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Gorman v Terence Paul (Manchester) Limited – 11 March 2020

27th July, 2020

In a further development in the story of employment status, the Employment Tribunal has ruled in favour of hairdresser, Meghan Gorman, in finding that she was an ‘employee’ of the Terence Paul salon and is accordingly entitled to employee benefits and protection afforded to those with employee status.

Ms Gorman was a hairstylist working at a Terence Paul salon based in Manchester until it closed in 2019.  Terence Paul Ltd argued that the stylists working at their salons were self-employed and therefore not entitled to benefits such as holiday and sick pay.

Terence Paul stated that the stylists operating in their salons managed their own working hours, including days worked and the number of holidays taken.  In turn, stylists were expected to provide 67% of any takings to Terence Paul.

However, Ms Gorman told the Employment Tribunal that the degree of control exercised by Terence Paul meant that she was not genuinely self-employed.  She stated that Terence Paul had strict rules around dress codes, taking time away from work; and expected stylists to work set hours.

The Employment Tribunal decided in Ms Gorman’s favour, stating that the degree of control and power operated by Terence Paul was indicative of an employee/employer relationship. The decision will enable Ms Gorman to pursue further claims for holiday pay, notice, and redundancy pay.

The ruling is also expected to trigger a review of employment status within the beauty and hair industry, where contracts such as those used by Terence Paul are commonly used by salons.

The degree of control exercised by an employer is a key test of a contract of employment.  The Ready-Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance [1968] provides a guide for the key features of a contract of employment, being:

  • An obligation by the individual to provide work personally
  • A mutuality of obligation between both parties (for an employer to offer work and for an employee to accept offers of work);
  • The employer exercises control over the individual e.g. in terms of the type of work, how and when and where the work is done.

A working relationship whereby an employer can dictate hours of work, place of work, and how to carry out the work would meet the common law test of ‘control’.

In contrast, a self-employed individual is in business on their own account and would have a high degree of control over their own working hours, the services they provide and how they carry out those services.  Importantly, self-employed individuals may decline offers to provide services and are not required to perform work personally, having an unfettered right to send a substitute to provide services in their absence.

The issues raised within Gorman are also currently being considered by the Supreme Court in the Uber BV v Aslam case. Uber classify their drivers as self-employed, however, a number of drivers are seeking to gain ‘worker’ status.

The distinction between employee, worker, and self-employed is important as employment status will dictate an individual’s entitlement to statutory rights, including the National Minimum Wage and Working Time Regulations.

Employers should ensure that all employees, workers and suppliers and provided with the appropriate form of contract and that any contracts are drafted carefully to reflect the intended working relationship.  Companies who have contractors working under a self-employed contract should consider reviewing those contracts in light of this decision.

Claire Brook

Employment

Partner
Email: [email protected]
Tel: 01244 405 575

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