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This case concerned whether an individual, who is expressly described as a self-employed contractor in his contract, is really a 'worker' (and thus entitled to certain rights including minimum wage and paid holiday) due to the true nature of the relationship between the parties.
Twenty car valeters signed contracts describing themselves as self-employed subcontractors. They paid their own tax and had to purchase their own insurance, uniforms and materials (the latter two of which they could do from Autoclenz). Their contracts stated they were under no obligation to attend work, although the tribunal found as a fact - in practice - they were expected to attend work and provide services personally. The tribunal also found that they went into the contracts with their eyes open about being self-employed.
The Supreme Court upheld a finding that they were 'employees', but the claims for minimum wage and holiday only required they prove they were 'workers'.
So what prevailed in this instance was it the written contract in place or the "reality of the situtation"?
The Supreme Court held the reality of the situation trumped what was written in the contract. It was not necessary for the valeters to prove a 'sham', in the sense that the parties intended to mislead HMRC. The fact that the employer had written a 'substitution clause' into the contracts did not reflect the reality, as everyone expected the valeters to carry out their duties personally.
Conclusion
This case confirms previously followed guidance provided in Protectacoat Firthglow Limited v Szilagyi. Where there is a dispute as to the genuineness of the written terms of a contract there is no need to show a common intention to mislead, it is sufficient that the express terms do not represent the common intentions or expectations of the parties. In such a situation, a tribunal should seek to ascertain the actual legal obligations of the parties.
This case is also of some interest because it highlights that individuals who have been content to accept the tax benefits of being classed as "self-employed", may not be prevented from claiming that they are employees for other statutory purposes.
