A Self-Employed Carer can be given Employee status

Employee vs Self Employed

One of the common characteristics of a self-employed person is that they have a right to substitute someone else to work for an employer on their behalf.   Indeed this is one of the key characteristics that both Employment Tribunals and HMRC use when making decisions on employed/self-employed status.  A recent case at the Employment Tribunal decided however that it was possible for an employee to have a right of substitution – although as usual it all turned on the specific facts of the case.

Chatfeild-Roberts v Phillips & Universal Aunts Limited

Mrs Phillips the Claimant was a live-in carer for Mr Chatfeild-Roberts’ uncle.  She was introduced by an agency (Universal Aunts) and after an initial six-month engagement she ended up working there for three years. 

At the end of the three year engagement Mrs Phillips brought a number of Tribunal claims against Mr Chatfeild-Roberts which hinged around the key question of whether or not she was an employee or self-employed.

Mrs Phillips was not paid a salary, but was instead paid gross, sorting out her own tax and NI.  She eventually stopped submitting invoices however and was simply paid by a regular standing order.  Also, while Universal Aunts’ carers normally worked for short periods, Mrs Phillips had worked exclusively for the one client for three years.  Taking both these factors into account the Tribunal decided that there was both “sufficient control” and “mutuality of obligation” (the employer must provide work and the employee must accept it) – key indicators of an employer/employee relationship.  Mrs Phillips was therefore an employee.

Mr Chatfeild-Roberts appealed this decision on the grounds that Mrs Phillips had regularly used her right of substitution to source an alternative carer, and often approached Universal Aunts to arrange a substitute, rather than providing a substitute for herself. 

The right to use a substitute is consistent with employee status

The Employment Appeal Tribunal (“EAT”) looked at the question of substitution, but it found that substitution had only happened (a) on Mrs Phillips’ days off each week (b) for a period of jury service and (c) for periods of annual leave (for which she had also been paid).  Following the principles in recent cases, the EAT decided that a right of substitution which is only exercised when a contractor is unable to work can still be consistent with personal performance, and so with employee status.  Mrs Phillips was therefore an employee.

This case highlights the need to be careful when engaging self-employed contractors to ensure that they don’t turn out to be employees.  From an employment law viewpoint, you may leave yourself open to holiday pay or unfair dismissal claims while HMRC might seek to recover unpaid NI for several years. 

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