Dark law – Employment status Part 1

Employment status can appear to be a very confusing issue. It proliferates authorities containing such exotic terms as ’mutuality of obligations’, the ‘control test’ and the ‘economic reality’ test. Witness statements often contain a vast shopping list of details about the nature of the employment relationship from the layout of the office  to the ownership of the company fax machine. There have been decisive shifts in the short history of Employment Tribunals so that, in the 1980s, they were quick to find shams while, more recently, they have been reluctant to depart from the literal wording of a written contract.

The problem is one that exists throughout contract law in general that the nature of an agreement is not always the same as what appears in a written contract. However, in complex commercial disputes, the parties have usually received advice throughout to avoid the sort of ambiguity which can arise in such situations. In employment disputes, especially where small employers are concerned, this is often not the case, making the task of the tribunal a particularly difficult one. A further complication is that people exploit the system. Employers give employees contracts that do not reflect the true relationship between the parties while employees bring claims suggesting that this has happened when it has not.

In this context, the historical trends are easy to explain. In the beginning, employers suffered the brunt of their own attempts to obscure real employment relationships but, as employees began to succeed in these cases, the temptation for them to bring speculative claims became overwhelming. Regrettably, this explains why dark law is unavoidable. Courts and tribunals cannot simply say that one particular point is determinative of employment status because, if they did so, such dicta could be exploited by unscrupulous parties. Tribunals have to stay one step ahead of the people who appear before them and this means that they can not always say what they are looking for. Blame dodgy lawyers for this one.

Having said all of this, there are some general predictions which can be made. We are certainly in a form rather than a substance phase which means that there is a marked reluctance to look beyond the agreement as recorded in contractual documents. There is often little to be gained from showing, for example, that a uniform is provided to a worker. On its own, this is unlikely to be a knock-out point for establishing an employment relationship, especially where other factors would support the opposite conclusion. An overwhelming amount of evidence, all pointing in the same direction, is usually required. However, there are some exceptions and, in particular, certain industries which use sham contracts a lot, especially to avoid holiday pay, find it much harder to rely upon the literal wording of a contract.

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