Gorman v Terence Paul - Employment status

The employment tribunal (ET) has ruled that a hairdresser was an employee, not self-employed, due to the level of control asserted on her by an organisation.

‘Employment status’ refers to the arrangement under which an individual is engaged to work for an organisation. There are three main categories of employment status; employees, workers and the self-employed. Distinguishing between these three labels is important; whilst employees and workers are entitled to a number of employment rights, those considered self-employed are not.

Employees are those who are hired directly by an organisation. Workers are also hired by an organisation but have more freedom in the work they do and when they do it, such as casual, agency or freelance workers. The genuinely self-employed are those who conduct work for an organisation but have full control over how they conduct it, such as independent contractors.

A number of cases have previously addressed the issue of individuals being falsely labelled in order to deny them their rights. The ongoing case of Uber v Aslam, which is currently being heard by the Supreme Court, concerned drivers engaged by Uber who had been labelled self-employed contractors but actually argued they should be considered ‘workers’. This was because of the level of control they felt Uber had over their working day. Thus far, all courts, including the Court of Appeal, have agreed with this.

FACTS

This case concerned a hairdresser who was engaged by an organisation to conduct work on their premises. In her contract, it outlined that she was a self-employed contractor. However, the organisation exercised a great deal of control over her working day. After working for the organisation for six years, the claimant argued that she had been denied a number of rights as she had been falsely labelled self-employed. She also wanted to pursue numerous claims against the organisation, including wrongful dismissal and sex discrimination.

ET

In order to hear her claims, the tribunal first needed to consider if the claimant could be considered an employee, and not self-employed. The claimant’s main arguments rested on the degree of control the organisation had over her; she had to work fixed hours from Monday to Saturday, had no control over pricing, had to conform to their standards of dress, use their products exclusively and also needed their permission to take time off. Despite this, she was not paid any holiday pay and had to provide 67 per cent of her takings to the organisation.

The organisation countered by stating that all hairdressers engaged by them did have control over the hours they worked. In their words, hairdressers could decide what treatments they provided, as well as control when they took holidays.

Ultimately, the tribunal agreed with the claimant, finding that the degree of control exercised over her by the organisation meant that she was, in truth, an employee. This was despite her original contract labelling her as self-employed. Going forward, the claimant is free to pursue her claims as an employee, however it is currently unknown if the organisation will pursue this matter to the Employment Appeal Tribunal.

Note for employers

Once again, we clearly see a situation where an organisation has falsely labelled an individual working for them by contract but the actual truth of the relationship has caused a tribunal to disagree with this. It does not matter what an original contract states; in situations where employment status is in dispute, tribunals will always look to address the truth of the relationship. The level of control was crucial in this case and can work against the argument that an individual is self-employed. Whilst we have seen cases where such discrepancies are deliberate, sometimes it can be the result of honest mistakes.

To this end, organisations should be clear what relationship they are going to have with an individual before engaging them. Failure in this regard could lead to costly claims that they have been denied their employment rights.

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