Well not literally, of course, but it was the topic for discussion! In a recent case, the Employment Appeal Tribunal (“EAT”) has reversed a decision made by the Employment Tribunal that a dancer working at Stringfellows was not an employee.
Only an employee has the ability to bring a claim for unfair dismissal (based on the right not to be unfairly dismissed under section 94 of the Employment Rights Act 1996). This has resulted in many Employment Tribunal cases dealing with the initial question of whether an individual has the status of ‘employee’. There are many factors that Tribunals will look at to determine employment status. The most important factors are listed below:
- The contractual documents in place. However, a Tribunal will look beyond the documents in place to the actual operation of the relationship.
- Whether there was a mutual obligation between the parties to provide and do work.
- Whether there is an obligation for the individual to provide work personally.
- The level of control exercised over the individual’s work by the ‘employer’ party.
- Other factual aspects. For example, whether the individual was paid sick and/or holiday pay, whether they received other benefits, whether they were subject to disciplinary and grievance procedures and the level of responsibility or financial risk they had within the business.
In the case, the dancer was looking to progress a claim of unfair dismissal, but the initial Tribunal had ruled that she was not an employee. This was based on Stringfellows not being obliged to pay the dancer anything (the dancer would earn money from receiving ‘heavenly vouchers’ from customers, subject to Stringfellows making some deductions). In addition, the dancer was not required to work a set number of days per week or obtain permission to take holiday (she was only required to notify Stringfellows so rotas could be arranged), and she provided her own equipment and took on some financial risk (i.e. she could incur a loss some nights if she did not earn enough money to cover the deductions made).
The EAT reversed the Tribunal’s decision and ruled that the dancer was an employee. The EAT said there was sufficient mutuality of obligation in this case. The dancer had to turn up pursuant to her contractual commitment to the rota. The duty corresponding to the dancer’s right to attend personally and supply services was that she was given the opportunity by Stringfellows to earn money on nights that she attended. On each night she attended, the dancer was obliged to work as directed by the management and there were certain rules around this. Failure to follow the rules could result in fines.
The fines and also the deductions made by Stringfellows implied a contractual relationship that was consistent with a contract of employment. The EAT also said that there plainly was an obligation to pay the dancer. The fact that her pay came indirectly through vouchers from the customers was not considered by the EAT as material. The dancer also took the risk that there may not be enough work to earn money on a night, but she was willing to accept that on the basis that she is available for the work and obliged to undertake dances under the rules.
The EAT sent the case back to the Employment Tribunal to decide on the unfair dismissal case. Stringfellows has also submitted a defence on the basis of illegality (on the basis that the dancer had not declared that she was an employee for tax and NI purposes) and this will also be considered as part of the case by the Employment Tribunal, so the claim by the dancer may or may not be successful. However, the case shows that employment status can be a complex and fact-specific matter involving a detailed analysis of both the contractual documents in place and the actual operation of the relationship between the parties.
Would you like advice on employment status? We can help. Please contact any member of the Pure Employment Law team on 01243 836840 or [email protected].