Byrne Brothers v Baird and others [2002] IRLR 96

Now that at least some employment rights extend beyond the confines of employees, the definition of a 'worker' is becoming more important. The issue was recently considered in the case of Byrne Brothers v Baird. The Applicants in this case were self employed building trade workers who were required to sign a standard form sub-contractors' agreement. Under the terms of the agreement they were not entitled to holiday pay, sick pay or pension rights. So when they received no holiday pay for the Christmas/New Year break they presented applications to an Employment Tribunal claiming they were entitled to holiday pay under the Working Time Regulations.

Regulation 2(1), of the Working Time Regulations provides that a worker means: 'an individual who has entered into or works under (a) a contract of employment or (b) any other contract, whether expressed or implied, whereby the individual undertakes to do or perform personally, any work or services for another party to the contract, whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.'

This definition therefore potentially covers a wide range of individuals who provide personal services under a contract including many casual, freelance and some self employed workers as well as employees. However, the definition does not extend to self employed people who are genuinely pursuing a business activity on their own account.
The Tribunal found that as Mr Baird and his colleagues were obliged to perform personally work or services for the company and that they did not do so in the capacity of a business undertaking, they were workers for the purposes of the Regulations and accordingly entitled to holiday pay.

The company appealed to the EAT and the issues were:

(i) Whether the Applicants were undertaking personal work or services for the company and
(ii) whether the company was a customer of a business undertaking carried on by each of the Applicants.

There was a clause in the contract that provided that where the sub-contractor cannot provide these services, the sub-contractor may provide an alternative worker to undertake the services subject to obtaining the express approval of the contractors. The clause fell short of giving a sub-contractor a blanket licence to supply the contractual services through a substitute. The EAT held that a limited power to appoint substitute is not inconsistent with an obligation of personal service.

In respect of whether the company was a customer of business undertakings operated by the individual Applicants, the EAT stated they were going to focus on the term 'carrying on a business undertaking' and 'customer' rather than profession or client. In their view it was clear that the Applicants did not carry on a profession in the ordinary sense of the word and that the company was not a client. They noted that the term was not intended to have such a wide meaning.

The intention behind the Regulation was to create an intermediate class of protected worker, who on the one hand is not an employee, but on the other hand cannot in some narrower sense be regarded as carrying on a business.

The EAT concluded that the basic effect of the definition of worker is to lower the pass mark so that individuals who fail to qualify for protection as employees might nevertheless do so as workers. Hence, the EAT upheld the Tribunal's decision of concluding that the Applicants were not carrying on a business undertaking but were workers.