We have clients, both employers and individuals, who want their relationship to be one of self-employment, rather than employment. This is because the employment relationship is more highly regulated (and so more costly) than self-employment; and self-employment may have tax advantages for both parties. But employment status can be complicated.
The Supreme Court last year, in Autoclenz Lyd v Belcher  ICR 1157, made clear that written contractual terms inconsistent with ‘employee’ status may be disregarded where they do not reflect the parties’ actual agreement. Hence a clause negating any obligation on car valets to provide personal service was ignored in deciding whether they were employees.
Now, the Employment Appeal Tribunal (‘EAT’), in Quashie v Stringfellow Restaurants Limited UKEAT/0289/11/RN, has ruled that an exotic dancer was an employee and, therefore, eligible to bring an unfair dismissal claim. She would, incidentally, also be able to claim holiday pay and other employment rights.
This judgement has come as a big surprise to the entertainment industry and many outside it. It will affect the employment rights of thousands of dancers across the UK, in an industry previously largely free of employment regulation.
For there to be an employment relationship, the cases establish that there are three essential ingredients:
- the employee must perform the service personally (and not, for example, through a substitute or limited company);
- there must be a sufficient degree of control by the employer; and
- there must be a mutuality of obligation, whereby the employer must supply work and the employee do work.
If any one of these three elements is missing, the individual is not an employee.
The employment tribunal decided that Miss Quashie ticked the first two boxes. She was required to work personally and there was sufficient control by Stringfellows over how she provided her services, as she was required to comply with strict ‘club rules’. The employment tribunal found, however, that there was not the necessary mutuality of obligation to sustain an employment relationship.
The EAT disagreed. Ms Quashie was employed even when she was not working because she had contractual obligations to attend work, to notify Stringfellows of holidays and to attend weekly meetings without pay. She was an employee.
This case is particularly useful in exploring what ‘mutuality of obligation’ really means and will make it more difficult for employers and individuals, where the service is personal and there is a high degree of control, to escape the ‘employment’ net.
If you are an employer or individual at risk, please give me a ring.