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Reality Bites

28th July, 2011

The much anticipated decision of the Supreme Court in the case of Autoclenz Ltd vs Belcher & Ors is finally in; and it’s not the best news for businesses that use self-employed contractors.

So, you’ve engaged a self-employed contractor and both parties have signed an agreement stating that everyone accepts that there is no employment relationship. However, on a day to day basis, Mr. Contractor looks like an employee; walks like an employee; talks like an employee (you get the idea). In this situation, what is the true picture?

The case centres on whether or not a contractor, expressly described as a self-employed contractor in his contract, is really a ‘worker’ and subsequently entitled to certain rights including minimum wage and paid holiday. It was the true nature of this relationship between the parties that was assessed by the Supreme Court in Autoclenz Ltd vs Belcher & Ors

In the case, twenty car valeters signed contracts in which they accepted that they were self-employed subcontractors (and interestingly it was found that they entered the relationship with their ‘eyes wide open’ and fully appreciated their self-employment status). They paid their own tax and had to purchase their own insurance. Although they had to purchase their own uniforms and materials they could purchase these items from Autoclenz. Their contracts also stated they were under no obligation to attend work and that they were self-employed contractors and were entitled to provide a substitute if necessary. However, in practice, it was found that the valeters were expected to attend work and provide their services personally.

Ultimately, the reality of the valeters’ working practices triumphed over the written contractual agreement.

The lesson to be learned for any business that uses or is considering using self-employed contractors is simple – make absolutely sure the reality of the contractor’s working practices reflect the terms of any contractual agreement and their self-employment status. It appears a business cannot rely solely on the written agreement in such circumstances!

For more information on this or any other employment law matter please contact Helen Watson on 01244 405565 or email her here.

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