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Employment status and substitution clauses

Adrian Fryer

A recent Employment Appeal Tribunal decision has set out further guidance on how tribunals should approach the issue of employment status following the landmark decision of the Supreme Court in Uber BV v Aslam. In Manning v Walker Crips Investment Management Limited the Claimant was engaged as an ‘associate’ for the Respondent working as an investment manager. His contract with the Respondent stated that he was a self-employed contractor, and he was paid on a commission-only basis. His contract included a substitution clause which stated that any substitute had to be approved by the Respondent.

The Claimant brought a claim alleging worker status. At a preliminary hearing the employment tribunal concluded that the Claimant was not a worker. In coming to this conclusion they looked, amongst other factors, at the substitution clause. They implied a term into the clause that the Respondent would not unreasonably refuse to approve a substitute. The tribunal held that this term had to be implied for the clause to work effectively.

The EAT disagreed. It found that the clause was perfectly workable without such an implied term. The EAT was also critical of the tribunal for deciding that the substitution clause was genuine without having regard to the fact that it had never been used. The EAT substituted the decision that the Claimant did undertake to perform work personally for the Respondent and that the substitution clause was not genuine. Other aspects of the test of worker status were remitted to the tribunal to look at again.

This case is a reminder that tribunals will now look very closely at substitution clauses in contracts where the relationship is stated to be one of self-employment. If substitution clauses are limited in scope and there is no evidence of them having been used then they cannot be relied upon to support a finding of self-employed status.

Adrian Fryer, Partner & Head of Employment

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