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‘Worker’ Status Survives ‘Watertight’ Contract

In a striking example of even the most ‘watertight’ contract drafting failing to oust the jurisdiction of Employment Tribunals, a scaffolder has successfully argued that, far from being a mere subcontractor, he was a ‘worker’ within the meaning of the Working Time Regulations 1998 and thus entitled to holiday pay.

The contract between the scaffolder and the company for which he regularly worked had stated explicitly that he was neither an employee nor a worker. The contract, as well as purporting to make him solely responsible for his own Income Tax and National Insurance, stated that he was entitled to neither holiday nor sick pay.

The company eschewed any first claim on his services; he was told that he could substitute another worker to do his job whenever he pleased and the contract, which purported to embrace every facet of their legal relationship stated in unequivocal terms that he was ‘an independent business on his own account’.

The scaffolder had also signed a ‘self-employed status declaration’ and, altogether, nothing more could have been written into the apparently watertight contract in order to ensure that his relationship with the company could not be viewed as that of an employee or worker.

However, the company’s best drafting efforts came to nought when an Employment Tribunal (ET) ruled that the contract did not represent the reality of the relationship. Noting the difference in the relative bargaining power of the parties, the ET observed that the scaffolder was expected to carry out his work personally. Given his high level of experience and skill, it was common sense that he could not readily substitute someone else to carry out his job.

In dismissing the company’s challenge to that decision, the Employment Appeal Tribunal (EAT) ruled that there was no error of law in the ET’s finding that the Regulations applied and that the scaffolder was entitled to holiday pay notwithstanding the specific terms of the contract. The company’s plea that material extraneous to the contract had been unfairly taken into account was rejected.