Case update
Employment status & multiple 'employers'
United Taxis v (1) Comolly and (2) Tidman & Tidman v (1) United Taxis & (2) Comolly [2023] EAT 93
A recent Employment Appeal Tribunal case highlights the difficulties involved in ascertaining the employment status of an individual working/providing services where multiple organisations or individuals are involved in the structure. We summarise below the key factors and takeaways from this case.
Background on employment status
Types of employment status
There are three categories for employment status in England:
- Employee.
- Worker.
- Self-employed independent contractor.
Determining which category a person falls into can be a complex and often controversial exercise. Numerous recent cases in the courts/tribunals have provided further guidance for employers and HR teams, including this recent case.
Why is employment status important?
Two reasons:
- Employment protections: different protections are afforded to individuals based on which employment status category they fall into i.e. there are more protections for employees than there are for workers, and more protections for workers than there are for self-employed.
- Tax e.g. national insurance contributions.
How is employment status generally determined?
- Range of factors taken into account e.g. control over how the person works, exclusivity, personal service, mutuality of obligation, and other factors consistent with employment.
- Substance over form i.e. calling someone ‘self-employed’ when they are required to do the same things as an employee doesn’t magically make them self-employed. The object is to consider the totality of the picture created by the various factors.
Background on the recent case
Mr Comolly, a taxi driver, drove customers of United Taxis in a taxi belonging to one of United Taxis' shareholders, Mr Tidman. The relationship broke down and Mr Comolly brought various complaints against both United Taxis and Mr Tidman.
Employment Tribunal decision
The Employment Tribunal ruled that Mr Comolly was simultaneously:
- an employee of Mr Tidman (within the meaning of section 230(1) of the Employment Rights Act 1996); and
- a worker of United Taxis (within the meaning of section 230(3)(b) of the Employment Rights Act 1996). Under this section of the Employment Rights Act 1996, a person is a worker if they have entered into, or work under, a contract (other than an employment contract) and they personally perform "work or services".
Employment Appeal Tribunal
The Employment Appeal Tribunal overturned that decision, finding Mr Comolly was in fact:
- a worker of Mr Tidman; and
- not in an employment relationship of any kind with United Taxis.
Employment Appeal Tribunal's reasoning
In the Employment Appeal Tribunal's decision, Mr Comolly did not have an employment relationship with United Taxis for the following reasons:
- Dual employment issue: As a point of principle, a person cannot be, "simultaneously, the employee of two different employers in respect of the same work" (para. 44). In this case, the work in issue was exactly the same and therefore Mr Comolly could not be in an employment/worker relationship with two employers for exactly the same work at the same time. Although not mentioned in this decision, this aligns with other employment decisions relating issues involving dual employment e.g. in the Employment Appeal Tribunal case of McTear Contracts v Bennett (UKEAT/2021), it was recognised that an employee's employment could transfer under TUPE to two separate entities so long as the work was clearly separate and identifiable.
- No basis to imply a contractual relationship: There was no basis to imply a contract of employment between Mr Conolly and United Taxis if he was already an employee of Mr Tidman.
As to the nature of the relationship with Mr Tidman, the Employment Appeal Tribunal considered that the degree of control exercised by Mr Tidman over Mr Comolly was not sufficient to designate him as an employee, but rather as a worker.
Specifically, whilst Mr Tidman controlled the times when Mr Comolly had use of the taxi (as the vehicle was Mr Tidman's), he did not control what Mr Comolly was doing during those time windows. In fact, and even though Mr Comolly was not a worker or employee of United Taxis, his services provided to passengers were "very tightly defined and controlled" by United Taxis (not Mr Tidman).
Takeaways for employers
Employment status is a finely balanced exercise but can have significant knock-on consequences in terms of employment rights and tax liabilities.
Employers should therefore be proactive in determining and reviewing employment status of individuals, especially for casual workers or those contracting via a personal service company (given IR35 rules - see our update here for more information).
Another useful resource is the checklist released by the UK Government for employers determining employment status.
The Northridge Employment team has significant experience of conducting employment status reviews of contractors and other temporary/part-time roles. Get in touch with Employment Partner Jamie Feldman to find out more.
