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What we can learn from Autoclenz

freelancesupermarket.com newsroom

RSS 20 November 2009
Following a landmark legal victory by Unite the union against the car-valeting giant Autoclenz , leading industry commentators have warned that employers now risk giving regular sub-contractors employee status through poorly managed working practices.

The caveat comes as a result of a Court of Appeal ruling that determined a group of car valeters who had signed contracts defining them as sub-contractors were, in fact, performing the duties of employees and, as such, were entitled to benefits commensurate with their position.

The court heard that the group of cleaning contractors had all started carrying out work on behalf of the company after signing a written contract in which they were clearly defined as sub contractors. However, presiding Judge Lord Justice Sedley, ruled that clauses contained in the same contract were more in keeping with the employer-employee relationship than with that of a contractor and client.

The case can be clearly defined by looking at the situation on one former Autoclenz valeter, Paul Huntington.

Mr Huntington began performing valeting duties for Autoclenz in 1991, at which point he signed a contract that defined him as a sub-contractor. The same contract, however, contained a number of clauses more commonly seen in a typical contract of employment.

Clause 1, for example, stipulated that Mr Huntington would carry out the services he had agreed to provide Autoclenz "within a reasonable time and in a good and workmanlike manner". And while clause 2 was in essence a confirmation on Mr Huntington's "self employed" status, which stipulated he was responsible for his own tax affairs and clause 3 reaffirmed his ongoing non-employee status outlining that he would be responsible for the payment of his own income tax and national insurance contributions, clause 4 required the signatory to agree to receive all payments from Autoclenz net of VAT (with a provision that, should Mr Huntington become VAT registered Autoclenz would pay VAT on all sums payable).

There were also provisions in the contract that allowed Autoclenz to reveal details of Huntington's payments to HMRC and or Social Services should they be required to do so as well as demands as to the condition of the supposed "sub contractor's" driving license.

After performing car valeting services at Autoclenz's behest for 16 years, in 2007 Mr Huntington found himself faced with an additional agreement - the same one that all valeters carrying out work for Autoclenz were being asked to sign.

The new document echoed the sentiments of the original contract in its definition of the signatory as a "sub contractor" but went further in its definition of the Huntington as such.

As well as reiterating that the signatory acknowledged his working relationship as that of an independent sub-contractor and client, the new papers appeared to give him the right to ask someone else to carry out his cleaning duties on his behalf (a practise that any true contractor would surely take for granted) while outlining that valeters were under no contractual obligation to provide their services and Autoclenz, was likewise not obliged to provide work for the signatory. Signing of the new agreement was mandatory and Autoclenz Measham depot manager Mr Hassall told the court that any cleaner who had declined to sign the agreement would not have been offered further work by the company.

Qualifying his ruling that the claimants were indeed, de facto employees, Court of Appeal Judge Lord Justice Sedley told the court that the contracts had contained clauses and obligations "entirely consistent with employment". The judge dismissed the repeated use of the term "sub-contractor" in the agreements signed by the valeters and upheld the Nottingham Employment Tribunal judge's finding that other terms contained therein that were inconsistent with employment were simply "unreal."

He concluded that the court was satisfied that the requirements set out in the 1968 precedent case of Ready Mixed Concrete (South East) Ltd v Ministry of Pensions and National Insurance, which concluded that contractual provision must not be inconsistent with a contract of service, had been fulfilled.

Speaking at the Court of Appeal Lord Justice Sedley said: "Employment judges have a good knowledge of the world of work and a sense, derived from experience, of what is real and what is window dressing. The conclusion [of the original tribunal judge] that Autoclenz's valeters were employees in all but name was a perfectly tenable one."

Story by Crystal Umbrella.

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Car Wash Brushes by Mister Hambo

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