Court of Appeal provides clarification on ‘worker’ status
Court of Appeal provides clarification on ‘worker’ status
The case of Nursing and Midwifery Council v Somerville involving a dispute over the minimum work requirements for the employment status of a ‘worker’ has recently been heard at the Court of Appeal (the “CA”).
Nursing and Midwifery Council v Somerville follows a series of high-profile cases regarding employment status, such as the recent case of Uber BV and others v Aslam and others.
On this occasion, the concept of ‘mutuality of obligation’ being a test used to determine ‘worker’ status is challenged.
What is a ‘worker’?
Determining employment status is a complex matter, however employment status can broadly be classified into three categories:
- Workers; and
- Self-employed / independent contracts.
The employment rights of an individual vary according to which category they fall into. As an example, statutory redundancy payments or the right to claim unfair dismissal are exclusively available to employees (provided that that have at least 2 years continuous service).
Conversely, ‘workers’, whilst not privy to the full suite of employment rights that employees are entitled, are afforded rights such as minimum holiday entitlements and national minimum wage.
The status of ‘worker’ is defined under section 230(3) of the Employment Rights Act 1996 (“ERA”) as:
“an individual who has entered into or works under (or where the employment has ceased, worked under):
(a) a contract of employment; or
(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.”
This definition is replicated across legislation, including regulation 2(1) of the Working Time Regulations 1998.
There are a number of factors that the Tribunal and Courts will take into consideration in determining whether the test at section 230(3)(b) of the ERA is met, including:
- That there must be a contract between the worker and the employer (whether this is express or implied);
- That the contract must require personal service;
- That the other party to the contract is not the customer or client of any business undertaking or profession carried on by the individual; and possibly
- That there is a mutuality of obligation (the obligation to offer and accept work).
The inclusion of the ‘mutuality of obligation’ has been widely debated as to whether it forms a test to be met in itself, or whether it should be incorporated into the initial test in determining the existence of a contract.
The Case - Nursing and Midwifery Council v Somerville
The facts of the case centre on a dispute between Mr Somerville (“Somerville”) and the Nursing and Midwifery Council (the “NMC”) over Somerville’s claim that he qualified as a ‘worker’ and was therefore entitled to unpaid holiday under the Working Time Regulations 1998.
Somerville had been appointed by the NMC as a member and chair of its Fitness to Practice Committee for two consecutive terms which lasted four years. The terms of Somerville’s appointments were outlined in services agreements in both 2012 and 2016. Some of the key terms were that:
- Somerville had the status of an independent contractor;
- The NMC was not obliged to offer hearings or work to Somerville;
- Somerville was not obliged to accept hearings or work from the NMC; and
- Somerville could withdraw from a hearing even after he had accepted the allocation, providing that he gave notification of his withdrawal at the earliest opportunity.
Somerville had initially brought his claim for unpaid holiday to the Employment Tribunal (“ET”).
The ET judged that there were two contracts between Somerville and the NMC, the first of which was an ‘overarching agreement’ governing Somerville’s period of appointment. The ET judged that this did not amount to an employment contract and thereby failed the first test of attaining ‘worker’ status.
The ET judged that Somerville also held a series of individual contracts with the NMC that related to each individual hearing that had been allocated to Somerville. The ET held that this did qualify Somerville as a ‘worker’ and that the absence of any mutual obligations to offer and accept a minimum amount of work did not prevent ‘worker’ status.
The NMC appealed to the Employment Appeal Tribunal (“EAT”) which was subsequently dismissed.
The EAT held that an absence of an irreducible minimum of obligation (i.e. the obligation to accept and perform a minimum amount of work) was not a pre-requisite to ‘worker’ status.
The NMC then appealed to the CA who also dismissed the appeal and supported the view of the EAT. The fact that neither party was obliged to offer, or accept, any future work was irrelevant in determining ‘worker’ status.
What does this mean for employers when determining employment status?
This case is important as it provides clarification of the criteria required in order to qualify as a ‘worker’, particularly in cases of ‘one off’ contracts and ad hoc engagements.
Employers should be cautious if relying solely on there being no obligation to provide or accept future work in individual engagements, as this case suggests that this no longer precludes individuals attaining ‘worker’ status.
Employers should ask themselves:
(1) “Is this individual providing services personally to the business?”; and
(2) “Are we neither a client or a customer of a profession or business carried out by the individual?”
If the answer is yes to these questions, the test for ‘worker’ status is likely met and employers required to afford individuals further rights such as paid annual leave, right to a pension contribution under the auto-enrolment scheme, national minimum wage and right to a maximum working week.