An employment tribunal has found that a hairdresser who worked under a consultancy agreement with a salon for five years was an employee.
Ms Gorman started work as an apprentice at Terence Paul salon in Manchester in 2013. Following her qualification in 2014, the salon provided her with an “Independent Contract for Services” in which it agreed to engage her as a “self-employed hairstylist”. This document confirmed that Ms Gorman was not, and did not wish to be, an employee of the salon.
In 2019, the salon closed. Ms Gorman subsequently issued a claim for unfair dismissal, sex discrimination, notice pay, holiday pay and redundancy pay. Since the salon disputed that Ms Gorman was an employee or worker, a preliminary hearing took place to determine this issue.
The tribunal noted that Ms Gorman was 19 when she started work for the salon and that she did not understand (and was unable to negotiate) the terms of the contract. It also found that the contract did not reflect the reality of her working arrangements. Ms Gorman was subject to strict control by the salon when providing her services. There was mutuality of obligation, since her clients were allocated to her by the salon, she was obliged to perform services for them, and the salon was obliged to pay her for doing so. Although the contract theoretically allowed her to send a substitute if she could not attend work, in practice this was not possible. If she was unable to work, her clients were covered by other stylists at the salon. Further, among other things, Ms Gorman:
- Had no access to information about her clients (since this was password-protected by the salon).
- Was prevented from working for a competing salon during her contract and subject to a 12-month non-compete following termination.
- Had to seek permission to take holiday.
- Had 67% of her fees deducted by the salon for use of facilities.
On these facts, the tribunal held that the tests for employee status were easily made out.
This is a first instance decision, and (as with many employment status cases) is highly fact specific. It may therefore be of limited precedent value. Nevertheless, it is a further reminder of the approach a tribunal will take to establishing employment status, and that the underlying contract must be considered in the context of all the other facts.
While this isn’t a specific IR35 tax status case, it demonstrates the facts that Courts and Tribunals are looking at. If you need advice on IR35 issues for your business, or are an employee or contractor and need expert legal advice get in touch on 0116 3667 900.
(Source: Practical Law)