The case was that of Harris and Kearny v Excel Brickworks Ltd and involved Mr Harris, the Foreman, and Mr Kearny, a Bricklayer.
In Excel’s favour, they had a signed agreement confirming that Mr Harris and Mr Kearny recognised that they were self-employed and Mr Harris had worked for the company for 17 years without questioning his status. The contract contained the various provisions that you would need in order to demonstrate that an individual was self-employed, for example they:-
- had control over their own working pattern and methodology;
- could work on what they wanted, when they wanted and even refuse to work if they so wished; and
- could send in a substitute.
Mr Harris and Mr Kearny’s relationship was terminated by Excel on the basis that they were self-employed. Disgruntled by the decision, the pair brought a claim to the Employment Tribunal who found that both individuals were, in fact, employees.
In coming to the decision, the tribunal stepped over the contract to look at the reality of the relationship between the individual and Excel, i.e. how the parties were actually interacting. The Tribunal found, in this case, that, amongst other things:-
- a lack of substitute actually being used let the contract down; and
- simply being placed in the Construction Industry Scheme (CIS) was not sufficient to establish that they were self-employed.
This case is surprising as the tribunal found that both individuals were employees, jumping straight over the middle tier of ‘worker’, which has been the common finding in all of the gig-economy cases.
Being classed as an employee permits the individuals a lot more rights than they would enjoy under ‘worker’ status, such as the right not to be unfairly dismissed, which is only available to employees.
The claim is likely to be appealed and as this is only a first instance tribunal finding it does not carry much weight, but if it is upheld at appeal then this will have huge ramifications, particularly in the construction industry where there is a high percentage of self-employed individuals.
Ultimately, it is better to have the correct contract in place that reflects the working relationship between your organisation and those you engage with. It does not matter whether your contract has all of the bells and whistles in place to describe the arrangements as self-employed, if they do not act like self-employed then they will not be found to be self-employed.
If you would like any assistance in reviewing your arrangements with self employed contractors, then please do not hesitate to contact us.