The recent case of Autoclenz Ltd v Belcher and others has highlighted an important issue concerning the difference between employees and workers in legal terms.

Mr Belcher and his colleagues were engaged by Autoclenz to clean vehicles for car auctions. Autoclenz supplied all the cleaning equipment and materials, charging valets 5% of their weekly wage. They were paid on a piecework basis, and had to pay their own tax and National Insurance contributions.

The valets worked as sub-contractors. In 2007, their contracts were revised, and a “substitution clause” was added which specified that they did not have to carry out the work personally. Autoclenz was under no obligation to provide work for the valets, and they were under no obligation to accept work on any particular occasion.

In November 2007, Mr Belcher and several of his colleagues claimed that they were employees of Autoclenz, and so were entitled to unpaid wages and holiday pay.

In a preliminary hearing, the employment judge decided that the valets were employees, or, if not, workers, because of the degree of control Autoclenz had over them and the fact that, although their contract did have a substitution clause, in reality the clause was never put into practice. Autoclenz appealed the decision.

Autoclenz succeeded in their appeal. While the previous tribunal had found that the substitution clause was a sham, the Employment Appeal Tribunal (EAT) determined that, in order for the contract to be considered a sham, there had to be intent to deceive on the part of both the employer and the worker. This intent was not present, so the contract was not a sham.

However, the EAT did decide that the valets were “workers” for the purposes of the National Minimum Wage Regulations and the Working Time Regulations, so that part of the appeal was therefore dismissed.

Technorati Tags: Employee Rights, Employment Law, Substitution Clause