MacAlinden (t/a Charm Offensive) v Lazarov & Ors (Jurisdictional Points : Worker, employee or neither)

Worker status under limb (b) requires application of the statutory language to the facts. There is no single decisive test. Integration and subordination may assist, but neither replaces the inquiry whether the putative worker carries on a profession or business undertaking and whether the other contracting party is that undertaking’s client or customer.

An employment tribunal must address that issue where the evidence raises it. Active marketing of services to the public and obtaining work from varied sources may strongly indicate an independent business rather than worker status. The fact that an individual becomes immersed in a particular production does not, without more, establish integration into the engager’s business.

Five actors claimed national minimum wage and holiday pay following an unpaid theatre production. Their contractual entitlement was a share of any producer’s profits, but no profit was made.

The Employment Judge determined as a preliminary issue that the actors were workers. He found contracts for personal performance and stated briefly that the producer was not their client or customer.

The producer appealed. The central issue was whether the Employment Judge had correctly applied the limb (b) worker definition, in particular the exclusion for an individual carrying on a profession or business undertaking whose counterparty is a client or customer.

1. Appeal allowed. The Employment Judge erred in deciding worker status without properly addressing the final part of the limb (b) definition. The decision was inadequately reasoned and the issue was remitted for a fresh hearing before a different Employment Judge.

2. The statutory language must be applied to the facts of the individual case. Employment law recognises employees, independent self-employed persons undertaking work for clients or customers, and an intermediate class of workers. The client-or-customer exclusion distinguishes the second class from the third.

3. Cotswold Developments Construction Ltd v Williams and Hospital Medical Group Ltd v Westwood show that active marketing of services independently to the public, as opposed to recruitment as an integral part of the engager’s operations, will often assist the inquiry. However, there is no universal integration test. Following Bates van Winkelhof v Clyde and Co LLP and Anr, subordination is not a separate, universal requirement of worker status.

4. The evidence raised a real issue as to whether the actors were pursuing a profession or business undertaking. In particular, evidence that an actor had undertaken varied professional work, paid her own tax and National Insurance, and sought engagements from different sources could strongly indicate independent activity. Becoming immersed in a particular play after casting did not itself establish integration into the producer’s theatre-production business.

5. An employment tribunal considering worker status should always consider whether one party carries on a profession or business undertaking of which the other is client or customer. Authorities on whether an activity is a profession for other statutory purposes have limited value. Nothing turned on the Employment Judge’s reference to mutual obligations: the actors had contracted to perform personally.

6. A rehearing was necessary because the Employment Judge had made no findings on the relevant evidence. A fresh hearing, rather than an attempt to reconstruct evidence heard more than a year earlier, was the satisfactory course.

• Employment Appeal Tribunal: Allowed the producer’s appeal and remitted the preliminary worker-status issue for a fresh hearing.
• Employment Tribunal: Employment Judge Ross held that the actors were workers for the purposes of the National Minimum Wage Act 1998 and the Working Time Regulations.