The Employment Rights Act 1996 (ERA) gives employees the right to claim statutory notice pay on termination of employment. The Employment Appeal Tribunal (EAT) reiterated in Knight v BCCP Ltd that, as a minimum, there has to be “mutuality of obligation” between the parties to establish that the claimant is an employee.
Mr Knight was a taxi driver who worked for BCCP between 1 September and 14 October 2008. He had to provide his own car, cover the running costs and pay his own tax and national insurance contributions.
He received mileage rates for the work that he did, but had no set hours and did not have to turn up for his shift if he didn’t want to. He did not receive holiday pay, overtime or sick pay and was only paid for the jobs he did. The firm dictated how he should dress, how the car was to be presented and the etiquette for opening and closing doors.
His contract with BCCP came to an end when he refused to fill in a detailed security questionnaire in order to drive cars provided for government purposes.
He claimed that, as an employee, he was entitled to a week’s statutory notice period under section 86 of the ERA 1996.
The tribunal decided, however, that Mr Knight was a worker, not an employee and was not therefore entitled to claim the statutory notice period.
Relying on the case of Ready Mixed Concrete (South East) v Minister of Pensions, the tribunal pointed to a number of factors that were inconsistent with a contract of employment - he paid his own tax and national insurance; he was referred to as a sub-contractor; and he provided his own car.
More significant, though, was his working arrangement. There was no obligation on Mr Knight to work on any given day and when he did make himself available, there was no obligation on the taxi firm to give him work. There was, therefore, no contract of employment.
And the EAT agreed. It said that for a contract of employment to exist, there had to be - as a minimum - “mutuality of obligation”. In other words, that the firm had to offer work and Mr Knight had to accept it.
The EAT said the tribunal had been entitled to conclude, as a question of fact, from Mr Knight’s evidence that there was no mutuality of obligation.
It was “noteworthy” said the EAT that although Mr Knight had “an expectation” of being given work, there was clearly no obligation on the company to do so. As he only got paid for the work he did "the irreducible minimum necessary to create a contract of service" was missing.
The issue of employee status has been a hot topic in recent years, fuelled mainly by cases brought by agency workers. The law has settled down again, and here the EAT decided the claim using principles from a 43 year old case, rather than anything more recent. It nevertheless shows that sometimes the simplest questions are the hardest to answer, and is a further illustration of the significant benefit to trade union members which legal assistance represents.