Bannerman v Euroscot Engineering Limited

Whether a person is an employee depends on the parties’ contractual rights and obligations, including whether one party has a right of control to a sufficient degree. Day-to-day autonomy does not itself preclude employment. The material question is whether an express or implied agreement retains an overarching contractual right to direct the worker.

Where there is no express agreement, the tribunal may imply contractual terms from the parties’ conduct. Control over business strategy does not necessarily imply control over all aspects of a person’s work. Findings that the person acted independently may support a conclusion that no overarching right of control was retained, unless other evidence shows that the apparent autonomy was delegated or remained subject to control.

The claimant brought Employment Tribunal claims for unfair dismissal, wrongful dismissal and ancillary relief. The Tribunal held that he was not an employee within section 230(1) of the Employment Rights Act 1996, because the respondent lacked control to the degree required for a contract of employment.

On appeal, the Employment Appeal Tribunal obtained clarification from the Employment Judge under the Burns/Barke procedure. The clarification stated that the respondent could direct the claimant on strategic matters and payment, but did not direct what, how or when he worked in the day-to-day running and implementation of the business.

The central issue was whether those findings required an implied overarching contractual right of control, notwithstanding the claimant’s practical autonomy.

1. Appeal dismissed. The Employment Tribunal was entitled to conclude that the claimant was not an employee of the respondent and that it therefore lacked jurisdiction over the claims.

2. The applicable inquiry under Ready Mix Concrete was whether the respondent had a contractual right of control in a sufficient degree to make it the employer. The inquiry is not confined to the practical exercise of daily control. A skilled or professional worker may exercise substantial autonomy while remaining an employee if an express or implied contractual right of control is retained.

3. There was no written or oral agreement allocating an overarching right of control to the respondent. The Tribunal could therefore infer contractual rights only from the parties’ conduct. Its findings established control by the respondent over strategy and remuneration, but also established that the claimant led operational work, gave advice which the managing director followed, and at times told him what to do.

4. Control over strategy did not necessarily entail a retained right to direct every aspect of implementation or day-to-day work. The claimant’s autonomous acts were prima facie evidence of independence. There was no further evidence showing that they were exercises of delegated authority or remained subject to an implied overarching right of control. The Tribunal’s finding that control was insufficient was accordingly open to it and disclosed no error of law.

5. The Tribunal’s clarification did not contradict its original reasons. Its reference to the managing director making “ultimate decisions” concerned strategic decisions, not ultimate control of all matters. The third Ready Mix condition did not assist the claimant because the identified terms were also compatible with personal service or employment by a third party.

• Employment Appeal Tribunal: Appeal dismissed; the Tribunal’s conclusion that the claimant was not an employee was affirmed.
• Employment Tribunal: Judgment dated 5 April 2018. It held that the claimant was not an employee within section 230(1) of the Employment Rights Act 1996 and lacked jurisdiction to entertain the claims.