Self-employment: Providing a personal service

Facts:

MPG Contracts (“MPG”) appealed a decision that Messrs England (“England”) were workers within the definition contained in Regulation 2(a) of the Working Time Regulations 1998 for the purposes of determining their entitlement to holiday pay in respect of their work for MPG.

England worked as self-employed partitioning and ceiling erectors and signed written contracts with MPG headed “contract for services”. This contract provided that nothing in it was to be construed or having effect as constituting any relationship of employer and employee, agency or partnership between MPG and England and that England was not entitled to holiday pay, sick pay or pension rights. The contract also provided that England was free to subcontract the work or engage others to fulfil an engagement and that there was no obligation upon MPG to provide England with any work.

Issues:

1 Was the contract between MPG and England one to perform work and services?

2 If so, was it a contract to perform personally that work or those services?

3 If so, was England providing services in the course of running a business undertaking to MPG as a customer?

Held:

MPG accepted that there was a contract for services. Therefore the critical question was whether these were contracts for personal services. After reviewing the words of the written contract, the court held that it was not a contract for personal services as England was free to engage labour other than itself to fulfil the contract with MPG. This was wholly inconsistent with a contract for personal services. In addition, the factual matrix was used to determine the true intentions of the parties. It was decided that the fact that MPG refused work to an additional worker proposed by England because there was insufficient work was an irrelevant factor in determining whether these were contracts for services. Therefore, England's claims for holiday pay were dismissed.

Comment:

Both employers and employees should ensure that they understand the terms of their respective contracts and in particular, their entitlement to holiday pay, sick pay and pension rights. This case serves as a reminder for employees to ensure that, if they wish to have holiday pay, that they understand the terms of their contract fully.