Case of the week
Self-employed UPVC home improvement installer was in fact held to be an employee which allowed him to claim unpaid holiday pay to the tune of £18k 😳
Applying the wrong label to the employment relationship can be very costly as this Bournemouth company discovered.
Today’s case is all about employment status. It’s a very common issue which is addressed by tribunals, often before any evidence relating to the claim is heard. This is because many claims can only be made by employees or workers (there’s a distinction between the two, but that’s for another time).
Being classed as a worker/employee imposes duties on an employer and provides the worker/employee with a number of statutory protections. Self-employment is a simple to label to apply and many people are recruited on such terms.
Many years ago I fitted UPVC windows for a local firm along with a colleague. We worked as a team and our work was provided by the window company. I recall we were paid 10% of the value of the job (5% for new work and conservatories). It was a great arrangement as far as I was concerned. The Company supplied the windows, fixings, silicone etc - everything we needed to do the job. We supplied our own van and we sorted out our own tax affairs.
Background
I came across a case whereby a couple of window fitters worked under very similar circumstances as I did.
In Mr Joe Fowler v Bluesnow Limited T/A Richard Thomas Conservatories, Extensions & Windows, Mr Fowler worked alongside his colleague, Mr Essex, (since 2008) fitting UPVC products. As consequence of the lockdown in March 2020, they were told their services were no longer required.
Their employment was terminated with immediate effect. No warning was given, and no procedure was adopted.
As with many self employed workers, they applied for the self-employed government support grant. Mr Essex claimed his application was refused because HMRC doubted he was genuinely self-employed. He spoke to HMRC and ACAS about his status and completed an online checklist. HMRC refused to process his application.
They sought independent legal advice as to their employment status and informed the Company that they fitted the ‘worker category’. They both sought claims of unfair dismissal and, more significantly in this case - accrued, but unpaid holiday pay.
Unfortunately for Mr Essex, his claim was presented outside the strict three month tribunal time limit and he was refused permission to pursue his claims.1
However, Mr Fowler continued and at the hearing it was established that he was in fact an employee and worker within the meaning of the Employment Rights Act 1996 and Working Time Regulations 1998 respectively. As such he could claim unfair dismissal and claim for outstanding holiday pay.
The tribunal did not uphold his claims of unfair and wrongful dismissal, but they held he was owed holiday pay.
This was significant as it meant he could be reimbursed for the holiday he was owed.
Before the tribunal had set a date to determine how much he was owed, both parties agreed that he should be awarded a sum of £18,904.
He was also awarded two weeks’ pay (capped at £1,076) because he was not provided with a contract of employment.
Comment
This is just another example of an employer applying a self-employment label to a working relationship which, in reality is one of ‘master and servant’. It clearly benefits the employer if it does not need to pay the benefits which come with employed or worker status - such as holiday, sick pay and the minimum wage.
There are many workers operating under self-employed contracts, whether they be window fitters, labourers, taxi drivers or cleaners who are clearly ‘mis-labelled’. Simply providing them with an agreement which sets out they are self-employed is not enough. Tribunals will always look behind such agreements to ascertain the true nature of the relationship, so employers - be warned! And employees - check whether you are genuinely self employed.
HMRC have an online tool to determine employment status for tax purposes. Although it will not be binding on an employment tribunal, because the tribunal may take other factors into consideration the result will give employers and workers alike a very good indication of the employment status of an individual.