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In its decision in the case Forest Mere Lodges v Watt and Cameron, given on 6 February 2007, the London Employment Appeal Tribunal (EAT) rejected an appeal against the findings of an employment tribunal that two labourers were employees, and therefore entitled to make a claim for unfair dismissal.
The contractor, Forest Mere Lodges, had treated the labourers as self-employed. They both held CIS4 subcontractor certificates and, following normal construction industry rules, 18% tax on account was deducted from payments made to them. Despite this, the employment tribunal decided that Mr. Watt and Mr. Cameron were employees. In so doing, the tribunal had applied the principles set out in the case Hall (Inspector of Taxes) v. Lorimer. According to that 1994 decision of the Court of Appeal, the approach that should be taken in deciding whether an individual is an employee or self-employed is one of "picture painting", namely standing back and looking at the overall effect of the evidence rather than mechanically applying a checklist.
The tribunal had considered a number of factors, some of which indicated employment, some of which indicated self-employment. The EAT’s decision was that the employment tribunal had given "clear and cogent reasons why they reached the decision they did" and had properly weighed up the factors on either side of the argument.
Although relevant to all employers that make use of contract labour, this decision should be reviewed carefully by contractors preparing for the introduction of the new construction industry scheme from April 2007. The new monthly return requires contractors to confirm that they have checked the employment status of all of their workers. The EAT decision highlights many of the key issues that are involved in checking employment status.
The EAT also gave approval to one particular point made in the employment tribunal’s decision, namely that employment rights such as whether or not a worker has been issued with a statement of employment particulars or given holiday pay are not relevant to the employment status decision. Once the decision has been made that a worker is an employee, using all of the different factors relating to the job, the employer must provide all of the necessary employment rights. But the fact that those rights are not provided does not indicate that a worker is self-employed.
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Sources:
Forest Mere Lodges Ltd v Watt and Camerson
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