COVID-19 Pandemic Has Brought Employment Status Disputes to a Head

Strains on the labour market caused by the COVID-19 pandemic have resulted in a great many latent disputes concerning employment status coming to a head. That was certainly so in the case of a woman who, despite her lynchpin role in an events and entertainment management company, was inaccurately described in her contract as a self-employed subcontractor (Lobley-Eames v Pastiche Europe Ltd).

The company was hit hard by the pandemic and, when the first lockdown came into force, it indicated to the woman that it would no longer pay her. She was, however, asked to carry on working for the company, unpaid, so that it would be in a good position to recommence events once pandemic restrictions were lifted. After not receiving wages for several months, she resigned and launched Employment Tribunal (ET) proceedings.

The company denied her claims that she had been constructively unfairly dismissed and that unauthorised deductions had been made from her wages. It asserted that any deductions from her wages were consensual. Pointing to her contract, which throughout described her as a subcontractor, it also contended that she had never been its employee and that her claims thus fell at the first hurdle. The ET considered the latter issue at a preliminary hearing.

Ruling on the matter, the ET noted that she had worked for the company for almost a decade. She was in large part responsible for the day-to-day organisation of events, liaising with clients, organising and training performers, creating performances for particular events and sometimes even performing herself. On joining the company, she had not been offered the opportunity of employment but had been promised progression and ownership in the business in due course.

She was contractually obliged to work 40 hours a week and was expected to work further hours, if necessary, in order to fulfil her duties. She had to seek permission before going on leave and received holiday pay. Tellingly, her contract contained a restrictive covenant inhibiting her ability to work with or for other businesses with which she or the company had dealings in the 12 months prior to the end of her contract.

Given the importance of her role and the extent of the duties placed upon her, the ET found that there was a mutuality of obligation between her and the company that was consistent with employment status. Although she had a degree of autonomy in how she went about her day-to-day work, she formed an integral part of the business and the company exerted considerable control over her working life.

She provided her services to the company personally. Although her contract made provision for the appointment of substitutes to work in her place, the company retained control over that process. Notwithstanding her contractual description as a subcontractor, the ET found that she was in reality an employee of the company, as defined by Section 230(1) of the Employment Rights Act 1996. She was therefore entitled to pursue her complaints to a full hearing.