A requirement to offer or accept a minimum amount of work is not a prerequisite of worker status, says the Court of Appeal

Employment rights and obligations vary depending on whether an individual is an “employee”, a “worker” or an “independent contractor”. 

In this case, the individual needed to establish that he was an employee or a worker as part of his claim that he was entitled to paid holidays. The dispute centred on the fact that there was no commitment to offer or accept a minimum amount of work.

Background

The claimant was appointed as a panel member and chair of the Fitness to Practise Committee of the Nursing and Midwifery Council’s regulatory body. His appointment ran for two terms of four years each.  The number of hearings he undertook varied each year from 17 to 129, and he fitted these hearings around his other (separate) professional activities.
 
The claimant was appointed by two different letters of appointment. These letters set out the terms of the appointment, which included the following: 

• The claimant would have the status of an independent contractor and not an employee.
• The obligations of each party, for example to comply with a code of conduct and the provision of training and information.
• The NMC was not required to offer hearings or work to the claimant and the claimant was not required to accept any work nor was he required to offer his services at all.
• The claimant could withdraw even after he had been allocated and accepted a hearing without giving a reason and without a penalty.
• The NMC would set the daily fee paid to the claimant. 

The claimant brought a claim for unpaid holiday under the Working Time Regulations 1998. The Employment Tribunal (ET) first had to establish whether he was an “employee” or a “worker” to be able to claim the right to paid holiday.
 
The ET found that there were two contracts to consider: the overarching agreement as well as a series of individual contracts which existed each time the claimant accepted an assignment. It concluded that neither were contracts of employment because the claimant could withdraw, without sanction, after accepting the offer of an assignment. There was, therefore, insufficient “mutuality of obligation” for the claimant to be an employee. The next question, however, was whether the claimant was a “worker”.

The ET set out the three conditions that must be met for someone to qualify as a worker:

1. There must be a contract between the parties; 
2. The contract must be one in which the individual undertakes to perform work personally; and 
3. The other party must not be a client or customer of a profession or business carried on by the individual. 

As both (1) and (2) were met here, the ET focussed on the third element. It found that the NMC was not a client or customer of the claimant due to the degree of integration, subordination and control that the relationship involved, as well as the absence of any negotiation over pay. 

In the ET’s view, the absence of mutual obligations to offer and accept a minimum amount of work was not a barrier to worker status.  

The NMC appealed to the Employment Appeal Tribunal (EAT) primarily on the point about mutuality of obligation. The EAT dismissed the appeal, agreeing that an irreducible minimum of obligation to accept and perform a minimum amount of work for the other party who was obliged to offer or pay for that work was not a prerequisite for establishing worker status. 

The NMC then appealed to the Court of Appeal (CA), again on the point about mutuality of obligation. 

Court of Appeal’s decision 

The CA confirmed the three conditions to qualify as a worker (as listed above). 

The CA concluded that the overarching contract between the claimant and the NMC did include mutually enforceable obligations, but not of the type necessary to make this a worker contract in and of itself. It stopped short of being a contract to do or perform services personally. It was merely a contract that contemplated the obligations that would be in place if the claimant separately agreed to do or perform services personally. 

However, each time NMC offered and the claimant accepted an assignment, there was an individual worker agreement in place. The claimant undertook to perform services personally, and the NMC was not a customer or client of the claimant. The fact that there was no obligation to offer or accept future work was irrelevant. The ability for the claimant to withdraw at any point before the hearing, even after he accepted, also did not change the conclusion that he was a worker. 

The NMC tried to rely on the Supreme Court’s judgment in Uber to support its position that there could not be worker status without an irreducible minimum of mutuality of obligation. The CA disagreed, concluding that the discussions about mutuality of obligation in Uber were concerned with when the contract arose and when the worker was working, and not whether there was a worker contract in the first place. 

Implications 

This case may be the final “nail in the coffin” for arguments that “mutuality of obligation” is a key part of the worker status test in circumstances where a worker is performing ad hoc assignments and individual engagements. 

Putative employers cannot rely on there being no obligation to provide or accept work for individual contractors not to be workers for statutory purposes, and therefore entitled to minimum wages, paid holidays and pension contributions among other rights. Even individuals who can cancel or withdraw, without punishment or sanction, after they have agreed to do some work can still be classified as a worker. 

Whether someone is a self-employed independent contractor and not a worker will therefore come down to the following questions:

(1) Whether the individual is personally required to perform the work.  If they have the genuine right to send a substitute (not just in the contract but in practice) they will not be a worker.

(2) Whether (if they are required to do the work personally) the organisation they are working for is a client or customer of their business or professional undertaking. The more the individual looks like they are genuinely in business on their own account the more likely they are to be an independent contractor.  The courts will consider issues such as:

• the degree to which the individual is integrated into the organisation,
• the amount of control or subordination exerted on the individual in relation to the work they carry out, 
• whether there is room for negotiation on pay or whether the individual sets their own rates, and
• the level of financial risk that the individual takes on.

Nursing and Midwifery Council v Somerville  - judgment available here