An individual’s employment status determines their rights, obligations and their employer’s responsibilities. Despite the obvious importance of the question of employment status, it is not an easy one to answer. It is impossible to set down a clear set of criteria that definitely determines an individual’s status as the area is highly fact sensitive. However, a number of tests and how they are likely to be applied in certain circumstances can be gleaned from the case law in this much litigated area. The EAT’s decision in Halawi v WDFG UK Ltd (t/a World Duty Free) and another UKEAT/0166/13 demonstrates a recent application of such tests.
The facts and tribunal decision
Mrs Halawi worked as a beauty consultant selling Shiseido cosmetics in a duty free outlet at Heathrow Airport. Her security clearance to do so was withdrawn following her colleagues’ complaints about her, and she claimed that she had thereby been discriminated against. In order to bring such a claim she had to show that she was an employee within the meaning of the Equality Act 2010, which essentially required her to show that she had (i) a contract with the respondent(s) (ii) by which she undertook personally to do work.
Mrs Halawi provided her services through her own limited company, which invoiced a company called Caroline South Associates (“CSA”) for the hours she worked each month. CSA provided staff (including Mrs Halawi) to Shiseido to work in the retail space controlled by another company trading as World Duty Free (“WDF”). Thus, there was no contract of any kind between Mrs Halawi and WDF. Further, there was found to be no contract between her and CSA as the relationship was between CSA and her limited company.
The tribunal found that even if there was a contractual relationship in place, it was not an employment relationship as there was a complete absence of typical employment-related features, such as the obligation to perform work personally, mutuality of obligation and control. The arrangements were such that there was no requirement for Mrs Halawi to provide services personally as she had an unfettered right to provide a substitute: a right which was more than theoretical, as on occasion she did exercise it. Further, neither WDF, Shiseido or CSA were under an obligation to provide work to Mrs Halawi and she was free to refuse work if offered. She also did not get paid if she did not work, and had no entitlement to holiday or sick pay. As such the tribunal found Mrs Halawi was not an employee for the purposes of bringing a discrimination claim under the Equality Act 2010.
The Appeal
Mrs Halawi appealed to the EAT and argued that the requirement for there to be a “contract personally to do work” should be disregarded when deciding whether she could bring her discrimination claim. She said that what mattered was whether she was in a “subordinate” position to WDF or CSA and that the EAT should look more broadly at whether she was in an “employment relationship” with either company.
The EAT rejected her arguments and upheld the tribunal’s decision. It held that a contract personally to do work was required for the Equality Act 2010 to apply and could not be established on the facts. Further, the lack of control over Mrs Halawi and the absence of any direct evidence that she was economically dependent on CSA or WDF also led the EAT to conclude that an employment relationship of subordination had not been established in any event. As Mrs Halawi could not establish the requisite employment status she therefore did not benefit from and could not enforce the employment law protections under the Equality Act 2010.
The EAT was clearly troubled by the fact that someone in Mrs Halawi’s position could be discriminated against without recourse to the courts, however, it stressed that the legal tests had to be satisfied.
The case is a useful demonstration that the correct approach to determining employment status is to look carefully at the terms of each relationship and how that relationship operated in practice considering factors such as mutuality of obligation, control and the absence of personal service.
