Employee or self-employed
Employee or self-employed?
In a recent Interim Hearing – Mr Coleman Vs Digital Communications Systems (Commercial Division) Ltd case number 1105066/06, the Tribunal set out its case for deciding upon whether Mr Coleman was a Consultant or an Employee of the Company.
It is important to understand the distinctions between the above as employers may inadvertently think that just because a staff member carries the title of consultant this means that there is no employer/employee status in place and therefore the Employment (Jersey) Law 2003 will not apply either.
Background
The Claimant commenced work with the Company in July 2004 and the Employer presented evidence that his role was that of a Consultant as the Claimant had other business interests and also because his services as a Consultant were cheaper if he worked on a self employed basis. Both men were friends and the working relationship was a great success with the business being strengthened by the Claimant’s contribution. The Employer maintained that the Claimant’s status as a Consultant was not in doubt as he was not included in the Company’s Social Security returns, whereas all other employees were. This was further endorsed by the Claimant retaining his Social Security card and not receiving a salary slip along with all other employees. Whilst invoices were not raised by the Claimant the Employer paid him weekly by cheque in a casual manner because of their friendship. When the Employer went on holiday the Claimant was left in charge of the business in his absence.
Consideration
The Tribunal had to consider 3 elements (along with the evidence heard) when deciding on the employment status of the Claimant:
1. the amount of control exercised over him by the Employer with regard to his performance of duties;
2. the extent of his integration into the business;
3. the economic reality of the case – was he in business on his own account.
Control - the Employer exercised little control over the activities of the Claimant due to his high level of competency, and also the degree of trust that existed between the parties. The Tribunal found that the test of control was not an issue in this relationship.
Integration - the Tribunal found that very quickly the Claimant was an integral part of the business and this was demonstrated by the Employer leaving him in sole charge when he went on an extended holiday early in 2005. The Claimant’s role and authority in the Company was accepted by the employees and third parties and actively promoted by the Employer. Whilst the role that the Claimant undertook – namely the function of the operations manager (previously and subsequently undertaken by the Employer), the Claimant made it a managerial role and introduced procedures and policies which aided the company in its business.
Economic Reality – the Tribunal found that the Claimant was not in business on his own, he did not advertise himself as a consultant or hold himself out as one, and importantly the employer would have known that this was the only job and only income enjoyed by the Claimant.
Therefore the findings of the Tribunal were that despite the intent of the Employer to offer a Contract for Services to a Consultant the reality of the situation is that the Claimant was an Employee and therefore was afforded protection under the Employment (Jersey) Law 2003.