Yet another recent case on self employed/worker status demonstrates how confusing this area of law continues to be. In Redrow Homes (Yorkshire) Limited v (1) Buckborough (2) Sewell the EAT examined the parties’ intentions when entering into a contract for the provision of bricklaying services. The issue was whether workmen engaged by Redrow were workers for the purposes of the Working Time Regulations entitling them to holiday pay or self employed contractors. Regulation 2 (1) of the WTR provides that a worker is someone who works under:
- a contract of employment; or
- any other contract where the individual undertakes to do personally any work or services for another party to the contract.
The two claimants were bricklayers who worked for substantial periods at Redrow sites. Redrow stipulated the rates and provided the men with materials. Each of the men performed his services personally but, subject to the obligation to comply with the building programme, they were free to work when they wished.
Redrow argued that the contract under which the men worked stated that ‘the work is not personal to the Contractor and their obligations may be performed by other labour’ therefore the men were properly classified as self employed.
The EAT agreed with the tribunal in rejecting Redrow’s argument. At the time the agreement was signed, neither party intended that the men would provide a substitute or refuse work that was offered to them. The right to provide a substitute was, in effect, a sham. The EAT commented that there were two circumstances in which a contractual provision might be regarded as a sham:
- when the parties set out to deceive third parties by agreeing contractual terms which neither party intended to exist
- when neither party intended the contractual term to have binding effect, without setting out to deceive.(This was the Redrow case)
The EAT’s decision shows how careful parties must be when entering into a contract for the provision of services. Contractual documentation alone will not suffice to establish the status of the individual providing the services. The intentions of the parties will be closely examined and, to this end, employers would be wise to make clear in writing the understanding of the parties before entering into any such agreement.