Unite took the case on behalf of pipefitter Russ Blakely against the employment agency On-Site Recruitment Solutions Ltd and payroll company Heritage Solutions City Ltd.
The case was for the unlawful deduction of wages and employer鈥檚 national insurance contributions as well as the non-payment of holiday pay. It is the first case of an employment appeal tribunal considering a bogus self-employment appeal involving the use of a payroll company.
聽Unite appealed the case after the Reading employment tribunal rejected the case, determining that Mr Blakely was not a worker.
聽The employment appeal tribunal (EAT) case was heard in early December 2017 but Unite has only now received the appeal court鈥檚 written judgment. The fact that the decision was made at the EAT means that it is binding on all employment tribunals and must be applied in other cases, the union notes.
聽The employment appeal tribunal found:
鈥⒙犅犅犅犅犅犅犅犅� The tribunal was wrong to decide that Mr Blakely was not a worker
鈥⒙犅犅犅犅犅犅犅犅� When determining whether there was a contract (part of the test of whether someone is a worker) the tribunal must consider the intentions of the worker and all surrounding circumstances, not just the intentions of the employer
鈥⒙犅犅犅犅犅犅犅犅� There was a contract between Mr Blakely and On-Site (the agency) 鈥� importantly, the use of a payroll company did not circumvent this relationship
鈥⒙犅犅犅犅犅犅犅犅� Mr Blakely (and therefore other agency workers being paid through payroll companies) could be a worker of the agency, the payroll company or both. The possibility of being a worker of more than one body provides the opportunity to dramatically reduce the amount of umbrella/payroll company deductions.
Unite assistant general secretary Howard Beckett said: 鈥淭his is a groundbreaking victory secured by Unite鈥檚 Strategic Case Unit in the fight against bogus self-employment in construction and other sectors. It blows a hole in the way that employment agencies hide behind payroll and umbrella companies and pretend that they are not responsible for the employment of the workers they recruit.
鈥淭he fact the EAT held that a worker could be jointly employed by two organisations is a game changer in the campaign against bogus self-employment. Unite will be ensuring that the EAT鈥檚 findings are fully utilised to ensure that other workers are not denied their basic employment rights or exploited by agencies and parasitical payroll companies.
鈥淭his decision sends out an unequivocal message to all those involved in bogusly self-employing workers, Unite and our Strategic Case Unit is on your case. Whilst this isn鈥檛 the type of appeal that a mistreated worker might bring on their own, employers should beware, as Unite members have the unwavering support of the country鈥檚 largest trade union.鈥�
From 19th January 2016 until 20th May 2016 Mr Blakely was employed by On-Site on the NHS-funded Broadmoor hospital redevelopment project in Berkshire. Confirming he was to undertake work on the project, On-Site texted Mr Blakely and informed him that he needed to contact payroll company Heritage Solutions City Ltd for payment.
Mr Blakely was paid weekly and was deducted a weekly fee of 拢18 by Heritage from his pay (described as management company margin). He was also charged the employer鈥檚 national insurance contributions, labelled on his payslip as 鈥楬MRC Payment NIERS鈥�. In total he was charged 拢324 in management fees and 拢725.59 in employer national insurance contributions (NICs).
In March 2016, Heritage Solutions asked Mr Blakely to sign 鈥榓 contract for services鈥�, denying him such rights as auto-enrolment pension, holiday pay and sick pay.
The contract also attempted to authorise deductions for employer鈥檚 class 1 national insurance from Mr Blakely鈥檚 pay and included an 鈥榠ndemnity鈥� clause aimed at stopping him from pursuing any legal claims or raising complaints with HMRC. He was told that if he did not sign the agreement his pay would be stopped. Mr Blakely refused to sign.
He continued to work until 20th May 2016, when he took holiday and was told that he was not needed to return. Mr Blakely was owed 拢1453.50 in unpaid holiday pay, as well as the management fee and employer NICs deductions.
The case has now been returned to the employment tribunal, to determine who was Mr Blakely鈥檚 legal employer, whether it was On-Site, Heritage or both. The tribunal will also decide on Mr Blakely鈥檚 compensation, which is expected to be around 拢2,500.
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