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Contract? What Contract?!

Clarification or even admittance of an employer/employee relationship can sometimes be a rather contentious exercise where disputes arise as to the nature of a working arrangement.

Recently in the case of Troutbeck SA v White & Anor the Court of Appeal (“CA”) was required to look at a situation where an employer had little day-to-day control over its employee’s work. The CA was however able to find that such a lack of control was not a fatal obstacle to there being an employment relationship being in existence.

Troutbeck had previously employed a couple to operate and watch over a small farm estate in Surrey which the company had bought as an investment as well as serving as holiday getaway for its Nigerian owners.

The parties entered into an express written agreement describing them as employer and employees respectively; the same document also detailed the couple’s rate of remuneration and also stipulated that they must live on the site. Despite pay being detailed in the document, no tax or national insurance contributions were deducted at any point. Once this agreement was in place the couple were left to their own devices as to how to operate the farm.

Of course some time later Troutbeck decided to sell the estate and so served notice on the couple, who of course claimed unfair dismissal and unpaid wages; Troutbeck denied entirely that there was an employment contract in place.

The initial Employment Tribunal (“ET”) handling the case took the decision that a lack of day-to-day control on the part of Troutbeck meant that there could not be a contract of employment in operation.

However both the Employment Appeals Tribunal (“EAT”) and the Court of Appeal (“CA”) found this approach to be fundamentally wrong in principle. The control exerted by Troutbeck, while not ‘hands-on’, was still not completely absent and the ET of first instance should have considered the wider facts.

The CA was ultimately able on those wider facts to reach a conclusion on the existence of an employment contract, finding in the affirmative. The couple were therefore now capable of progressing their previously lodged claims of unfair dismissal, holiday pay and arrears of pay.

Conclusion

The above case again highlights the need for clarity in such situations where the parties are not on the same page at the inception of a potential employer/employee relationship. The ‘control test’ in relation to defining employment status is a complex exercise, one which often forces many employment practitioners to themselves seek an expert opinion. It is therefore critical to take specialist advice prior to any such arrangement being implemented.

If you need assistance in drafting contracts or mandatory policy documentation please contact me on 0113 350 4030 or samira.cakali@scesolicitors.co.uk for a free consultation. 


Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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