Autoclenz Ltd v. Belcher

This Court of Appeal decision addresses the correct approach to characterising the legal status of individuals who contract to perform work for another. The court applied the statutory test in section 230(3) of the Employment Rights Act 1996 and the Ready Mixed Concrete criteria to distinguish between self-employed contractors, "limb (b)" workers and employees.

The Employment Tribunal's factual findings that the valeters were required to provide personal service, were subject to a sufficient degree of control, and were not in business on their own account were upheld. The Court held that written clauses permitting substitution and denying any obligation to attend were not genuine in the factual circumstances of the case and therefore did not determine the parties' rights. On that basis the valeters were workers and, on the facts found, satisfied the further requirements of a contract of employment.

This appeal concerns 20 car valeters engaged by Autoclenz Ltd and their claim that they were "workers" or employees entitled to statutory protection such as holiday pay. The claimants brought proceedings in the Employment Tribunal which found they were employees; Autoclenz appealed to the Employment Appeal Tribunal which set aside the employee finding but held the claimants were "limb (b)" workers. Autoclenz appealed to the Court of Appeal and the claimants cross‑appealed to restore the Employment Tribunal's employee finding.

Nature of the claim: declarations of status (worker or employee) and attendant statutory entitlements.

Procedural history: Employment Tribunal (Nottingham) found employees; EAT (UKEAT/0160/08/DA) allowed Autoclenz's appeal against the employee finding but held claimants were limb (b) workers; Court of Appeal heard appeal and cross‑appeal and restored the Employment Tribunal decision.

Issues framed:

• Whether, under section 230(3) ERA, the claimants had undertaken to perform personally the services;
• Whether the services were provided to a client or customer of a business carried on by the claimants;
• Whether the contractual arrangements amounted to contracts of employment applying the Ready Mixed Concrete test (personal service, control, and consistency of other terms).

Court's reasoning: The court set out the correct approach where written contractual terms are disputed: the tribunal must identify the actual legal obligations of the parties by examining the written terms together with evidence of conduct and expectations. It rejected the EAT's narrower formulation requiring a common intention to mislead before disregarding written terms. Applying that approach, the Court found (i) sufficient evidence to infer a contractual obligation on valeters to attend and to perform personally (the substitution clause was in practice never exercised and appeared not to reflect genuine rights), (ii) the claimant‑valeters were not independent businessmen providing services to a client or customer, and (iii) the degree of control and other contractual features were consistent with employment. The Court therefore dismissed the appeal and allowed the cross‑appeal, restoring the Employment Tribunal's finding that the claimants were employees.

Appeal dismissed and cross‑appeal allowed. The Court held that the Employment Tribunal was entitled to find that the valeters were workers and, on the facts found (personal performance, degree of control and mutual obligations), employees. The Court rejected the EAT's narrower test for treating written terms as inapplicable and held that the tribunal could disregard or treat written clauses as not reflecting the true contractual obligations where the evidence justified that conclusion (notably the substitution and "no obligation to attend" clauses).

Employment Tribunal (Nottingham): found claimants were employees. Employment Appeal Tribunal: allowed appellant's appeal as to employee status but held claimants were limb (b) workers (UKEAT/0160/08/DA). Court of Appeal: dismissed Autoclenz's appeal and allowed the claimants' cross‑appeal, restoring the Employment Tribunal's finding that the claimants were employees ([2009] EWCA Civ 1046).