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A Hairdresser was Held to be an Employee Despite Signing a Consultancy Agreement

 Many businesses will be eagerly anticipating the final decision in the Uber case which the Supreme Court will shortly provide a final ruling deciding whether drivers are workers after hearing Uber’s final appeal on 21 and 22 July 2020. In the interim, the employment tribunal has considered another worker status case in Gorman v Terence Paul (Manchester) Ltd, finding that a hairdresser who signed a consultancy agreement with her salon was not genuinely self-employed.

In the case, Ms Gorman worked under a consultancy agreement for five years at the salon. Initially, she worked for a year as an apprentice before qualifying and agreeing to be a "self-employed hairstylist" under an "Independent Contract for Services". The contract made express reference to the fact that Ms Gorman was not, and did not wish to be an employee of the salon.

The salon subsequently closed in 2019 and as a result, Ms Gorman issued claims against the salon for unfair dismissal, sex discrimination, notice pay, holiday pay and redundancy pay. The salon disputed that the tribunal had jurisdiction to hear the claims as she was not an employee or worker and the Tribunal were required to determine her worker status.

In reaching its findings the Tribunal took into consideration that Ms Gorman was 19 when she started to work for the salon and consequently she did not understand what she was agreeing to in the contract and she was unable to negotiate those terms. Ultimately, the Tribunal found that despite the contractual wording, the reality of the arrangements did not reflect the contract for the following reasons:

  • There was mutuality of obligation: This was because the salon allocated her clients, she was obliged to provide services to them and the salon was obliged to pay her for doing those services;
  • No Substitution: Whilst contractually she was able to send a substitute in the event she could not work, in practice this was not possible as the salon simply covered the work by other stylists at the salon when she was unavailable;
  • Client information: She had no access to her client’s information that was held and password protected by the salon;
  • Restrictions: She was subject to a 12-month non-compete following termination; and
  • Control: She had to seek permission to take holiday and she had 67% of her fees deducted by the salon for use of facilities.

In light of this evidence, the Tribunal held that her employee status was easily made out. This decision should remind employers that the label given to people you engage will not be conclusive in establishing their employment status. As we know from previous employment status cases whilst the cases are fact-specific, the Tribunal will consider the reality of the arrangement in reaching their decision.

This bulletin is for general guidance only and should not be used for any other purpose. It does not constitute, and should not be relied upon as legal advice.

JMW Solicitors is a Limited Liability Partnership.

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