Last July the Supreme Court announced two important decisions on employment status. The first was about employment status in the strict sense, and the second addressed whether an arbitrator was protected by anti-discrimination law.

Car valets were employees

As the name suggests, Autoclenz operates a car-valeting business. This case was about the services it provided under contract to a customer in Derbyshire. After some years working for the company, the group of 20 claimants were asked to sign new documents. These had a number of features designed to ensure that they would not be regarded as employees, or as workers for the purposes of the National Minimum Wage and Working Time Regulations. The documentation included a clause that allowed each worker to provide a substitute, and a separate agreement which stated that each individual was not obliged to provide his or her services on any particular occasion.

It was suspected that many of the claimants had signed the documents without reading them, and the substitution clause was never used in practice. Indeed it seems that the workers were not even aware of its existence. Faced with these facts the employment tribunal decided that the claimants were employees, a finding now upheld by the Supreme Court.

It said that a tribunal is entitled to look at the reality of the relationship, not just the written documents, to work out what has really been agreed. This decision will therefore give considerable encouragement to employment tribunals to look behind the small-print when assessing the status of claimants. It is also a signal to employers to make sure that the written documents they produce match what actually happens on the ground.

Arbitrator was not a worker

The other case in the pair involved a commercial dispute which turned on whether an arbitrator was an employee for the purposes of the Religion or Belief Regulations. Those Regulations include a wide definition of employee (now incorporated in the Equality Act) which applies not just to employees in the strict sense of the word but also workers who are engaged under a contract to do work personally. The dispute arose because an agreement included an arbitration clause stipulating that the arbitrator had to be a member of the Ismaili community, in effect limiting the choice to someone who followed a particular branch of Islam. One of the parties argued that the clause was void because it amounted to an attempt to contract out of the Regulations.

The Supreme Court looked at the corresponding EU case law and decided that the definition was not broad enough to cover someone like an arbitrator who was not controlled in any way by the people appointing him. Applying this decision more widely, this is likely to mean that the Equality Act does not cover self-employed professionals and other skilled workers who work independently of the person appointing them, even if they are engaged to perform their services personally. It remains to be seen if that was really what the Supreme Court intended.

More light will be thrown on the status of non-employees in a discrimination context when the Supreme Court hears a case involving a volunteer at a CAB Bureau next year.