EAT confirms that a right of substitution can be compatible with employment status

In the latest case before the Employment Appeal Tribunal, the individual claimant was a live-in carer, Ms Phillips.  She asserted that she was employed by Mr Chatfield-Roberts, the nephew of Colonel Henry Brooke, whom the Claimant cared for and had done so for 3 years.  She was introduced to the Colonel’s family by an agency.  There was no contract or written arrangement in place between Ms Phillips and Mr Chatfield-Roberts.  Nevertheless, at the end of the engagement, Ms Phillips asserted that she had been employed by Mr Chatfield-Roberts continuously throughout the period and therefore was entitled to various statutory protections as an employee.

To recap the legal position, an employment relationship will exist where the following 3 conditions are satisfied:

  1. Payment of a wage or other consideration for personal performance of work
  2. Performance of the work is under the control of the relevant third party ‘employer’
  3. The other provisions of the contract are consistent with it being an employment contract

Ms Phillips was paid monthly, not by the agency but by Mr Chatfield-Roberts.  For the first year she raised invoices for the agreed amount, but when she stopped sending invoices she continued to be paid the same set amount by direct bank transfer.  However, she was paid as if she was self-employed i.e. without deductions for PAYE.  Ms Phillips was expected to perform various tasks which included administering medication, cooking and shopping as well as booking and organising medical appointments and accompanying the Colonel to those appointments.  She was instructed to organised birthday parties and to liaise with the Colonel’s niece and nephew at routine intervals with updates and to carry out their requests.  There was a right for the agency to provide a substitute carer and this right had been exercised to accommodate Ms Phillips’ annual leave and a period of jury service.  The family had no say or right to determine who the substitute carer was; it was entirely the agency’s choice.   

In its appeal, the Respondent argued that the agency’s unlimited right of substitution, which they had been shown to exercise, meant that there could not be a contract of employment in existence between Ms Phillips and the family as there was no requirement for the services to be performed personally by Ms Phillips. The Employment Appeal Tribunal, agreeing with the original Tribunal, disagreed.  Judged objectively, the EAT was satisfied that Ms Phillips had in reality worked six days a week, 12 hours a day.  They drew on a passage from the Judgment in Pimlico Plumbers “a right of substitution only when the contractor is unable to carry out the work will, subject to any exceptional facts, be consistent with personal performance”.  It was material that a substitute had only been arranged for periods of known absence.

It is no surprise that the ruling in this case was that Ms Phillips had been an employee for the entirety of her time working for the family.  Ms Phillips was a live-in carer but the same scenario could arise in relation to nannies or au pairs introduced to families through an agency.  The best advice in these situations is always to enter into direct contractual arrangements with these individuals which accurately reflect their employment status even if they individual themselves is pushing to be paid as self-employed from the outset.

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