Employment status

In the case of Mr Allister Webb v Anglian Windows Ltd T/A Anglian Home Improvements an employment tribunal considered whether the claimant could be an employee having contracted with the respondent through a partnership. He could only pursue a claim for unfair dismissal as an employee.

The claimant, Mr Webb, was engaged by the respondent as an Area Sales Leader. Before being engaged by the respondent the claimant had set up a "partnership" with his wife, trading as Webb Consultants. There was no dispute that "Webb Consultants" was a party to the contract. The claimant's wife did not undertake any work for the respondent.

The respondent argued that the claim should be struck out because previous employment appeal tribunal ("EAT") decisions, established that a partnership could not enter a contract of employment. Although the employment tribunal accepted this, they found that there was no EAT case preventing an individual member of a partnership from having employment status. As such the employment tribunal refused to strike out the claim.

The respondent appealed to the EAT. The EAT, upheld the appeal, deciding that as the contract was between Webb Consultants and the respondent it was bound by previous EAT decisions that a partnership could not be an employee. The employment tribunal could not look beyond the contract to the claimant's status as an individual. The EAT might have reached a different decision had there been any evidence that the contract was a sham. The rulings of the Supreme Court in Autoclenz v Belcher and Uber BV and ors v Aslam and ors, recognise that the inequality of bargaining power in the employment context may require a court or tribunal to look "beyond the terms of any written agreement to the parties' true agreement." However, the Claimant did not argue that the contract was a sham but had accepted that the partnership was a party to the contract. As such he could only succeed, in the EAT's view, by proving that the partnership's inclusion in the contract did not reflect the true agreement between the parties.

As the partnership already existed when the claimant entered into the agreement with the respondent, it might have been difficult to argue that inequality in bargaining power led to a sham arrangement. Nonetheless, if the claimant met all the criteria of an employee but the respondent had failed to offer him terms of employment, then a tribunal could have reached the decision that the arrangement was a sham had the employee argued this. Companies engaging individuals to undertake services should ensure that the agreement reflects the true employment status. Our team of employment lawyers can advise on whether an individual should be designated as an employee.

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If you need guidance on the above matter, we are here to help.  Please do not hesitate to contact Martin Cornforth on 01636 558343, or email: martin.cornforth@chattertons.com.