August’s issue of Construction Magazine featured a short article advising companies to think carefully about their contracts with individuals, to ensure that they are only entering into an employer/employee relationship where they intend to do so.
The recent employment case of Quashie v Stringfellows Restaurants Ltd (EAT, 26 April 2012) highlighted this risk, and provided some pointers as to what kind of facts and circumstances a court or tribunal will look at to determine whether or not a relationship of employment exists.
In this particular case, the claimant was a lap dancer, who attended for shifts at Stringfellows in accordance with a rota. She was penalised if she did not attend a shift, and she was required to dance at particular times of the evening, as directed by Stringfellows. She was paid through a voucher scheme; customers at the club paid her in ‘heavenly money’, which she could cash in at the end of the evening. She did not receive holiday pay, and was permitted not to be allocated shifts for extended periods of time if she wished.
On appeal, it was held that Quashie was an employee.
The tribunal considered the three essential ingredients that point towards an employment contract:
(a) an obligation to provide work personally.
(b) mutuality of obligation
(c) control over the worker/their performance.
There was a mutuality of obligations between the parties, Quashie being required to attend in accordance with the rota, and Stringfellows being obliged to let her dance for those shifts. Stringfellows controlled her activities during shifts, as she had to dance at particular times. Stringfellows were obliged to make payment, albeit through a voucher scheme. Not only was Quashie an employee, but she was engaged under an ‘umbrella’ contract, which continued during periods without shifts.
Some points to bear in mind from a construction perspective:
• Contracts are important and should state clearly what the intention is – but circumstances will be considered as well.
• Consider the three key elements: obligation to provide work personally, mutuality and control.
• Someone can still be an ‘employee’ from day to day, even if there is no ‘umbrella’ contract – this may be relevant for CIS/tax purposes.
Other factors that may be relevant are:
• the term of the contract
• who supplies the equipment and materials to do the work
• whether the worker takes on any financial risk in respect of the job
• whether the worker is able to engage someone else to do the work
• whether the ‘employer’ can choose to put the worker on a different job.
The Inland Revenue website has a handy ‘employment status indicator’, to assist ‘engagers’ with determining whether they are treating individuals correctly for tax purposes (NB: please note this will not necessarily be decisive for employment tribunal purposes). This tool can be found at: http://www.hmrc.gov.uk/calcs/esi.htm
Claudia Russell is a Senior Associate in Construction at CMS Cameron McKenna, Edinburgh
