In this short update, we once again consider employment status. In particular, we address a recent decision that confirms that an individual may be an employee even if they are able to appoint a substitute.
The claimant was a live-in carer for an individual described as "an irascible old man," who was known as "the Colonel." She had been introduced to the individual's family by an agency. For over three years, she cared for the individual and was paid on a gross basis for doing so. She took responsibility for paying her own income tax and NICs. However, she worked on a full-time basis (12 hours a day) for over three years and had no home of her own. She took only one day off a week each week and, very occasionally, took greater periods of leave.
When the arrangement broke down, she brought a number of claims before an employment tribunal.
As a preliminary issue, the tribunal had to determine whether the claimant had employment status or not.
The tribunal determined that she was an employee. It noted that she stopped preparing invoices following an initial period of six months, and was subsequently paid by standing order. Whilst other carers worked on rota basis, she did not.
The tribunal considered that there was mutuality of obligation (an obligation on the employer to provide work and on the claimant to accept such work in return for pay) and sufficient control of the claimant's work. Notably, the Colonel's nephew (the first respondent in the case) referred to himself as being the claimant's employer and exerted considerable influence over her activities. On one occasion, he remarked: "It may be Henry's [the Colonel's] house, but I am your employer and what I say goes."
An appeal was brought before the Employment Appeal Tribunal (EAT). As part of the appeal, the fact that a substitute (via the agency) was appointed when the claimant was unable to work was raised.
Employment Appeal Tribunal Decision
The EAT considered a number of issues, including the issue of substitution. It noted that substitution only happened on the claimant's day off each week, and when she was undertaking jury service and taking annual leave (for which she was paid). It had regard to the Pimlico Plumbers case, in particular the finding that a right of substitution only when a contractor is unable to work can be consistent with personal performance and, therefore, with employment status.
The fact that the claimant was able to make arrangements for a substitute, when she was unable to work, was not inconsistent with her having employment status. The reality of the situation was consistent with an employment relationship. A substitute was only ever appointed when the claimant was unable to work, and a substitute was not provided by the claimant herself (but by the agency with whom the Colonel's uncle maintained a working relationship).
Whilst the case concerns very specific circumstances (a domestic care arrangement), it follows in the footsteps of a significant number of other cases examining status the individuals engaged to undertake work. It reiterates that the tribunal will always examine the reality of the working relationship closely.
Employers often rely on substitution provisions in contracts, even if they are not used in practice, to argue that an individual cannot have worker or employee status. Whilst it remains useful to have express substitution provisions, any contractual provisions will only be one factor when determining an individual’s status. The Pimlico Plumbers case differentiated between an unfettered right to appoint a substitute (which would be inconsistent with employment status) and a conditional right to appoint to appoint a substitute (something that would not necessarily be inconsistent with employment status).
This case underscores the importance of employers treating individuals consistently with the status they are alleging. For example, alleging that an individual is a self-employed independent contractor, but controlling exactly when and how they perform work (and requiring them to book annual leave), would be inconsistent with them being a self-employed independent contractor.