Ms Phillips’ working practices, however, differed to those of the carers usually sent from the agency. Whereas agency workers worked on a three-to-four-week rota, the nephew made it clear to Ms Phillips that this arrangement would only work if she agreed to an initial six-month contract. Ms Phillips agreed and lived full-time with Mr Chatfeild-Roberts with no other home. She stayed with him for three years, apart from two hours’ break each day (when the cleaner took over caring responsibilities). She had further periods of absence for jury service and to take paid holiday. During these times, the agency sent other carers. Ms Phillips was paid gross directly by Mr Chatfeild-Roberts, and expected to take off the necessary tax on receipt of payment. After a short while, a standing order was set up, so she stopped submitting invoices for the work she had completed.
All was well until Ms Phillips received a letter from Mr Chatfeild-Roberts terminating the agreement. She was not happy and bought a number of claims. The one we are concerned with today is her employment status; did the arrangements for the care of Mr Chatfeild-Roberts constitute an employment relationship? If so, who was her employer - Mr Chatfeild-Roberts or Universal Aunts Limited, the agency?
One of the key issues discussed in the case was the right of substitution of personal services – the case law has established that other than in extremely limited circumstances, an employee is required to provide personal service, whereas self-employed or independent contractors should be able to provide a substitute or subcontract the work. In this case, Ms Phillip was viewed by Mr Chatfeild-Roberts and Universal Aunts Limited as self-employed and could substitute herself with another agency staff member. The question the court had to determine was whether this ability to substitute negated any right to employee or worker status.
The EAT agreed with an earlier judgement of the Employment Tribunal that this right of substitution was not necessarily a bar to an employment relationship. Following the Pimlico Plumbers case, it ruled that some sort of substitution, with the consent of the “employer”, was permitted within the framework of an employment relationship when the individual could not work for whatever reason. The EAT concluded that a substitute was only used when Ms Phillips was on her weekly days off, when she was on annual leave and for a single period of jury service. On the facts of this case, the ETA held that she was an employee of Mr Chatfeild-Roberts.
This case could have some interesting implications for the care sector, and in particular, the employee or worker status of many carers engaged on a self-employed basis. If carers are classified as workers or employees, even where there is the right of substitution, then it is difficult to see in what circumstances the relationship in place can be that of self-employment. The consequences of this are that carers perceived as self-employed could, in fact, have the right not to be unfairly dismissed, to paid holiday, notice periods, sick pay and a whole raft of employment rights that might not have been envisaged when the carer was first engaged.
For those involved in this sector, it is worth noting the following from this case:
- The fact that an individual carer can substitute themselves so that they can enjoy holidays and/or have other time off, is not a bar to employee status;
- Clarity of language is key – the language used in referring to Ms Phillips’ monthly payments as a ‘salary’ and referring to her ‘employment’ by Mr Chatfeild-Roberts’s nephew did not help the case against an employment relationship. Making sure all contractual documentation and communication is consistent is crucial;
- Whilst the tax treatment is important, it is still only part of the picture, and certainly, in this case, it was not a determining factor. Just because HMRC has accepted that a carer is self-employed, it does not mean that a court would take the same view in respect of other employment rights, such as those listed above, and therefore could have significant financial implications; and
- Remember this area of law is currently a moveable feast! Tribunals and courts are willing to rethink situations that previously might have been considered clear-cut, with regards to employment status. The Government’s initial intentions (The Good Work Plan) demonstrate their intention to move forward with the recommendations of the Taylor Review, and their plan to address employment status regarding the increasing number of individuals within our economy whose working practices are not necessarily compatible with old-style rules. Providers engaging carers on a self-employed basis may, therefore, want to review their working practices.
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