REWARD
Status, deductions, dismissal
NicolaMullineux, senior employment specialist for Peninsula, reviews the decision in three cases
Gorman v Terence Paul In this case, the employment tribunal (ET) ruled that a hairdresser was an employee, not self-employed, due to the level of control asserted by the organisation. ‘Employment status’ refers to the arrangements under which an individual is engaged to work for an organisation. Correctly labelling staff in accordance with their status is important in identifying the rights they are entitled to. Employees are those who are hired directly by an organisation. Workers are also hired by an organisation but have more freedom in the work they do and when they do it, such as casual, agency or freelance workers. The genuinely self-employed are those who conduct work for an organisation but have full control over how they conduct it, such as independent contractors. This case concerned a hairdresser who was engaged by an organisation to conduct work on their premises. Her contract outlined that she was a self-employed contractor, but the organisation exercised a great deal of control over her working day. After working for the organisation for six years, the claimant argued that she had been denied a number of rights as she had been falsely labelled self-employed.
She also wanted to pursue numerous claims against the organisation, including wrongful dismissal and sex discrimination. In order to hear her claims, the tribunal first needed to consider if the claimant could be considered an employee, and not self-employed. The claimant’s main arguments rested on the degree of control the organisation had over her: she had to work fixed hours from Monday to Saturday, had no control over pricing, had to conform to their standards of dress, use their products exclusively, and also needed their permission to take time off. Despite this, she was not paid any holiday pay and had to provide 67% of her takings to the organisation. The organisation countered by stating that all hairdressers engaged by them did have control over the hours they worked. In their words, hairdressers could decide what treatments they provided, as well as control when they took holidays. Ultimately, the tribunal agreed with the claimant, finding that the degree of control exercised over her by the organisation meant that she was, in truth, an employee despite her contract label. Going forward, the claimant is free to pursue her claims as an employee, but it is currently unknown if
the organisation will pursue this matter to the employment appeal tribunal (EAT). It does not matter what an original contract states, because in situations where employment status is in dispute tribunals will always look to address the truth of the relationship. The level of control, which was crucial in this case, can work against the argument that an individual is self-employed. Whilst we have seen cases where such discrepancies are deliberate, sometimes it can be the result of honest mistakes. HMRC v Ant Marketing Limited In this case, the EAT provided guidance on situations where deducting wages for training costs and accommodation expenses could put organisations in breach of national minimum wage (NMW) law. As outlined in the National Minimum Wage Act 1998 and clarified by the National Minimum Wage Regulations 2015 (‘the Regulations’), workers must be paid at least the current rate of the statutory NMW. An example of where the law is breached is outlined within regulation 13 of the Regulations, which states that deductions made for expenses associated with their employment, for example the purchase of uniforms, should not put wages below the NMW. In contrast, as outlined in regulation 10 organisations can deduct an amount from
...tribunals will always look to address the truth of the relationship
| Professional in Payroll, Pensions and Reward | September 2020 | Issue 63 44
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