Employee or Not Employee, That is The Question

Autoclenz Ltd v Belcher [2011] UKSC 41 is a Supreme Court decision on employee status.  It serves as a useful reminder to UK employers that they cannot rely on the written terms of their agreements with independent contractors to safeguard them from a finding of employee status. It is how the agreement plays out in practice and the relative bargaining power of the parties that will be the key determining factors in the eyes of the Court.

The company in this case, Autoclenz (A), used the services of car valeters. Their agreements described the valeters as self-employed sub-contractors, allowed them to substitute others to provide the services, required the submission of weekly invoices and did not oblige them to work nor guarantee that A would provide work. The valeters were also responsible for the payment of their own tax and National Insurance Contributions.

The Supreme Court held that the so called "self-employed contractors'" written terms did not reflect the reality.  In particular, the high level of control that A exercised over the valeters and the level of their integration into A's business meant they were in fact employees. Although this is not new law, it is an important reminder to companies to consider carefully at the outset what the reality of the working relationship is and to put in place documentation that reflects this reality – as failure to do so can result in liability for tax arrears and employment-related claims.