Richards v Waterfield Homes [2023] IRLR 144
The Employment Appeal Tribunal (EAT) ruled in favour of the claimant, asserting he was indeed an employee, even though he was a registered Construction Industry Scheme (CIS) contractor.
Key Principles derived by the EAT which apply to the Employment Tribunal :
The label of 'self-employment' is not definitive. Tribunals should look beyond mere labels to the actual nature of the relationship.
The intentions expressed by parties about their relationship have relevance but are not conclusive.
Taxation methods or payment arrangements alone don't determine employment status.
Facts and Application of the Law
The claimant, a multi-trade carpenter, began working for the respondent company, owned entirely by Mr Conyers, in 2010. While he exclusively worked for this company during regular working hours, he was registered under the CIS, a system where contractors deduct payments, transferring them to HMRC.
In 2018, the company transitioned its employment relationships, leading to the claimant moving onto an employment contract. However, he mostly received statutory sick pay due to illness until his resignation. The key dispute revolved around his employment status before this switch.
While the employment tribunal acknowledged that the relationship closely resembled employment, they emphasised the agreement to operate under the CIS scheme, thereby classifying the claimant as self-employed. This decision was challenged, arguing that the tribunal excessively relied on the tax status to determine employment.
Citing Young and Woods Ltd v West, the EAT highlighted that one must discern if the self-employment label accurately reflected the relationship's reality. It was noted that the relationship's description by the parties can offer insights but isn't decisive. In this case, the tribunal mistakenly centred its decision on the payment method, i.e., the CIS.
Given the long-standing working relationship and other factors, only the payment method was inconsistent with the employment status. The EAT clarified that using the term 'false' doesn't equate to a 'sham'. Consequently, the EAT overruled the tribunal's verdict, declaring the claimant was, in fact, an employee.
For individuals keen on appealing decisions from the Employment Tribunal to the Employment Appeal Tribunal, it's vital to remember that employment status determinations should consider all factors, not just the payment or tax method.
