For there to be a contract of employment in place, there are three main elements that need to be present. These are:
- Personal service – the need to carry out work by your own hand.
- Mutuality of obligation – there must be a mutual obligation between the parties for one to offer work and an obligation for the other party to accept it and carry it out.
- The third element, which makes up the irreducible minimum, is Control.
It is Control that I am going to look at in greater detail in this article. Control over the years has varied in importance when deciding status cases. It basically comes from the old master servant relationship, where there was little doubt that there was total control by the master over the servant. The Control test, that of a contract being one of service, employment, or for services, self-employed, really comes from the Ready Mixed Concrete case back in 1968. In the decision, LJ MacKenna stated, “An obligation to do work subject to the other party’s control is a necessary condition of a contract of service”.
When we think about control, it is the ‘How’ the work is completed that is the important consideration. Not the ‘when’, not the ‘where’ or the ‘time’. So, if I am contracted to fit a radiator at your house, you would probably explain to me where you wanted the radiator fitted, you would tell me that you will at home Thursday afternoon, so that would be a good time for me to come and do it. Once you have given me that information, it would be up to me to use my own skills and experience to carry out the work. You would then expect me to report to you that I have undertaken the work and to thank you for the tea. Should the radiator then leek, I would expect to have to sort this out at my own expense. So when we consider control, we think about the manner in which the work is undertaken being of my own choosing.
Let’s contrast that with me as an employee of Lambert Chapman LLP. I have an obligation to undertake the work that is requested of me and probably in order that it is given to me. I would also be expected to be at my desk from a certain time to another given time, and to be awake for at least some of that time period! If I arrange to go to visit a client, this would probably be approved by the Partner who looks after that clients affairs. I may well be using my own skill and experience when preparing accounts or reviewing contracts, but I am certainly under a considerable amount of control in my position.
Recent cases have been heard relating to TV presenters working for the BBC. It was considered that the presenters did have control over the manner in which they undertook their work when they were on the air. They might get assistance or suggestions in an ear piece of questions to ask an interviewee, but they basically controlled the manner in which they carried out their work. So one might conclude that they would not be employee’s having passed the control test, right? Wrong – it was found that the presenters were indeed under the control of the BBC but at a higher level. The presenters had to discharge their obligations under the contract in a manner so as to observe the BBC’s general editorial policy, many of these editorial guidelines being advisory but some are mandatory and have the force of instructions. Therefore, there was sufficient control to render them employees for the control test. It is expected the cases will be appealed.
So on the face of things you might consider the contract is not subject to instruction and control, but you need to take into account all of the factors.
Even very highly skilled people, surgeons perhaps, who cannot be controlled as to the manner in which they carry out their work when in the operating theatre, may be under the control of the NHS for other reasons or work practices. Highly skilled people are less likely to be controlled as to the manner in which they carry out their work, but the contract needs to be clear on this point.
When the new IR35 rules are introduced into the private sector in April 2020, it will be even more important that your contract makes it crystal clear that you are not controlled as to manner in which you carry out your contract work, but also, that you are not controlled for any other reasons whatsoever. The contract must highlight control so that there is no doubt on this point. As ever, the contract must be a true reflection of what actually happens on the ground.
If you are not controlled, you are not caught by IR35.
To get your contract reviewed and ensure that you are going to be safe should your engager decide they will still want to use PSC’s after April 2020, please get in touch with us.
Posted by Duncan Forsyth
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.