In a ruling that may have implications for dental associates, the Supreme Court has upheld a decision by an Employment Tribunal that, where contractual terms did not reflect what was actually agreed, one party to the contract was a worker and not self-employed.
Autoclenz, a car valeting firm, inserted new terms into the contract with its valeters entitling them to engage individuals to carry out the valeting on their behalf (in effect, a locum) and also provided that: “You will not be obliged to provide your services on any particular occasion nor does Autoclenz undertake any obligation to engage your services on any particular occasion.”
The contractors brought a case that, despite these clauses, they were “workers” within the meaning of the National Minimum Wage Regulations 1999 (“NMWR”) and of the Working Time Regulations 1998 (“WTR”) and therefore entitled to holiday pay and the minimum wage.
The Supreme Court found (1) the valeters would perform the services defined in the contract for Autoclenz within a reasonable time and in a good and workmanlike manner; (2) that the valeters would be paid for that work; (3) that the valeters were obliged to carry out the work offered to them and Autoclenz undertook to offer work; and (4) that the valeters must personally do the work and could not provide a substitute to do so.
Normally a commercial contract would be definitive in the area of rights and responsibilities, however the Court said “the circumstances in which contracts relating to work or services are concluded are often very different from those in which commercial contracts between parties of equal bargaining power are agreed. This must be taken into account in deciding whether terms of any written agreement in truth represent what was agreed“.
The implication for self-employed associates is that their contracts might fall within the scope of this ruling, in which case the Court would look closely at whether the terms reflected the true intention of the parties. Where it was clear that (despite what was contained in any contract) the associate was not free to substitute a locum, or was not free to accept or decline patients or choose his or her working hours, or work at other premises, or where the principal was expected to provide patients, it may be found that the Associate is, in fact, an employee.
Where an Associate is found to be an employee, the Employer may under certain circumstances be liable for PAYE and NI based on the gross amount paid, going back up to six years, plus up to 100 per cent penalties and interest.
A DPA contract is the best defence against an employment claim and is available only to DPA members.
For further information, please call 01635 521212 or firstname.lastname@example.org
Last 5 posts by Andrew Egan
- IR35 CONSULTATION - August 11th, 2015