The EAT (Employment Appeal Tribunal) upheld a decision that drivers engaged as self-employed contractors were in fact workers and so entitled to the legal protections afforded by working time regulations and national minimum wage provisions.
The facts
The company was a vehicle delivery and inspection company. The claim centred around the validity or enforceability of the substitution clause in their contracts. The argument was that the substitution clause had never been invoked and furthermore that it was unrealistic possibility that they would ever be able to use a substitute. The claimants said the result of that was that it did not effectively remove the personal service obligation required to demonstrate worker status.
Tribunal decisions
The Employment Tribunal found that the clause was “..not intended to be operated in practice, and it therefore did not form part of the true agreement”. The EAT agreed and also indicated other elements that supported that position, including the fact that the Respondent had no plan or process to deal with the practical issues that a substitution would present (e.g. insurance, trade plates, data protection), there was no training or guidance on how to deploy a substitute, no training for substitutes and that it was implausible that the Respondent would take the commercial risk of untrained, unknown individuals handling customers’ vehicles for them and, perhaps the most significant, no substitute had ever been deployed in 25 years.
Key takeaways
The takeaway for employers is that just paying lip-service to substitution as a clause in self-employed contracts is insufficient on its own to establish that the person is genuinely self-employed. Substitution must be practicable with demonstrable processes supporting it. However, this is a careful balance, because the more conditions that are placed on the right to substitution, the greater the risk that it is no longer a genuinely free choice of substitute.
Employment status checklist
We have provided a useful checklist in your Employment Service Manual to help you determine whether an individual is an employee, worker or self-employed NFU Employment Service
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