Dakin v Brighton Marina Residential Management Company Ltd & Anor

Employment status must be determined from the objective reality of the parties’ contractual relationship. Mutuality of obligation does not require agreed specific hours or a specified quantity of work. It is sufficient to establish an obligation to do at least some work and a correlative obligation to pay for it.

Employee status requires control and personal service. Worker status also requires personal service, but does not require control. A genuine and unfettered contractual right of substitution is inconsistent with both statuses. A tribunal must make clear findings on the contract, control, substitution and personal service, rather than relying on labels or leaving worker status unresolved.

The claimant had undertaken estate-inspection work for the respondents from about 2005, under an arrangement described as self-employment and paid at £15 per hour. He claimed unfair dismissal, notice pay, arrears of pay and holiday pay, asserting that he was an employee or, alternatively, a worker.

The Southampton Employment Tribunal dismissed all claims. Its disability-discrimination decision had already been held unappealable. This appeal concerned the dismissal of the employment-status claims. The central issue was whether the Tribunal had applied the correct approach to mutuality of obligation, personal service, substitution, control and worker status.

1. Appeal allowed. The Employment Judge adopted an erroneous approach to mutuality of obligation. The question was not whether the parties had agreed precise hours for work to be provided and performed. The material question was whether their relationship showed an obligation to do at least some work and a correlative obligation to pay for it.

2. The evidence of regular paid work over approximately six years, averaging about 18 hours a week, required proper analysis. The Tribunal could not resolve the case simply by treating the absence of more precise evidence as fatal.

3. The Tribunal had made no clear finding on whether the claimant possessed an unfettered contractual right to substitute another person. Such a right would be inconsistent with employee and worker status. A limited substitution arrangement might not be decisive, but required assessment as a matter of fact and degree.

4. The Tribunal had also failed clearly to determine integration, the respondent’s power of control, and whether the claimant was a worker. The observation that he might well be a worker did not decide an essential issue in his holiday-pay claim. The agreed label of self-employment was relevant but not conclusive; the objective reality of the arrangement governed.

5. The status issue was remitted to a different Employment Judge. That judge was to determine whether the contractual relationship made the claimant an employee under section 230(1), a worker under section 230(3) and the equivalent Working Time Regulations 1998 definition, or neither. The disability finding remained undisturbed.

• Employment Appeal Tribunal: allowed the appeal and remitted the status issue to a different Employment Judge.
• Southampton Employment Tribunal: following a pre-hearing review on 28 February 2012, dismissed the claims in reasons delivered on 8 May 2012. The Tribunal had found that the claimant was not disabled and dismissed the employment-status claims.