Autoclenz v Belcher & Ors

Permission to appeal was granted in a worker-status case because the proposed appeal had a real prospect of success. The central issue was whether a qualified substitution clause excluded an obligation of personal service under limb (b) of the definition in the Working Time Regulations. The court noted that lack of mutuality of obligation, although fatal to employee status, did not necessarily determine worker status. The contractual terms, the parties’ actual obligations and the practical effect of the substitution clause required further consideration. Respect remained due to the employment tribunal’s factual assessment as an expert industrial tribunal, but the difficult relationship between mutuality and personal service justified permission.

Autoclenz applied for permission to appeal against the Employment Appeal Tribunal’s decision of 16 July 2008. The EAT had allowed Autoclenz’s appeal in part, holding that the respondents were independent contractors rather than employees, but workers under limb (b) of the statutory definition. The proposed appeal concerned the effect of contractual substitution clauses, the obligation of personal service and the relationship between mutuality of obligation and worker status. The respondents did not appear or make submissions.

The application for permission to appeal was granted. Lord Justice Moses agreed with Lord Justice Pill.

1. The employee issue was not subject to a cross-appeal. The proposed appeal concerned whether the respondents were workers under limb (b) of the definition in regulation 2(1) of the Working Time Regulations.
2. The relevant questions included whether the contractual arrangements required the respondents to perform the work personally and whether Autoclenz was a client or customer of a business carried on by them. The employment tribunal had found that the substitution clauses did not reflect the parties’ actual agreement and that personal service was required. The EAT had affirmed that conclusion.
3. The effect of a qualified substitution clause was arguable. The court also considered it difficult to determine the relationship between mutuality of obligation, which was fatal to a contract of employment in the circumstances, and the distinct question of personal performance for worker status.
4. In Wright v Redrow Homes (Yorkshire) Ltd [2004] ICR 1126, the court had treated personal performance as central and had accepted that individuals could be workers although they were not employees. The present facts arguably permitted distinctions, but the decision was materially relevant.
5. The employment tribunal’s findings deserved respect because it was an expert industrial tribunal. Nevertheless, Autoclenz had a real prospect of success. The order was: application granted.

• Court of Appeal (Civil Division): On 29 September 2008, permission to appeal was granted because Autoclenz had a real prospect of success.
• Employment Appeal Tribunal: On 16 July 2008, HHJ Peter Clark sitting alone allowed Autoclenz’s appeal in part. The respondents were held not to be employees but to be workers under limb (b) of the statutory definition.
• Employment tribunal: The respondents had been held to be employees and workers.