Employment Status

Employment status: where written agreement reflects the reality of a relationship of service then this cannot be cut-across

In Plastic Omnium Automotive Ltd v Horton the Employment Appeal Tribunal found that an employment tribunal had been wrong to conclude that the claimant was a worker of the end-user where it separately concluded that the written agreement between the claimant’s service companies and the end-user was an accurate reflection of the reality of the relationship.

The elements required to satisfy the statutory definition of a worker under section 230(3)(b) of ERA 1996 are:

There must be a contract between the worker and the putative employer, whether express or implied.

The contract must require personal service.

The other party to the contract is not the customer or client of any business undertaking or profession carried on by the individual.

There was a written contract between the claimant's service companies and the end-user specifically for the provision of the claimant's services to the end-user, with no provision for a substitute.

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The Decision

The tribunal found that the written agreement reflected the true agreement between the parties, and held that the claimant was not an employee. However, the tribunal held that he was a worker, having identified that he was "clearly subordinate and dependent” on the end-user.

The EAT disagreed with this finding. The definition of worker required there to be a contract between the worker and the putative employer. Here there was a contract between the claimant’s service companies and the end-user which was not a sham and which the tribunal had concluded reflected the reality of the arrangement. There was no contract between the claimant and the end-user and, given the presence of a contract which reflected the reality, there was no need to imply one.

The EAT concluded that there was only one legally correct outcome and that the claimant was not a worker.