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With increasing numbers of people engaged in more unconventional and innovative working arrangements and with individuals becoming more aware of their rights and entitlements, the difficulty in determining “employment status” has become a hot topic that continues to burn bright. As mentioned in our previous Insight, the Government are now proposing to improve clarity on employment status to make it easier to determine who is an “employee” and who is “worker” and what rights they are entitled to, by aligning this with the test for employment status in relation to taxation.

Until such measures are implemented, however, the question of employment status is still subject to significant uncertainty, resulting in numerous cases over the last couple of years, most notably in relation to “gig economy” type business arrangements such as Deliveroo and Uber.

There is no fixed “test” which can give a definitive answer on employee status, and the facts of the individual case will always be important. One factor often mentioned is the obligations to provide service personally; in other words, is the individual required to carry out the work themselves or are they free to appoint a substitute to do this for them?

In a recent Employment Appeal Tribunal (“EAT”) decision, the question of substitution was as a key consideration in a rather old-fashioned kind of working arrangement. The nephew of an elderly gentleman in Chatfield-Roberts v Phillips and another UKEAT/0049/18/LA appealed a decision of the Employment Tribunal hearing that the live-in carer he had engaged to look after his uncle, Ms Phillips had been his employee. Ms Phillips had been on the books of ‘Universal Aunts’, which provided carers on a rotational basis to clients with carers normally moving on every three to four weeks. Mr Chatfield-Roberts was however keen to secure more long-term, consistent care for his uncle and requested that Ms Phillips commit to a minimum of 6 months, with the engagement in the end running for over three years.

Ms Phillips lived in the property and worked six days a week, with her day off covered by another ‘Aunt’ initially, and later by the gentleman’s cleaner. On the occasions where she was on annual leave and on jury service, Ms Phillips contacted Universal Aunts for a replacement, to whom Mr Chatfield-Phillips continued to pay a monthly fee. Ms Phillips initially submitted invoices for her fee but later Mr Chatfield-Roberts paid her directly by standing order, with overtime payments being dealt with by way of supplementary payments. Ms Phillips did her own tax returns but was not required to supply any of her own equipment or make any expenditure to carry out her duties. She received instructions from and gave updates to Mr Chatfield-Roberts by telephone and during his visits to his uncle.

When her engagement was terminated, the question of whether she had been employed by Mr Chatfield-Roberts arose as a preliminary point in relation to whether or not this dismissal had been fair. The EAT upheld the decision of the first instance employment tribunal in finding that, on the facts, Ms Phillips had been employed.

In reaching the decision, the EAT considered factors such as the level of control over the work carried out by Ms Phillips, and the fact that her tasks had been set by Mr Chatfield-Roberts, with an expectation that she would carry out the tasks required. One of the main factors considered was the question of whether the fact that Ms Phillips organised a substitute to cover when she was not at work was a sufficient ground to determine that she was not employed.

The EAT referred to earlier the Court of Appeal decision in the Pimlico Plumbers, in which distinctions were drawn between different types of rights to substitution. For example, where the individual carrying out the work has an unconstrained right to provide a substitute at any point, this is inconsistent with employment. Where, however, there is a need to obtain the consent of the person to whom services are provided and that person has discretion to refuse that consent, this is more consistent with employment. If, as in this case, the right to provide a substitute is only engaged where the individual is unable to carry out the work, this is consistent with the requirement to personally perform the obligation, pointing towards an employment relationship. The EAT also took into account that Ms Phillips was not arranging her own choice of substitute; rather she was using the service which Mr Chatfield-Roberts paid for to cover only her days off, holidays and jury service.

This case illustrates that simply including a right for the individual to provide a substitute is not sufficient to avoid employment status. Much will depend on the facts and the extent to which the right to provide a substitute is actually capable of being utilised – for example, by requiring Ms Phillips to commit to a minimum 6 month term, it was evident that it was she personally who was required. In many cases, individuals providing services will have been selected on the basis that it is their particular skills that the employer wishes to utilise, and the fact that cover is arranged only when that individual is, in limited circumstances, unable to attend does not negate an employment relationship. The issue becomes more complex where there is a right to provide a substitute and the client or “employer” has limited ability to veto the selection, in which case other factors such as level of control over the tasks carried out will require to be looked at in conjunction.

If you have any queries regarding the proposed reforms or any of the issues discussed above, please contact a member of the Stronachs Employment Team.

Annika Neukirch, Solicitor


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