REWARD
C ontracts C law-backs C laims (whistleblowing)
Nicola Mullineux, senior employment specialist for Peninsula, explores the interesting outcomes of three different recent employment law cases
When determining employment status, return to the legal tests The Employment Appeal Tribunal (EAT) in the case of Plastic Omnium Automotive Ltd v Horton is a useful reminder that when considering an individual’s employment status, it’s always important to return to the tests set down in the law. In this case, the claimant was engaged through a service company to provide services to the respondent. Along with another, the claimant was a shareholder of the service company from which they drew salary and dividends. The service company and the respondent had a written contract in place. Under that contract, the claimant couldn’t provide a substitute in his place, although in reality, this happened for some time. The contract also clearly stated there was no employment contract in place and the claimant wasn’t entitled to holiday or sick pay. However, the daily fee charged by the service company for the services of the claimant included a sum in respect of holiday. Under the arrangements, the respondent provided the claimant with the IT equipment needed to perform his role, a company email address and an office access card. He also reported to one of the respondent’s directors, was required to work set hours and had to attend training provided by the respondent. In essence, the claimant was treated the same as any other employee of the respondent, other than that he wasn’t subject to the
appraisal or disciplinary process. He was required to sign in and out of buildings, as did employees of the respondent, and he requested leave in the same way as employees. An issue arose between the claimant and the respondent. The claimant brought a claim before an employment tribunal (ET) that he was an employee, or a worker, and that the respondent had unlawfully deducted his wages by failing to pay him. “The restraint of trade principle, which comes from contract law, is The ET held that although not an employee, he was a worker, because he was integrated into the respondent’s business and the relationship between the claimant and the respondent operated with the claimant in a subordinate position. The respondent provided the claimant with IT equipment, an email address and he was required to work regular hours and had to report to one of the respondent’s directors. based on the idea that an individual should be free to work without undue interference from another party”
The claimant was awarded £28,500 in unlawfully deducted wages. On appeal, the EAT disagreed and found that he was neither an employee nor a worker. There was no contract between the claimant and the respondent, so he didn’t satisfy the first part of the test for worker status, which would have required the claimant to have entered into a contract personally with the respondent. The contract in place was between the service company and the respondent and it was reflective of the working relationship between the claimant and the respondent. Also, although the claimant was well integrated into the respondent’s company, the EAT found that this didn’t mean that the other factors should be ignored. As a result, the appeal was allowed and the EAT concluded that in this case, there was no employment status. Claw-back provisions aren’t the same as a restraint of trade The High Court, in the case of Steel v Spencer Road LLP (t / a The Omerta Group), had to consider whether or not a claw-back clause was a restraint of trade. This case involved a contractual dispute which was dealt with by the civil courts, rather than through the employment tribunal system. The restraint of trade principle, which comes from contract law, is based on the idea that an individual should be free to work without undue interference from another party. Contractual terms which appear to restrict
| Professional in Payroll, Pensions and Reward | May 2024 | Issue 100 42 | Professional in Payroll, Pensions and Reward | May 2024 | Issue 100 54
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