Knowing who your workers are

The Employment Appeal Tribunal (EAT) has given further guidance on how to draw the line between nonemployee workers, who are protected by working time and minimum wage legislation, and the "genuinely self employed", who are not. It decided that a double-glazing salesman was a worker, even though he signed a contract that made it look (at least at first sight) as if he was in business on his own account.

The final ruling will always depend on the specific circumstances of each case, but two factors seem to have been crucial to this EAT decision. First, although the claimant was in theory free to work for other companies, in practice he could not. The contract he had signed with Yorkshire Windows precluded him from working for competitors, and with such a highly specialised sales job it was unrealistic to expect him to work in other fields. Secondly, while he could appoint a substitute to work on leads assigned to him, this was only possible when he was unable to work and, in addition, the substitute had to come from a small group of approved people. Overall, that meant that he was so closely tied in with Yorkshire Windows that he could not be regarded as in business on his own account. The tribunal had therefore been right to ignore the fact that he was required to register as self-employed for tax and VAT purposes and had on occasions made payments of commission to contacts who had given him valuable leads.

Holidays and long-term sick leave

Under the Working Time Regulations, workers are entitled to take and be paid for a minimum amount of annual leave in each leave year. The regulations do not allow workers to carry forward leave, and only allow payment in lieu of holiday entitlement on termination of employment. Following decisions of the European Court of Justice and the House of Lords in 2009, employers face uncertainty over the statutory holiday entitlement of employees on long-term sick leave. The European and domestic decisions confirmed that holiday entitlement continues to accrue during sickness absence.  

More controversially, despite the wording in the regulations, those decisions also appeared to create the potential for workers to carry forward leave and to recover pay going back a number of years in respect of statutory holiday entitlement that they had been denied the opportunity to take because of illness. They could do this by claiming that there had been a series of unlawful deductions from wages. However, a recent decision of the employment tribunal offers employers some reassurance.  

Earlier this year, an employment tribunal found that an employee could not claim holiday pay for previous years where he had not requested it at the relevant time: if he had not requested it, he had not been denied it. In addition, the tribunal considered that, by paying him in lieu of his accrued entitlement for the final year of his employment, the employer had broken any series of deductions and the claimant could not claim back through other years. This decision is not binding on other tribunals and it remains to be seen whether the EAT will adopt this reasoning if it has a chance to consider a case with similar facts on appeal.