Employment status – Supreme Court ruling

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Employment status has been in the headlines a lot over the years and particularly this year as there was a Supreme Court ruling on it in the case of Auto-Clenz Limited v Belcher and Others (2011) http://www.bailii.org/uk/cases/UKSC/2011/41.html.

In the case of AutoClenz, the Court of Appeal held in 2009 that the individuals in that case were employees despite the fact that they were accepted as self employed by the Revenue and had the right to substitute. The test formulated was essentially “what is the real state of affairs”. The paperwork was not so determinative as had been thought in previous cases.

This year the case was appealed to the Supreme Court who affirmed the Court of Appeal decision. However, the Supreme Court said that if a substitution clause exists and is “genuine” then its existence may negate an employment relationship even if it is never invoked. Notwithstanding this, to decide if a clause is genuine one still looks behind the wording of the contract and at the real state of affairs i.e. what is actually going on in practice.