The recent Supreme Court judgment in Autoclenz Ltd v Belcher and Others (UKSC 41) backed a group of self-employed car valets who worked for Autoclenz and argued that clauses in their contracts did not reflect their actual working arrangements. In spite of clauses on mutuality and substitution, the court ruled that they were obliged to provide the services personally. The legal dispute started in 2007.

The Supreme Court decision establishes a precedent that the conduct of the contractual parties could override the written terms.

In its ruling the Court said decided that the contracts did not reflect the true agreement between the parties and that in reality “four essential contractual terms were agreed: (1) that the valeters would perform the services defined in the contract for Autoclenz within a reasonable time and in a good and workmanlike manner; (2) that the valeters would be paid for that work; (3) that the valeters were obliged to carry out the work offered to them and Autoclenz undertook to offer work; and (4) that the valeters must personally do the work and could not provide a substitute to do so.”

This case highlights the importance for all parties to ensure that they have seen the contract of services and agree that it reflects the true working practices of everyone involved. The court stated that only one party needed to claim that a clause in the contract did not reflect their intentions in order for the clause to be considered a sham.

If you have any self employed people contact us today to ensure that your current arrangements reflect this new opinion, on 0800 917 9176

At last the results of the consultation exercise into false self employment in the construction industry have been published and we have summarised the more salient details below:

• Nothing is going to happen yet and nothing will happen until the industry picks itself up, certainly not before the Olympics in 2012

• The simplistic approach of the government having three tests has been widely criticised and they have conceded that further consultation will be required – no surprises there then

• There is also a lot of criticism that any simplistic approach away from case law is only being geared at the Construction Industry, what about other industry sectors?

• The government have indicated that they will look into organisations purporting to get round the rules such as umbrella companies, managed service companies and labour style agencies – this type of compliance is no bad thing as they are so blatantly flouting the rules and taunting HMRC (never a good idea for them or more importantly their clients)

• Interestingly, the Trade Unions aren’t happy as they could potentially see a lot of new members but the government proposals actually mean that although subcontractors would suffer PAYE/NIC they would not be regarded as “employees” but “deemed employees” which means that they would have no employment rights or benefits. This has been widely criticised because it would actually create “false employment” and the employment law side of this has not really been addressed

• There is a General Election due, probably around 6^th May, which could mean a different party in power. The Conservatives have not indicated that they will pursue what is effectively a witch hunt in the Construction Industry

So if you have self employed subcontractors and would benefit from an employment status review call us on 0800 917 9176