The High Court has found an employment relationship to exist, despite the parties agreeing and documenting a contract for services (consultancy) arrangement.

The case concerned ownership of intellectual property rights, in relation to which the relationship between the parties is highly relevant. Despite the individual providing his services to the company via a personal services company for tax reasons, the court held that the true relationship between the company and individual was that of employer/employee, not least because the individual was required to personally perform the technical services described in the contractual documentation. Ownership of the IP was construed accordingly.

Why this matters

This is one of only a handful of cases where the court has been willing to pierce the corporate veil and set aside the contractual arrangements adopted by the parties. It is a reminder of the need for the documentation to accurately reflect the true relationship between the parties, whatever that might be. If not, the parties risk the court not respecting the contractual structure and making a contrary determination.

Sprint Electric Ltd v Buyer's Dream Ltd and another