Case of the week: Clarkson v Pensher Security Doors

Clarkson v Pensher Security Doors Ltd

Facts

Mr D Clarkson was a family friend of the McAllisters, who were, respectively, chairman and managing director of Gateshead-based Pensher Security Doors Ltd (Pensher). Pensher employed 91 employees; 83 of them at the site where Clarkson worked.

From October 2005 until December 2007, he undertook all of the electrical work that was required by Pensher, with the exception of some specialist work that was not within his capability. Clarkson was supplied with some tools and materials but provided his own hand tools. Pensher’s exercise of control over him was of a very general nature. It told him what work needed to be done but did not tell him how he was expected to do it.

Clarkson brought an employment tribunal claim to enforce rights under s.11 of the Employment Rights Act, such as the right to an itemised pay statement, and under the Working Time Regulations.’ At a pre-hearing review, the employment tribunal had to decide whether he was an employee for the purposes of the Employment Rights Act 1996 (ERA), or a worker for the purposes of the Working Time Regulations 1998 (“WTR”), or neither.

Decision

The tribunal found that there was an obligation on both parties to provide and to undertake a reasonable amount of work and that Clarkson was expected to, and did, provide his services personally. It noted that he had worked consistently for Pensher over a period of time, that he was paid at an hourly rate rather than by the job, and he had to clock in and out of work. The tribunal also found that Clarkson worked under a contract, there was mutuality of obligation and limited control.

It said that he came very close to the dividing line between being a worker and having or being a business undertaking. However, on balance, the tribunal found that Clarkson was neither an employee nor a worker. He accepted that he was not an employee but he appealed the tribunal’s decision that he was not a worker and argued that there was no evidence on which the tribunal could have found that he was operating a business undertaking.

The Newcastle-upon-Tyne Employment Appeal Tribunal (EAT) said that the structure of the relevant legislation is that prima facie, contracts to perform work or services personally will be performed by a worker. However, there is an exception that relates to the carrying on of a business undertaking. Referring to previous case law, the EAT said that the words “business undertaking” have to be construed with some care and comparatively narrowly. It also said that the exception for those in business on their own account demands that the courts must differentiate between workers and those in business, and that inevitably requires consideration of whether the contract, properly analysed, is predominantly of the former or the latter kind.

The EAT rejected Clarkson’s argument that the tribunal had failed to look properly at the status of the parties by virtue of the contract. The EAT said that the tribunal had looked, in very considerable detail, at all the factors which were raised and that, in its judgment, when it looked at the totality of the case, it could not say that the tribunal had erred in law. So it dismissed Clarkson’s appeal stating that he was a trusted independent contractor who was at liberty to, and did, work elsewhere.

Implications

This case is a useful example of how a tribunal will determine the status of an individual, in particular, whether or not that individual is a worker. This is key to assessing the employment rights and protection which an individual is entitled to. The case also demonstrates that if the tribunal has considered all the relevant circumstances, it will be difficult to challenge the tribunal’s decision on appeal.

Clare Gregory, employment partner, DLA Piper

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