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Scottish construction workers win legal challenge over employment status

5 Dec 13 A group of construction workers in Scotland have won an employment tribunal they brought to challenge the employment status imposed upon them.

Treated as self-employed, they were denied holiday pay and notice pay and had illegal deductions taken from their wages.

The workers, who were all joiners, were recruited by contractor Dunne, a company for which they had all previously worked, on the Southern General Hospital Project in Glasgow in October 2011.

On starting the project they were required to sign a contract. It was not until they had been working for several weeks that they realised that although they were working under the direction of Dunne they had signed contracts with a company called Marnoch Formwork Ltd and they had been engaged on self-employed contracts. The workers never had any form of working relationship with Marnoch Formwork Ltd.

Throughout their time on the project they did not receive pay slips and assumed that income tax and national insurance contributions were being deducted directly from their wages. Subsequently the workers were contacted by HMRC and told they owed income tax.

The contract included clauses that the workers could refuse work, had to supply all their own tools and could send a suitably qualified substitute, with the permission of the contractor, to undertake their work.

The workers did not receive holiday pay or sick pay. When their employment ended in August 2012 they made an employment tribunal claim with the support of their union Ucatt against Marnoch Formwork Ltd for holiday pay, unfair deduction from wages and not receiving notice pay, on the grounds that the self-employed contract did not represent their actual working practices. The workers were represented at the employment tribunal by Ucatt’s Scottish solicitors Dallas McMillan.

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The hearing took place last month. The employment tribunal judge agreed that the contract did not reflect the actual employment relationship of the workers. He said: “I find that the substitution clause did not reflect the reality of the relationship. The claimants were not businessmen in business on their own account. They had no control over the way in which they carried out their work. They were required to clock in and out. They were subject to the direction and control of Dunne employees on site. Importantly, the fact that they signed the contract accepting they were self-employed subcontractors did not mean they actually were self-employed contractors.”

He added: “On the evidence I was satisfied that, despite the assertion in the contract that the claimants were self-employed, this assertion bore no practical relation to the reality of the relationship even allowing for the fact that the claimants were registered with CIS.”

The employment judge found that the workers fully demonstrated worker status and that their claims for holiday pay and unlawful deductions can proceed. He also found that the workers met the definition of an employee and therefore their claim for notice pay can also proceed.

Ucatt Scotland regional secretary Harry Frew said: “This is an important victory. It demonstrates that companies cannot pretend that workers are self-employed and try to deny them basic rights such as holiday pay, sick pay and pension rights. Ucatt will ensure that other workers faced with the same problems will receive what they are entitled to.”

Dallas McMillan head of litigation Gordon Bell agreed: “This is an important tribunal victory for Ucatt members. It sends a strong message to employers that they can no longer evade their legal responsibilities to their employees and workers by making them sign one-sided contracts stating wrongly that they are self-employed contractors. Employment tribunals will simply ignore these ‘sham’ contracts and declare employees and workers entitled to their full employment rights.”

The judge was also critical of the lack of payslips. He said: “This failure to provide the claimants with payslips was itself unlawful and only served to further confuse what was already a completely unsatisfactory situation.”

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