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Employment Status and the Right to Use a Substitute

Calendar January 22, 2019

In the recent case of Chatfeild-Roberts v Phillips & Universal Aunts Limited, the Employment Appeal Tribunal provided an interesting example where the right to use a substitute was consistent with employee status.


The Claimant worked as a live-in carer for the Colonel (Uncle of the First Respondent) from June 2013 until 6 August 2016, where she was given a letter of termination. The Second Respondent is a Company who provide residential and daily assistance using individuals such as housekeepers and carers. They introduced the Claimant to the First Respondent.
The Claimant’s pattern of work for the First Respondent was not the usual practice operated by the second Respondent. Usually, they operated a rota system where carers would move on after every three or four weeks. However, the First Respondent wanted a carer who could commit to a minimum period of six months placement.

The Claimant was paid a gross basic and paid her own tax and national insurance. This is an indicator that she was self-employed (however, it is not a determining factor). For the first year of the engagement, the Claimant submitted invoices and then received payment from the First Respondent. The Claimant asserted that after this time, she was not asked for an invoice again and instead the First Respondent made payment directly into the Claimant’s bank account. On 23 July 2014, the First Respondent increased the Claimant’s rate of pay on his own accord.

During the course of the engagement, the First Respondent paid the Second Respondent’s agency fee of £125 plus VAT each month. This was to ensure that if the Claimant ceased to provide care on a certain day, the First Respondent could rely on the Second Respondent to provide an alternative carer. This only happened on a few occasions as the Claimant only took time off work on four occasions during the course of the engagement. On these four occasions the First Respondent paid the client as normal.

Around June 2016, the First Respondent referred to the Claimant as her “employer” and on another occasion they made reference to employing the Claimant.

The Preliminary Hearing

At the Preliminary Hearing, the Judge had two questions to determine. The first question was whether the Claimant was an employee of the First Respondent, and the second was whether the Claimant was an employee of the Second Respondent.

The Claimant’s Particulars of Claim attached to her ET1 exhibited that the Claimant saw the First Respondent as her employer and that the Second Respondent was only included in the claim due to something the First Respondent had raised.

In answering these questions, the Judge found that the Claimant was an employee of the First Respondent and the Claimant was held not to be an employee of the Second Respondent.

The Full Merits Hearing

The Tribunal Judge considered previous case law in determining whether the situation amounted to a contract of employment, including the famous summary in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] from Mackenna J:
A contract for service exists if these three conditions are fulfilled.

The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.

He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.

The other provisions of the contract are consistent with its being a contract of service.

The crucial findings were made by the Judge in Paragraph 57: “… Mackenna J’s three conditions are all, in my view, satisfied in this case. The Claimant had agreed that, in consideration of remuneration, she would provide her own work and skill in the performance of service at the behest of the first Respondent. She had agreed expressly and impliedly, that in the performance of that service she would be subject to the first Respondent[’s] control in a sufficient degree to [m]ake him the master. And the other provisions of the contract are consistent with its being a contract of service – and by that I have in mind that one rest day per week was agreed, her absences over and above her day off per week were all paid absences and, while there was stipulation as to the hours for which she was to be paid, she lived in the house and was expected to attend to the Colonel as and when he required attention. She came to be paid by standing order only invoicing for overtime. Her rate of pay, having followed that suggested by the second Respondent, was unilaterally increased by the Respondent. And, importantly, there was nothing about this arrangement which indicated the Claimant was running a business.”

The Appeal

There were three grounds of appeal permitted to go forward. These were that the Employment Tribunal “erred in holding that the Claimant was an employee of the Respondent in the following respects:

First, by failing to analyse and determining the contractual relationship between parties as regards, (a) substitution, (b) mutuality of obligations in the sense of a requirement on the Claimant to provide services and on the Respondent to provide work and (c) annual leave and other unpaid absences.

The First Respondent argued that Claimant could rely on a substitute, as if she was unwilling to personally provide care, the First Respondent could (and did) rely on the Second Respondent to provide a substitute. They also felt the Judge failed to determine the contractual arrangement for substitution.

In regards to mutuality of obligation, the First Responded alleged they were under no obligation to provide work for the Claimant, or for the Claimant to accept work.

The First Respondent also felt the Judge failed to determine the contractual rights held by the Claimant in regards to annual leave, such as sick pay. They felt this did not sit correctly with the Judge’s finding that “other provisions of the contract were consistent with a contract of service.”

Second, by failing to make appropriately detailed findings of fact and not subjecting the relevant facts to the intense focus required in respect of (a) control, (b) substitution, and (c) annual leave and other unpaid absences.

Under this ground of appeal, the First Respondent essentially felt the Judge failed to examine the facts in enough detail and without “intense focus.”

Third, by making internally inconsistent findings or finding unsupported by any evidence in respect of (a) the words used by the Respondent to describe the relationship and (b) the requirement to attend to the Colonel as and when he required attention.

The First Respondent alleged there was an internal inconsistency between two sections of the judgement, namely at paragraph 26 – “The Claimant was free to choose her working hours without any input from the first Respondent against a background whereby the second Respondent’s brochure suggested she worked 12 hours per day with 2 hours respite” and at paragraph 57 – “while there was a stipulation as to the hours for which she was to be paid, she lived in the house and was expected to attend on the Colonel (First Respondent’s Uncle) as and when he required attention.”

The Decision

The Appeal Judge began by dealing with the first ground of appeal. The Judge asked the Claimant’s representative how he thought an Employment Judge was to make findings on the agreement between the parties on issues (e.g. for sick pay or holiday) where there was no proper agreement. The Claimant’s representative submitted that the Tribunal ET is still required to make findings. The Judge found “dealing with the reality of the present situation there must be a limit to the analysis or “intense scrutiny” which can be performed where there is limited documentation… and all that a Judge can do is work from the evidence put before the Tribunal.”

In looking at the scenario and the reality of the present situation, the Judge found the Claimant worked 12 hours a day full-time for over three years, taking one day off a week and living at the house. Her role was defined for her and it was not suggested any tasks she was expected to perform were self-generated. She reported to the First Respondent, who in the past referred to the Claimant and his employee.

In regards to substitution, the Judge gave an example of where the right to substitute does not count against employee status. “… the key finding by the Employment Judge at paragraph 53 was that the Claimant was not providing a substitute for herself. She was taking advantage of an arrange between the First and Second Respondents whereby she would notify the Second Respondent of an intended absence and the Second Respondent would provide a replacement from a carer on its books.”

The Judge reached the same conclusion for mutuality of obligation, taking note of the fact the Claimant had no home of her own and she lived in the house permanently.

In considering subsection (c) of the first ground of appeal, annual leave and other unpaid absences, the Judge did not agree with the criticism the Tribunal Judge failed to determine the contractual relationship. This was because the First Respondent’s evidence was there was no arrangement for annual leave or unpaid absences. The Judge considered that as the Claimant was paid every day she took leave, it was reasonable for the Employment Judge to conclude this was the nature of the relationship.

The Judge then considered the second ground of appeal made by the First Respondent, and again sided with the Tribunal Judge. In considering control, the Judge found that “the fact that such employee is trusted to manage his or her workload and hours or work does not make him any the less an employee.” The Judge also referred to the frequency of the First Respondent’s overnight visits decreasing from one a week to once every two or three weeks, indicating an “increased degree of satisfaction with the way in which the Claimant was performing her duties.”

In considering the third ground of appeal, the Judge looked at the wording of paragraph’s 26 and 57. The Judge found that Paragraph 57 described a situation where the First Respondent wanted someone in the house 24 hours a day. The Judge made clear that no employee or self-employed could be expected to provide a service of this nature for 24 hours a day. Paragraph 26 mentions the Claimant working 12 hours a day with 2 hours break, and the Judge found this was not inconsistent with the term “expected to attend to the Colonel as and when he required attention” from Paragraph 57.
In conclusion, the Judge concluded that the Tribunal Judge made no error of law in the findings he made, and dismissed the appeal.

To read the full judgement follow the link

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