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30 June 2021

Establishing 'worker status'

A ‘worker’ is defined by section 230(3) Employment Rights Act 1996. The definition includes employees and anyone else who works under ‘any other contract…whereby the individual undertakes to do…personally any work…for another party’ provided the other party isn’t a client or customer of the individual (which would make them genuinely self-employed).

Mr Somerville was contracted to sit on panels in fitness to practice hearings, which he did alongside his other legal work as a barrister. His contract with the NMC said he was a self-employed contractor and gave no requirement for him to be offered any work. Nor was there any requirement on him to accept work when it was offered. He brought an employment tribunal claim for holiday pay, saying he was either an employee or a worker. The employment tribunal said there wasn’t sufficient mutuality of obligation to be an employee – he wasn’t required to do a certain number of days and was free to withdraw from dates he accepted. However, he had to do the work personally. The work was central to the NMC’s main function of maintaining high standards for nurses and midwives. He had to do mandatory training. His pay was fixed and non-negotiable. As such, the tribunal said there was a degree of subordination to which someone truly self employed would be unlikely to agree. He was a worker. The NMC appealed. They said that an ‘irreducible minimum of obligation’ – to offer and accept work – was an essential part of worker status.

The EAT did not agree. The tribunal had established that there was an individual contract every time Mr Somerville sat on a panel. There was also an overarching contract for providing his services. Once that overarching contract was established, there was no additional duty to demonstrate any more mutuality of obligation. The important question for worker status wasn’t the requirement to offer and accept work but the degree of control exercised once that work was accepted. The EAT said Mr Somerville was under a high degree of control in his work as panel chair. Once he said he was available, he was required to accept the work offered, perform it personally (he could not subcontract it out to another person) and work to the particular standards and requirements of the NMC. The EAT said the fact he paid his own tax was not relevant.

This is yet another case that demonstrates that the labels which businesses put on contracts can sometimes mask the true nature of the legal relationship. Employment tribunals will dig behind those labels and look to the reality of the position. If an individual is integrated into the business in the way Mr Somerville was, worker status is likely. This also shows that worker status cases are not limited to the gig economy. Self-employed status should be used with extreme caution by employers and only when it truly represents the relationship between the parties. Employers should beware that individuals on zero hours contracts, where the facts imply an overarching contract, may well be workers.

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