False self-employment case adds to worker status conundrum

In a further case underlining the dangers for companies of false self-employment, a woman working as a sole trader has been deemed by an employment judge as employed.

Gemma Long presented a claim in the employment tribunal on 31 March 2021 including complaints of disability discrimination (she has ADHD), that she suffered detriments for having made protected disclosures, and for unlawful deductions from wages and for holiday pay.

The respondent, Brain in Hand, is a technology company which provides services to people with autism, mental health difficulties and neurological conditions. It has contracts with organisations including the Department for Education and the Department for Work and Pensions, to provide technology solutions and training to individuals who have been assessed as needing support.

Brain in Hand defended Ms Long’s claims primarily by explaining that the tribunal did not have jurisdiction to hear them because she was self employed and was neither a worker nor an employee.

Judge Ayre decided earlier this month that Ms Long – who had responded to a job advert stating the role was self-employed with an hourly rate of pay – was in effect an employee of the respondent according to the Employment Rights Act 1996 and worked under a contract of employment falling within section 83 of the Equality Act 2010.

After her successful application to join the firm, Ms Long attended its three-day training course, for which she was not paid. She began working for the respondent as a specialist on 30 July 2020 and worked regularly two days a week until she resigned with effect from 26 April 2021. Her role was to provide training and support to the respondent’s service users.

The tribunal heard that Brain in Hand also directly employed specialists, who carried out the same work as Ms Long, but had other responsibilities as well. When these employees delivered services to the firm’s service users, they provided the services in essentially the same way as the “self-employed” specialists.

Ms Long has ADHD and requested help with performing the administrative duties of her role. However, as the tribunal heard, “once she asked for a support worker as a reasonable adjustment for her ADHD, she was not offered any more work.”

This decision that she was in fact employed was reached primarily because the judge decided there was a substantial amount of control that Brain in Hand exercised over Ms Long and the way in which she carried out her work. There was also sufficient mutuality of obligations for Ms Long to be considered as employed. She was also unable to delegate her work or arrange for a substitute to perform it. There was no right of substitution in the written contract, and no right of substitution in practice.

Employment status expert and insurance firm Qdos, said the verdict could spark similar cases among self-employed and gig economy workers, along with having significant tax implications for businesses facilitating “false self-employment”.

Qdos CEO, Seb Maley, said ramifications for businesses of facilitating false self-employment in light of the case were likely to be severe.

“If a business engages someone as self-employed when in reality the relationship reflects employment, HMRC will expect the company to stump up missing employment taxes, which can mount up considerably just for one worker.

“So it goes without saying that for any business engaging or relying on sole traders, the cost of enabling false self-employment is potentially huge, both financially and reputationally.

“Against the backdrop of Uber, Addison Lee and numerous other gig economy employment tribunals, it’s becoming increasingly important that both parties are confident in their employment status compliance and agree upon it from the outset.”

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