The Supreme Court in Autoclenz v Belcher upheld the Court of Appeal’s decision that car valeters, described as self employed – and found to be self employed by the Inland Revenue – were, on the facts, actually employees of Autoclenz.
This case is interesting because the contractual documentation clearly pointed to self employment and the Inland Revenue had confirmed this status. In the two documents which comprised the contract of employment, the valeters signed a confirmation that they were self employed and that their tax affairs were handled under Schedule D. A substitution clause was later included so that if the valeter could not carry out the work, a substitute could be provided. The contract provided that valeters had to purchase from Autoclenz protective overalls which identified them as contractors of Autoclenz and had to provide their own cleaning materials. The documentation also stated ‘ you will not be obliged to provide your services on any particular occasion nor, in entering into such agreement, does Autoclenz undertake any obligation to engage your services on any particular occasion’.
The tribunal had made findings of fact which bound the higher courts. It found that Autoclenz had advertised for ‘self employed people’ as valeters. Payments were made to the valeters on a piecemeal basis and the valeters rendered weekly invoices. They undertook responsibility for payment of tax and NICs themselves on a self employed basis.
The valeters brought claims seeking a declaration that they were workers and entitled to the national minimum wage (NMW) and holiday pay. The Supreme Court agreed with the Court of Appeal (which had overturned the EAT) and found that in reality the valeters were employed under contracts of employment and therefore entitled to the NMW and holiday pay. The court emphasised that the real question was what was the true position between the parties, irrespective of what the contractual documentation pointed to? The relative bargaining power of the parties had to be taken into account in deciding whether the terms of any written agreement represented both what was agreed and the true position. All the circumstances of the case had to be looked at. The tribunal was entitled to find that the valeters in practice had to carry out the work offered to them and Autoclenz was obliged to offer work. No substitution was in reality allowed.
This case underlines that, irrespective of the tight drafting of an agreement to illustrate self employment, the court is entitled to look behind that agreement and find that the true facts indicate employment status, even if the Revenue has determined otherwise for tax purposes.