Is the parties’ intention as to employment status determinative of the question?

No, held the Employment Appeal Tribunal (EAT) in the case of Richards v Waterfield Homes Ltd and Unity Build & Repairs Ltd.

The original tribunal had concluded that the Claimant was self-employed, that being the true intention of the parties.

The tribunal had relied on the fact that the parties chose to engage under the CIS scheme, a construction workers’ tax scheme, “under which registrants know they will be treated as self-employed”. The judgment only alluded to other factors such as control and right of substitution, all of which pointed to employment status, without making any findings. Instead, the tribunal simply noted that “the relationship was close to an employment one”. The Claimant appealed.

The EAT found that the tribunal had placed too much emphasis on the parties’ apparent intention, being just one factor to be considered. The EAT found the case was not a finely balanced one in which the parties’ intention could be regarded as a ‘tipping point’ and therefore determinative. Instead, the EAT found that on the brief facts set out by the tribunal, the label adopted by the parties was ‘manifestly’ false.

The EAT substituted the tribunal finding and determined the Claimant was an employee. The case was remitted to the original tribunal for the substantive hearing.

This case amply demonstrates why it is so important that employers give due consideration to the question of employment status to avoid serious problems and potentially expensive claims.

We can always help advise your business on any employment status issues so that the level of risk is minimised as far as practicable.