Employee or Self–employed: The debate rolls on…

March 22, 2018

The distinction between employment and self-employment is perennially difficult to draw but, as one case concerning a senior property professional showed, tribunals are used to looking beneath the surface in order to ascertain where control in a relationship really resides.

A highly paid Project Manager of major land deals had given in his notice and offered his services to a group that was investigating potential joint ventures with local authorities to develop publicly owned land. His relationship with the group’s boss broke down, however, and his engagement was terminated. He lodged an Unfair Dismissal complaint with an Employment Tribunal (ET).

What happened next?

In dismissing his claim, the ET found that it had no jurisdiction to consider the matter on the basis that he had worked for the group as a self-employed consultant. It noted, amongst other things, that he had invoiced the group for work done and had taken responsibility for his own tax and VAT liabilities.

The man had described his boss as a control freak and the ET accepted that the work he did for the group could only be done by himself, in that he could not arrange for someone else to do it. He had been provided with a mobile phone and laptop computer by the group, which also bore the cost of private medical insurance for him and his family.

However, the ET found that other provisions of his agreement with the group were wholly inconsistent with employment status. He was able to decide for himself how he went about his work and his role was not regulated to the extent that he could fairly and properly be described as an employee.

The outcome

In upholding the man’s challenge to that ruling, however, the Employment Appeal Tribunal (EAT) found that the ET, whilst asking itself the right questions, had erred in its approach to answering them. In particular, the ET had over-emphasised the absence of control over how the man did his job. The issue was sent back to the same ET for reconsideration in the light of the EAT’s ruling.

Our Employment Specialist, Lucy Watson, comments “There are a number of factors that need to be taken into consideration when determining someone’s employment status. If you are unsure whether an individual is truly self-employed or is an employee, seek legal advice to protect your working relationship.”

Nayak v Lucent Advisors (UK) Limited & Anr. Case Number: UKEAT/0154/17