Employment status is a tricky area which comes up all too regularly for some businesses. In order for an employee to really be an employee, the following criteria must apply:
- The individual must carry out the work themselves and not pass it to a substitute;
- The employer must have control over the work that is done; and
- There must be an obligation for the employer to offer work and an obligation for the employee to accept it.
If any of these boxes is not ticked, then the individual is not an employee and, depending on the circumstances, will be either a worker or genuinely self-employed.
The second of these factors (the ‘control’ test), will turn on the facts in question, but a recent Employment Appeal Tribunal decision has thrown some light on the up to date interpretation of ‘control’.
White v Troutbeck SA  concerned two individuals who were engaged as caretakers on a farming estate on behalf of the family owners via an offshore company. The family were rarely in residence, but expected the estate to be maintained ready for their occasional visits and the claimants took care of the house and grounds. A dispute occurred and the claimants argued that they were employees and therefore entitled to unfair dismissal rights.
In the first instance, the Employment Tribunal decided that as the owners did not exercise “day-to-day control” over the claimants, keeping only a final control of the finances, then the control test was not made out and the claimants were not employees. The claimants appealed.
In the Employment Appeal Tribunal, His Honour Judge Richardson allowed the appeal. He noted that the element of control needs to be looked at in modern circumstances, as for many employees it is not unusual to have a large degree of autonomy and the ability to follow their own judgment.
He commented that “it does not follow that, because an absent master has entrusted day-to-day control to such retainers, he has divested himself of the contractual right to give instructions to them … the question is not by whom day-to-day control was exercised, but with whom and to what extent the ultimate right of control resided”. Here, Judge Richardson decided that what he termed as “ultimate control” laid with the owners, who could have stepped in at any time and given direct orders and who ultimately held the purse strings.
Whilst these sorts of issues are likely to be specific to individual circumstances, it is important to note that it seems that less weight is now being given to who controls things on a day-to-day basis and that what is vital is who actually takes ultimate control.