Supreme Court rocks foundation of employment status

The Supreme Court has handed down its judgment in a case that has rocked the foundations of employment status to their very core.

The case of Autoclenz Ltd v Belcher and others involved car valeters engaged on a self-employed basis. The contracts contained the requisite mutuality of obligations and substitution clauses. The individuals argued that the clauses did not reflect the actual agreement between the parties and that they were obliged to provide the services personally. The highest court in the land agreed 100% with the individuals and found that the substitution and mutuality clauses were not a true reflection of the agreement.

More importantly, the Supreme Court held that when assessing the veracity of contractual clauses Tribunals should take into account the expectations of the parties (did anyone expect a substitute to be sent?) and the bargaining power between the parties (was the contract a ‘take it or leave’ contract?). The Supreme Court also suggested that the conduct of the parties may be such that it trumps the written terms agreed between the parties. In essence, the Supreme Court have widened an individual’s scope to claim that the agreed written terms are a sham and dismissed the sanctity of the written contract.

The bar has just got a lot higher for contractors engaging self-employed subcontractors with the risk of Employment Tribunal claims increasing significantly. HMRC will no doubt seek to exploit this judgment in good time also.

This article was written by Abbey Tax Protection and has been reproduced with their permission. Abbey Tax Protection provides a variety of products and services to accountancy practices, businesses and individuals. For more information please visit www.abbeytax.co.uk