Dominant worker

James v Redcats (Brands) Ltd

Under the National Minimum Wage Act 1998 (NMWA), a worker is defined as an individual who has a contract “to perform personally any work or services for another party to the contract”, as long as that other party is not a customer of the worker’s business.

In James v Redcats (Brands) Ltd (IDS 826), the Employment Appeal Tribunal (EAT) said that tribunals should carry out a careful analysis of all aspects of the relationship to ascertain its “dominant purpose.”

Basic facts

Mrs James worked as a courier for Redcats, delivering parcels to private addresses. The parcels were delivered to her house and she used her own car to deliver them. Her pay was determined by the number of parcels she was sent, but the company did not have to send her a minimum number.

She had the right to subcontract the work to other people (either because of illness or to go on holiday), and had occasionally done so. She, in turn, was free to deliver parcels for other companies, but had not bothered. She paid her own tax and national insurance, she did not get sick pay, maternity benefit or paid holiday (but had to tell the company when she was going on holiday).

She claimed she was a “worker” under section 54(3)(b) or a home worker under section 35 of the NMWA and therefore entitled to the minimum wage. The company said she was self-employed.

Tribunal decision

The tribunal agreed with the company that she was self-employed. It said that she may not have thought she was conducting a business, nor that the company was a customer of that business, but that was the essence of their relationship.

The tribunal then considered section 35 of the Act and concluded that she could not claim that she was a home worker since she did not work at home.

Arguments on appeal

Mrs James argued that the question was not whether she was providing services, but whether she was providing them to a customer in the context of operating a business undertaking or in her capacity as a worker.

For its part, the company argued that there were striking features to support the tribunal's conclusion, in particular that Mrs James provided her own vehicle, had significant control over when she did the work, was paid by the number of parcels delivered, was free to work for others, and could on occasions appoint a substitute.

Both parties agreed that she did not have to work at home to be a home worker, but the company argued that as she was a mobile worker and did not work at a “place”, she could still not satisfy the definition in the legislation.

EAT decision

The EAT said that the central question was whether Mrs James was contracting with Redcats as a customer of her business. In this case, the fact that she did not have a business prior to contracting with Redcats did not help her claim that she was a worker.

The EAT said that the correct approach for tribunals was the same as that adopted in the discrimination field, which requires courts to consider the “dominant purpose” of the contract.  

If that purpose was not clear, the EAT said that tribunals could consider whether the obligation to do the work personally was the dominant feature of the contractual arrangements or not. 

If so, then the contract belonged in the employment field and the individual was either an employee or a worker.  If not, then the contract belonged in the business field. 

However, the EAT said that the most important point was that tribunals should carry out a careful analysis of all aspects of the relationship. The dominant purpose test was simply to help them decide which side of the boundary a particular case fell.

On that basis, the EAT remitted the case to another tribunal for a new hearing.