Control contract

Tribunals have to apply a range of different tests when trying to decide if someone is an employee or not. In Troutbeck SA v White and Todd, the Court of Appeal held that the issue of control was not necessarily the determinative factor, as it was just one among many to consider.

Basic facts

A Nigerian family bought a small farm in Surrey and engaged a company, Troutbeck, to oversee their investment. The company then entered into an agreement in August 2009 with the claimants, Gary White and Katy Todd, to caretake and manage the property on site.

This stated that the claimants were under a duty to take care of the farm and grounds and were responsible for day-to-day management and maintenance. It also stated that they were entitled to a “personal allowance” of £600 per month as well as 30 days’ holiday, but that immediately "on ceasing to be employed by the owner" they had to vacate the farm. The agreement did not stipulate their hours of work, nor did it say anything about who was in day-to-day control of what they did or how they did it. Both claimants did other work.

On 11 March 2010, the company served a notice terminating what it described as "your employment contract." When Mr White and Ms Todd lodged a tribunal claim for unfair dismissal and unpaid wages, Troutbeck argued that the tribunal had no jurisdiction to hear the claims on the basis that the 2009 agreement was a commercial contract, not a contract of employment.

Tribunal and EAT decisions

Focusing on the issue of control, the tribunal found that Mr White and Ms Todd were not employees because the 2009 agreement had delegated responsibility to them for day-to-day management and maintenance of the farm and they could control how those duties were discharged. “That” said the tribunal “is not employment."

The Employment Appeal Tribunal disagreed, saying that as the employees could be left in charge and trusted to exercise their own judgement, “control” was not the killer question. In this case, it was satisfied that Troutbeck retained a sufficient degree of control to establish an employment relationship, even though substantial day-to-day responsibility had been given to the claimants.

Court of Appeal decision

The Court of Appeal agreed with the tribunal that the starting point was the agreement between the parties. However, it then went on to criticise the tribunal for deciding that the lack of day-to-day control over the claimants was the “determinative factor”, rather than the “cumulative effect of the provisions” in the agreement.

As Mr White and Ms Todd were clearly not operating as independent contractors supplying caretaking/management and security services generally as a business or businesses, the tribunal should have taken into account other indicators of an employment relationship, such as:

• the fact that they worked for pay at a workplace designated by Troutbeck
• the fact that they received paid annual holiday
• the fact that both parties had signed a document referring to "this employment agreement", along with other references to being employed
• the fact that any expenditure they wanted to make had to be reported to the company
• the fact that the company exercised a sufficient degree of control to preclude their independent status as contractors.

Although both claimants did other work elsewhere, that did not preclude an employment relationship with Troutbeck, nor did the fact that Troutbeck did not make PAYE and National Insurance payments for them. It therefore held that the claimants were employees.