Change to labour-only subcontract did not preclude worker' status

03 October 2014

An interesting Tribunal decision reviewing some of the criteria to be adopted in determining employment status.

Our thanks to Emplaw for their report of the Employment Appeal Tribunal (EAT) decision in the case of Plastering Contractors Stanmore Ltd v Holden.

A worker, for the purposes of claiming holiday pay, is defined as someone working under a contract of employment or any other contract where he undertakes to do or perform personally any work for another party. In PCS Ltd v Holden, Mr Holden brought a claim for unlawful deduction from wages under s.23 ERA 1996 in relation to several years of work as a labour-only subcontractor, prior to which he had been employed by PCS as a general labourer. As a labour only subcontractor MrHolden was placed by PCS on its database of labour-only subcontractors. If the services of a skilled worker or labourer were required at a particular site, either the ContractsManager or a supervisor would contact him to provide him with work. He was paid either by price or by time but did not submit invoices – the supervisor would note the time worked and PCS arranged payment. PCS set the rates of pay and provided him with most of his equipment.

An Employment Tribunal (ET) concluded that Mr Holden was a worker having regard to section 230(3) Employment Rights Act 1996 and regulation 2(1) Working Time Regulations 1998. PCS appealed, claiming that there was no mutuality of obligation rendering him to be a worker.

Applying the guidelines set out in Byrne Brothers (Formwork Ltd) v Baird and others [2002] IRLR 96 the EAT considered that the important thing was to establish whether there was a contract and once a contract is established to exist, there is no doubt mutual obligation. The focus was on the nature of those obligations rather than the existence of mutuality. Here, the EAT held that when MrHolden was working for PCS, he did so for each period or assignment pursuant to a contract to perform work personally. Since he was working for PCS for the vast majority of the time in question, he was under contract and the necessary mutuality existed in all those periods.

Further, with regard to the right of substitution a limited power of substitution was not inconsistent with the existence of an obligation to work personally.

Mr Holden brought an unlawful deduction from wages claim under ERA 1996 (rather than a Working Time Regulations claim) so that he could claim for series of deductions stretching back over several years. If he had brought a claim under the WTR 1998 he would have had to bring a claim within three months of the date on which the right to claim holiday pay should have been exercised.