Autoclenz Limited v Belcher & Others

Employment status remains an important commercial issue. Many businesses strive to maintain a workforce unaffected by the regulatory protections and which costs less to administer. There is a steady flow of cases where agency workers and others seek recognition as employees and the Supreme Court has recently disposed of such a saga in Autoclenz Limited v Belcher & Others [2011] UKSC 41. The case was brought by a trade union seeking to establish their members, who were all engaged to clean cars on the basis of a contract that declared they were self employed, were in fact ‘workers’ for the purpose of both the working time rules and also entitled to receive the minimum wage. The documents used, which were signed by each individual, could not have done much more to establish the selfemployment case. They declared the signatory was selfemployed; was responsible for tax; could provide a substitute and were not required to provide services on any particular occasion nor were Autoclenz obliged to provide work at any time. Even the Revenue was convinced when it came to call in 2004. In the past courts have declared firmly that employment is a personal service (so the ability to provide a substitute is usually fatal to the case for employment status) and also that there is an irreducible minimum requirement of mutual obligation for employment to exist.

The reasons Autoclenz lost this case (and the individuals were held to be employees as well as workers) will be studied by many other businesses that remain anxious to retain a workforce that is not comprised of employees. The first is the obvious fact that courts are alive to the reality that ‘armies of lawyers will simply place substitution clauses, or clauses denying any obligation to accept or provide work in employment contracts, as a matter of form, even when such terms do not even begin to reflect the real relationship’.

This concern is readily apparent in many cases and one attempt to work around it was to label the paperwork a ‘sham’, which could be disregarded. However in law a ‘sham’ was considered to require both parties to have a common purpose of misleading others about legal rights or obligations and this often led to difficulties in using that route to defeat the paperwork. The Supreme Court have attempted to cut through these difficulties by saying that in each case the important issue is to determine the true agreement between the parties or, put another way, whether the words of the written contract represent the true intentions of or expectations of the parties.

The key point to understand is that in order to determine whether the words of the contract reflect reality requires consideration of all of the relevant evidence, not just the documents. Once you are involved in this exercise the determination of that ‘reality’ becomes a factfinding exercise and not an argument of law. Appeal courts have very little jurisdiction to disturb such an exercise by the tribunal so if energy is to be spent on defence of nonemployment status it is essential to do this in the right forum, which is the tribunal. 

If you do not succeed at the first hurdle the most likely outcome of any further appeals is what happened in Autoclenz. Here the Supreme Court quoted at length the facts found by the tribunal and concluded that they could not sensibly be challenged as they were findings that were open to the Tribunal to find. This will remain the case even if, when examined objectively, a number of the factors relied on might remain arguable.

First published in The Grapevine Magazine September 2011

For further Information please contact Sejal Raja sejal.raja@rlb-law.com


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.