Case update

Employment status of non-executive directors

A recent Employment Tribunal case involving a non-executive director of English Table Tennis (Catt v English Table Tennis Association & Ors 3312887/2020) decided that the individual was a 'worker' under relevant employment legislation, even though the role was described as 'honorary'. 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

Initial Employment Tribunal decision

In 2021, an Employment Tribunal ruled that the claimant, Mr Catt, a non-executive director of English Table Tennis, was not a 'worker' for the purposes of the Employment Rights Act 1996. The earlier decision is available here.

Employment Appeal Tribunal

That decision was appealed to the Employment Appeal Tribunal which allowed the appeal, but remitted the case to a fresh Employment Tribunal to re-consider the claim.

New Employment Tribunal decision

The decision of the new Employment Tribunal (released in February 2023) was that Mr Catt was in fact a worker. We summarise the key points from that decision below.

Employment Tribunal's reasoning

In the Employment Tribunal's decision, the following factors suggested that Mr Catt as a non-executive director was a worker for the purposes 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".

Labels not determinative: Whilst the appointment was described as 'honorary' and as a 'volunteer', the Employment Tribunal decided Mr Catt was in fact a 'worker' and did have a relevant contract with English Table Tennis.
Time commitment: The time commitment of the role was "considerable": 15-20 days per year (and non-attendance at meetings could result in removal from the role).
Annual payment: Mr Catt was paid as part of his role as non-executive director (£1,500 per year plus expenses).

Takeaways for employers

This case is a reminder that an Employment Tribunal/court/HMRC will look at substance (the reality of the relationship) not form (what the contract says or the labels given to a role).
Employers may wish to review the employment status and tax treatment of honorary positions and non-executive roles in light of this case, focussing on the reality of the role and its requirements.

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.