Employment Status - Intention of the Parties Does Not Determine Status
Mr Richards worked for Waterfield as a self-employed carpenter between 2010 to 2018.
In the case of Richards v Waterfield Homes Ltd and Unity Build & Repairs Ltd, Mr Richards was engaged under HMRC's Construction Industry Scheme (CIS), which is a scheme in which a sub-contractor can have 20% of their gross earnings deducted by the employer and paid to HMRC on account of income tax and National Insurance. At the end of the year, an adjustment is calculated and usually there will be a balance payable by HMRC to the worker. Use of the CIS is inconsistent with being an employee.
In 2018, Mr Richards was moved onto an employment contract under which he mainly received statutory sick pay, as he was off sick between shortly after the date of the new contract, until his eventual resignation. The contract also stated Mr Richards had been continuously employed since 2018. Mr Richards claimed his date of continuous service should have run from 2010.
Employment Tribunal's Findings
The ET held that Mr Richards was not an employee until 2018. It focused on the fact that the parties had chosen to engage on the CIS scheme, whereby registrants will be treated as self-employed. The ET noted that the 'relationship was close to an employment one' and only briefly mentioned other factors such as control and right of substitution.
Mr Richards appealed to the EAT.
EAT Finds Self-Employed Label to Be 'Manifestly' False
The EAT held that the self-employed label adopted by the parties was 'manifestly' false. The ET had placed too much emphasis on the parties' apparent intention, which in reality was just one factor to consider. The EAT held that Mr Richards had been an employee since 2010 and remitted the case to the ET for the substantive hearing.
What Can Employers Learn From This Decision?
This case serves as a reminder that the parties' intention will not determine employment status. It will be necessary to consider the reality of the relationship in order to establish status.
