Employment Status

    26 March 2019 | Hannah Thomas

    Employment Status

    In this case, the Claimants worked as “educators” for the National Gallery in London on a purportedly self-employed basis.  Their core role was to deliver talks, lectures and workshops at the Gallery and elsewhere, until a reorganisation by the Gallery resulted in the Gallery terminating their services.

    The educators were engaged on contractual terms that stated there was no guarantee of a regular supply of work and that educators were at liberty to turn down any offer of work which they received, for any reason.  Educators were not penalised for declining work.  The Gallery did not go beyond assurances that it would offer as much work as it could and that it would seek to distribute assignments equitably.  The educators were paid standard fees for each assignment. The rate of pay, depending on the nature of the assignment, was set by the Gallery. None of the Claimants worked set hours.  Fees for the assignments undertaken were authorised for payment against pay claim forms submitted by the educators. Payments were made through the payroll and subject to deductions for income tax and national insurance contributions. The decision to deduct tax and N.I was made following an HMRC adjudication which determined that the educators were employees for tax purposes. Both sides disagreed with this tax decision, but the Gallery was compelled to implement it.

    The Tribunal’s conclusions

    Right of Substitution

    In order to establish worker status, there must be an agreement to provide personal service.  The tribunal was satisfied on the facts that there was no right of substitution and no practice of appointing substitute educators in reality.  The tribunal found that despite the fact there was no contractual right or practice of swapping assignments between educators, it was plain that the assignments were agreements for personal services.

    Control, appraisal and assessment

    In order to establish employment status, there must be mutuality of obligation and a significant degree of control by the employer over the employee regarding how the work is carried out. Although this is a key test to establishing “employee” status (rather than the intermediary status of “worker”); clearly a significant degree of control will tend to negate the assertion that an individual is carrying on their own business on their own account in a self-employed capacity.   The tribunal found that of particular importance to determining the degree of control by the Gallery over the educator’s method of work, were the Gallery’s requirements that the educators’ work must conform to current Gallery thinking and scholarship. For example, educators were not permitted to speak from notes or cue cards, were required to attend training courses and events organised by the Gallery, to attend meetings where decisions regarding the Gallery’s operations were made and, as part of an appraisal process, were observed by senior staff members and received detailed feedback and advice. 

    Integration

    The tribunal found that the educators were to a substantial extent integrated into the Gallery’s organisation and were essentially “the face of the Gallery”.  For example, they were required to adhere to the Gallery house style, to enforce the Gallery’s policies as representatives of the Gallery and were presented to the outside world as being members of the Gallery’s staff. 
    Other relevant factors that contradicted the Gallery’s contention that the educators were self-employed individuals, was the evidence that the Claimants were supplied with materials, facilities and support in numerous ways; the provision for educators to recover expenses and the Gallery’s retention of intellectual property rights in the Claimants’ work.

    In short, the Claimants worked ‘for’ the Gallery as members of its team of educators during each individual assignment of work, the result being that the Claimants could pursue their claims for statutory worker rights, such as the right to receive statutory holiday pay accrued for the duration of each assignment.  The lack of obligation between assignments to offer or accept work i.e. the fact that there was no “umbrella” contract of employment, defeated the educators' case that they were employees.  As the educators were not found to be employees, their claims for unfair dismissal and claims of failure to consult ahead of redundancy could not proceed.  

    This feature was written in collaboration with the lawyers at Markel Law, who regularly comment on SME related matters. You can stay up to date with the latest legal changes on the Markel Law Blog, written in plain English, so that you understand the implications that is has for you as a small business owner.

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