Disputed employment status case ends in favourable result for the employer

Disputed employment status case ends in favourable result for the employer

In the recently reported case of Hafal Ltd v Lane-Angell [2018], the Employment Appeal Tribunal (EAT) had to consider whether an earlier Employment Tribunal (ET) had correctly determined the issue of whether the nature of an engagement between a charity and an individual created a contract of employment.

The working arrangement

Hafal Ltd (the charity) ran a scheme, which provided vulnerable adults with access to the support of an Appropriate Adult (AA) in circumstances where they were held in police detention. Between November 2012 and February 2013, the charity appointed Ms Lane-Angell as a voluntary AA support. The engagement with the charity was on a 'bank basis', in that the charity would use her services as and when required provided she was available. However, there would be no pay or guaranteed hours. The availability of all AA support listed in the bank, was routinely prepared into a monthly AA call-out rota, from which the charity organised its police station support.

On 20 March 2013, the charity confirmed Lane-Angell had successfully passed its vetting stage and that going forward she would receive pay for any future AA call-outs. Additionally, the charity confirmed its terms and conditions relating to rates of payment for subsistence and mileage, holiday entitlement and her places of work. All of which were matters which you would expect to see in a contract of employment.

Whilst engaged with the charity, Lane-Angell’s earnings fluctuated from month to month. She also undertook other fixed term engagements for the charity and she provided support to another organisation.  

Operational difficulties

In April 2015, the charity decided to take action to resolve the increasing operational difficulties it was encountering in relation to a lack of AA availability. A number of AA’s, including Lane-Angell had repeatedly failed to respond to callout requests to attend the police station. In view of this, the charity wrote to all the paid AA’s advising that from 1 May 2015 they were expected to remain available each month for a minimum of 10 shifts, with at least 2 of these available dates being on the weekend. This new requirement proved problematic for Lane-Angell, as aside from her role with the charity, she was also committed to providing support 4 days per week to another organisation, Advocacy Support Cymru.

The 3 strike rule

In December 2015, the charity decided to drop Lane-Angell from the January 2016 rota. When she raised concerns regarding her exclusion from the AA call out rota, the charity informed her a 3-strikes rule was in operation. As a consequence of her repeated failings to attend to call out requests, she was removed from that rota.  Subsequently, Lane-Angell received a letter from the charity dated 14 January 2016, confirming again that she would not be placed on any further call out rotas.  In view of this, Lane-Angell alleged that the charity unfairly dismissed her and she presented a claim to the Cardiff Employment Tribunal. The charity denied that it had dismissed her on the basis that she had no employment relationship with the charity.

What was the issue in this case? 

The main issue for the ET to determine was whether the nature of the engagement between the charity and Lane-Angell created a contract of employment. Was there sufficient or any "mutuality of obligation" between the parties?

What did the ET say?

The ET stated that in order to determine employment status it was necessary to examine the whole picture. In doing so it concluded that based on the following reasons, Lane-Angell was an employee of the charity:

  • When work was offered there was an obligation on Lane-Angell to accept that work.
  • The charity would impose sanctions on Lane-Angell if the work was not accepted (the 3-strike rule).
  • There was an “overarching contract” which had demonstrable elements of mutuality of obligation that created an employment contract between the charity and Lane-Angell.
  • Lane-Angell offered her services and was subject to rigorous supervision and instructions on how to undertake the work.
  • Lane-Angell was not in any sense running her own business.
  • The fact that the claimant was also employed on other specific fixed term contracts by the charity did not prevent her from at the same time been categorised as either an employee or a worker.

What did the EAT say?

The EAT held that the ET made a mistake when it ruled there was an “overarching contract” which created mutuality of obligation and a resultant employment contract between the charity and Lane-Angell. Notably the EAT stated, “…the difficulty with the Tribunal's Judgment is that it focuses only on the facts surrounding the relationship and pays little or no regard to the terms of the appointment.” The EAT emphasised that “…an expectation that the Claimant would provide work is not the same as an obligation to do so.” In view of this the EAT held the terms of appointment between the parties was unambiguous and clearly stated that there was no obligation to provide or accept work. Unlike the ET, the EAT concluded that the features of the relationship between the parties were not consistent with an intention to create an employment relationship.

Favourable result for employer

This was a good result for the charity and the case provides some guidance as to how courts may approach the issue of employment status. Each disputed case will still continue to be decided on its own particular facts. Going forward it is important for businesses to pay particular attention to the paperwork drafted to regulate any working arrangements.  It should also be noted that the Supreme Court has recently handed down its decision in the case of Pimlico Plumbers Ltd & Anor v Smith [2018] UKSC, and in this case on the facts before it, a decision was made that  an individual was a worker and not self-employed.

As always, if you have a legal query please get in touch with the FSB Legal Helpline on 0345 0727727 and we'll be happy to assist you.