Case Law Update: Self Employment & Employee Rights

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06 Aug 2020

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The employment tribunal (ET) has ruled that a hairdresser was an employee. Her employer considered her self-employed, due to the level of control asserted on her.

Gorman v Terence Paul

The law

‘Employment status’ refers to the arrangement under which an individual is engaged to work for an employer. There are three main categories of employment status:

  • Employees
  • Workers
  • Self-employed

Employees are those who are hired directly by an organisation.

Workers are also hired by an organisation but have more freedom in the work they do and when they do it. Workers are usually casual, agency or freelance workers.

Finally, the self-employed have full control over their work, including how they conduct it. They can work for an organisation or themselves, and are often independent contractors.

Distinguishing between these three labels is important. Employees and workers are entitled to a number of employment rights, those considered self-employed are not.

The facts

This case concerned a hairdresser who was engaged by an organisation to conduct work on their premises.

In her contract, it outlined that she was a self-employed contractor. However, the organisation exercised a great deal of control over her working day.

After working for the organisation for six years, the claimant argued that she had been denied a number of rights. She believed she’d been falsely labelled self-employed. She also wanted to pursue numerous claims against the organisation. The claims included wrongful dismissal and sex discrimination.

What did the employment tribunal say?

In order to hear her claims, the tribunal first needed to determine her employment status. Could she be considered an employee, and not self-employed?

The claimant’s main arguments rested on the degree of control the organisation had over her. She had to work fixed hours from Monday to Saturday and had no control over pricing. She had to conform to their standards of dress, use their products exclusively and also needed their permission to take time off. Despite this, she was not paid any holiday pay and had to provide 67% of her takings to the organisation.

The organisation countered by stating that all hairdressers engaged by them did have control over the hours they worked. In their words, hairdressers could decide what treatments they provided. They also had control over when they took holidays.

Ultimately, the tribunal agreed with the claimant. They found that the degree of control exercised over her by the organisation meant that she was, in truth, an employee.

This was despite her original contract labelling her as self-employed. Going forward, the claimant is free to pursue her claims as an employee. It’s currently unknown if the organisation will pursue this matter to the Employment Appeal Tribunal.

Takeaway points

Once again, we clearly see a situation where an organisation has falsely labelled an individual working for them by contract. The actual truth of the relationship has caused a tribunal to disagree with this.

It doesn’t matter what an original contract states. in situations where employment status is in dispute, tribunals will always look to address the truth of the relationship. The level of control was crucial in this case and can work against the argument that an individual is self-employed. Whilst we have seen cases where such discrepancies are deliberate, sometimes it can be the result of honest mistakes.

To this end, companies should be clear what relationship they are going to have with an individual before engaging them. Failure in this regard could lead to costly claims that they have been denied their employment rights.

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