The Employment Appeal Tribunal (EAT) has again had to consider the use and meaning of substitution clauses in contractor agreements.

In the course of the case of Premier Groundworks v Josza, it was determined that a clause in Mr Josza’s contract which allowed him to delegate the provision of services to “other persons” meant that he should be considered as an independent contractor and not as a worker.

This remained the case despite the fact that he had never actually sent a substitute in his place to carry out any services.

The only conditions imposed on Mr Josza’s right to send a substitute were that he must notify his client in advance and that the representative must be at least as qualified and capable as Mr Josza himself. This was important, as other conditions imposed - for example, if the contract had specified that Mr Josza had to be “unable” to perform the services himself in order to send a substitute - then he may not have been considered an independent contractor for the purposes of employment law.

This contrasts with the recent case of Redrow Homes (Yorkshire) Limited v Buckborough and Sewell, which a similar clause was used in the agreement. However in this case, the EAT found that both parties had no intention of actually using the substitution clause, which meant that the contract was a sham and the individual was, in effect, a worker.

While there is no specific guidance on when a contractor with a substitution clause can be treated as a worker for the purposes of Working Time Regulations and other worker’s rights, recent case law indicates that:

• A substitution clause made in good faith will mean that an individual will not be considered a worker.
• Where such a clause is included for form only and there is no intention for an actual substitution to take place, the clause will be considered a sham and the contractor will be deemed a worker.
• Where the contract permits substitution only in special circumstances such as illness or absence, the individual will still be considered a worker.

Anyone still in doubt of the status in law of an individual regarding contractors and substitution clauses should obtain professional advice from employment law solicitors.

Technorati Tags: Employment Contracts, Substitution Clauses, Worker's Rights