When determining if someone is an employee, tribunals apply certain tests which include examining the degree of control that the employer has over the individual. In Glasgow City Council v Mr Johstone and anor, the Employment Appeal Tribunal (EAT) held that the degree of control by the council over the way that Mr and Mrs Johnstone delivered foster caring services indicated that they were council employees.
As part of a new fostering service being offered by Glasgow City Council, Mr and Mrs Johnstone entered an agreement whereby they were paid a professional fee of almost £32,000 per annum (which was paid whether a child was placed with them or not) plus an allowance when a child was placed with them. They were also entitled to four weeks’ paid holiday.
The agreement gave the council total control over how foster services were to be delivered to any children placed with them. For their part, Mr and Mrs Johnstone were obliged to supply a daily report on any child who they agreed to look after, to comply with the terms of any foster placement agreement and to attend training on a regular basis.
The agreement also stipulated that the foster carers were self-employed and therefore responsible for their own income tax and National Insurance. They were not allowed to take up any other paid employment.
Mr and Mrs Johnstone argued that they had a contract of employment with the council, giving them rights as employees. For its part, the council argued that the relationship was governed by statute and was therefore non-contractual.
The tribunal accepted that the agreement entered into between Mr and Mrs Johnstone and the council was contractual in nature and contained elements indicative of a contract of employment.
The tribunal pointed, firstly, to the payment of an annual fee of almost £32,000 to the claimants in respect of fostering services which “had the appearance of remuneration” as opposed to a sum of money paid to cover their costs. Secondly, it pointed to the degree of control exercised by the council over Mr and Mrs Johnstone in terms of delivering foster care services.
Since one of the characteristics of a contract of employment is that one party exercises a significant degree of control over the other, the high degree of control exercised by the council suggested that it was the employer of the foster carers.
The council appealed.
The EAT held that the tribunal was right to conclude that there was a contract of employment between Mr and Mrs Johnstone and the council.
Firstly, the essence of the arrangement between the parties was the undertaking by the carers to “serve” the council “in return for a wage”, a classic feature of a contract of employment. This differed from so-called “ordinary” foster carers who were paid expenses, as opposed to a fee. They were also entitled to four weeks’ paid holiday.
The second feature of the arrangement that pointed towards a contract of employment was the degree of control that the council exercised over the claimants. In particular they were required to give up other employment, to attend training on a regular basis and when a child was placed with them, to report on a daily basis to the council.