Weight Watchers case: the importance to employers of employment status
The Upper Tribunal has dismissed Weight Watchers employment status appeal and upheld the decision of the First-tier Tribunal that Weight Watchers leaders were employees of Weight Watchers (UK) Limited for PAYE and national insurance purposes and not operating on a self-employed basis.
Implications
Apart from Weight Watchers' headline-grabbing reported £23 million tax bill, the decision serves as a reminder that while it is important that contracts are drafted in such a way as to reduce the risk of an arrangement being classed as a contract of service, it is equally, if not more, important to ensure that the practical reality is in accordance with those terms. The tribunal will have little difficulty in dismissing "labels". The decision also serves as a reminder to keep employment status issues (and related documentation) under regular review.
Susan Mayall, Pearson Solicitors employment law specialist: “Just because an employer calls a person carrying out tasks for them "self-employed" the tribunals and courts will look further than the label at the true contractual relationship of the individual, and not the relationship as stipulated by the contract in place, if there is such a contract, to ascertain tax, and the person carrying out tasks rights to bring a claim for unfair dismissal.”
Although many other factors were considered, the decision in Weight Watchers centred primarily around the concept of “right of substitution”, which is one of the key factors that are considered when assessing any employment status.
The tribunal's decision makes clear that a substitution clause will only work if it enables the worker to sub-contract her obligations to a substitute.
The case should be examined carefully, particularly by any organisations that engage significant numbers of individuals on a ‘self-employed’ basis.
Contact us
If you are affected, or think you may be affected, by employment status issues – whether in the tax arena or for employment law purposes - please contact Susan Mayall in our employment team using the details provided below.
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