When determining if someone is an employee, tribunals apply certain tests such as whether there is a requirement for personal service, the degree of control by the employer and other factors consistent with a contract for service. In Augustine v Econnect Cars Ltd, the Employment Appeal Tribunal (EAT) held that Mr Augustine was not an employee but a worker because he retained some control by deciding when he could work.
Basic facts
Mr Augustine started work as a driver for a private hire company under an agreement on standard terms. These included a provision whereby he would be provided with a rent-free car for the first six weeks, after which he could continue to rent the car for free if he collected it at the start of a shift and returned it at the end. He was treated as self-employed for tax purposes and had signed a declaration to that effect.
He was allocated work on an app, had no control over which customers he picked up and he had to perform the work personally. In other words, he was not allowed to install a substitute driver in his place, for example on the days he could not work. He was able to determine his own hours and typically worked three or four hours, five days per week.
However, just before the end of his initial six-week period, the company introduced a new scheme, the free rental period was reduced to two weeks and a rental charge applied to drivers who did not work peak hours.
As Mr Augustine did not work peak hours it was no longer viable to continue driving for the company and it was suggested he return the car which he did. He then brought a number of claims including unfair dismissal, holiday pay as well as asserting rights as a part-time worker. This meant he had to prove either that he was an employee or a worker under section 230 of the Employment Rights Act (ERA). For its part, the company argued that he was self-employed.
Relevant law
Section 230(3) ERA states that a worker is an individual who either (a) works under a contract of employment; or (b) “any other contract … whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not … that of a client or customer of any profession or business undertaking carried on by the individual.”
Reg 2(2) of the Part-Time Workers Regulations (PTWR) states that: “A worker is part-time… if he [sic] is paid wholly or in part by reference to the time he [sic] works and having regard to the custom and practice of the employer in relation to workers employed by the worker’s employer under the same type of contract, is not identifiable as a full-time worker.”
Tribunal decision
The tribunal dismissed the argument that Mr Augustine was self-employed, holding that his tax status and the declaration he had signed were not determinative of the issue. It also held that he was not an employee as he could decide, rather than the company, when he worked and for how long. His claim for unfair dismissal could not succeed.
However, it held that he was a worker within the meaning of section 230 because his employer had to offer him work, which he had to accept (known as mutuality of obligation) and he had to carry out the work himself. He was not though, a part-time worker because he was not paid at least partly by reference to time worked but by a percentage of fares.
EAT decision
The EAT agreed with the tribunal that Mr Augustine was a worker and not an employee. First it was right to accord minimal importance to the fact that he was responsible for his own tax and national insurance and had signed a declaration that he was self-employed. Although these labels were the ones that the parties had used to describe their relationship, they were not necessarily conclusive of Mr Augustine’s employment status.
The tribunal was therefore right to go on to look at how the parties operated in practice, with particular attention to the issue of control. It had noted that although Mr Augustine could decide when and how often to work, the company exercised a high degree of control once he decided to do so. For instance, he had to accept the jobs allocated to him, wear a suit and tie, promote the company’s image and was subject to detailed provisions about how to perform his duties. These factors were therefore indicative of his status as a worker.
The EAT overturned the tribunal’s finding that he was not a part-time worker. In particular, it held that the evidence showed he was paid by reference to the amount of time he was working and compared to other drivers he was not working part-time. It upheld his claims to holiday pay and the National Minimum Wage and referred his claims under the PTWR back to the tribunal to determine.