Unite, and predecessor union Ucatt, which it took over at the start of the year, have long been campaigning against what they call 鈥榖ogus self-employment鈥� and the use of 鈥榰mbrella鈥� payroll companies.
The case is the first appeal launched by Unite鈥檚 new strategic case unit which will focus much of its work on tackling self-employment. The case is significant as the EAT鈥檚 decision on the appeal will set a legal precedent, which employment tribunals nationwide will be obliged to follow when dealing with claims involving agencies and employers that use payroll or umbrella companies.
The case concerns Unite member Russ Blakely who was employed as a pipefitter on the NHS funded Broadmoor hospital redevelopment project in Berkshire from 19th January 2016 until 20th May 2016.
The main contractor was Kier and the mechanical contractor was Fascel. Mr Blakely received a text from employment agency On-Site Recruitment Solutions Ltd to confirm he was to work on the project and that he needed to contact an umbrella/payroll company, Heritage Solutions City Ltd, for payment.
Mr Blakely was paid weekly and was charged a weekly fee of 拢18 by Heritage Solutions City for his pay (described as Management Company Margin). He was also charged the employer鈥檚 national insurance contributions, labelled on his payslip as 鈥楬MRC Payment NIERS鈥�. In total he was charged 拢324 in management fees and 拢725.59 in employer NICs.
Mr Blakely was not asked to sign any form of contract until March 2016 when Heritage Solutions City asked him to sign 鈥榓 contract for services鈥�. This document stated that he was neither an employee nor a worker and it sought to exclude basic worker rights, including auto-enrolment pension, holiday pay under the Working Time Regulations 1998 and sick pay. The contract also attempted to authorise deductions for employer鈥檚 class 1 national insurance from Mr Blakely鈥� pay and included an 鈥榠ndemnity鈥� clause aimed at dissuading him from pursuing any legal claims and gagging him from raising complaints with HM Revenue & Customs. He was told that if he did not sign the agreement his pay would be stopped. Despite this, Mr Blakely refused to sign.
He continued to work until 20th May 2016, when he took holiday and was told that he was not needed to return.
With the support of Unite Legal Services, Mr Blakely took an employment tribunal case for unlawful deduction of wages for the management company deductions and the employer鈥檚 national insurance. He also claimed for the accrued holiday pay he had earned and not been paid. The member鈥檚 total claim is worth between 拢2,500 and 拢3,000.
聽The case was initially heard at the Reading Employment Tribunal which dismissed the claim as they found he was not a worker. Unite lodged an appeal with the EAT on 3rd March 2017 based on the tribunal wrongly applying law and reaching a perverse conclusion.
Unite assistant general secretary for legal services Howard Beckett said: 鈥淔or too long employers, agencies and accountants in construction and other industries have believed that they can boost their profits and evade basic employment protections by classifying workers as bogus self-employed. Unite has drawn a line in the sand and will be throwing the full force of our resources behind our members who are sick of being exploited and treated as disposable units that can be hired and fired at will.
鈥淲e expect the EAT will uphold our appeal and establish a legal precedent for employers and agencies operating these sham contracts, which bear no relationship to the actual employment relationship, and mean this exploitation loophole can be closed.
鈥淚t is astonishing that both On-Site, the agency, and the payroll company, Heritage, thought it was somehow legal and acceptable on the one hand to deduct employer鈥檚 NI from Mr Blakely鈥檚 wages and on the other claim our member was self-employed to avoid paying holiday pay and basic minimum pension contributions, whilst charging a 鈥楳anagement Company Margin鈥� for doing so. It鈥檚 a disgrace that this was allowed to happen, least still on a publicly funded NHS project.鈥�
聽Mr Becket continued: 鈥淐ompanies big and small need to take note that Unite鈥檚 strategic case unit has been set up for dealing with precisely this type of legal case and we will be shining a light those who seek to shamelessly dodge worker rights with bogus self-employment and other precarious models and those that allow this to occur in their supply chains.
鈥淲hilst this isn鈥檛 the type of case or appeal that a mistreated worker might bring on their own, employers should beware, as Unite members have the unwavering support of the UK鈥檚 largest trade union.鈥�
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