A recent Court of Appeal decision in the case Secretary of State for Justice v Windle and Arada has ruled that an employment tribunal can take account of the ‘absence of mutuality of obligation’ (now a common phrase when dealing with employment status disputes and IR35) when deciding whether an individual is an ‘employee’ for the purpose of the Equality Act 2010 (EqA).
Hirers, agencies and recruiters need to be aware that this ruling now widens the scope for who is protected and who isn’t protected under the EqA, which brings an increased risk of exposure to costly discrimination claims from agency workers, contractors and freelancers. In this case the ambiguity of employment status was much debated and resulted in three different courts having differing views.
In this race discrimination case the Claimants were professional interpreters who provided work for HM Courts & Tribunals Service, amongst others, on a case by case basis. They were self-employed for tax purposes and did not receive holiday or sick pay.
The Employment Tribunal (ET) dismissed the Claimants’ claims because there was no obligation imposed by law or contract for them to accept any work assignment and therefore there was no ‘mutuality of obligation’ – which is an essential ingredient for an employer and employee contractual relationship. ‘Mutuality of obligation’ is a term describing the legal obligation of an employer to provide work and pay for it, together with the legal obligation of the employee to personally carry out the work. The ET cited the well-known case Quashie v Stringfellows – concerning a stripper who was deemed to not be an employee as there was no obligation on her to dance for anyone; she could do so at her discretion.
The Employment Appeals Tribunal (EAT) disagreed and held that mutuality of obligation was only relevant to whether an employment contract was formed, but irrelevant to whether there was a ‘contract personally to do work’, as defined in the EqA.
The Court of Appeal disagreed with the Employment Appeals Tribunal. They held that mutuality of obligation was not a pre-condition for the definition of ‘employment’ for the purposes of the EqA, it was a factor that could point in the direction to establish the nature of the contractual relationship.
The ruling in this case provides potential protection under employment legislation for casual workers bringing discrimination claims against hirers and agencies. It’s also worth noting that job seekers are protected under the EqA and recruiters who do not shortlist candidates because they have a protected characteristic (such as race) could similarly face exposure to discrimination claims.
For recruiters this ruling presents a double-edged sword in discrimination claims cases.In situations where mutuality of obligation cannot be shown future claims could be dismissed. However where mutuality of obligation can be shown this can be used to bring agency workers, contractors and freelancers under EqA protection.
This case shows how important it is for recruiters to protect their interests, and those of their hirers, by putting in place robust EqA-compliant contracts that clarify employee status and by establishing indemnities for potential liability claims.
Lawspeed can help
- Clear contractual provisions regarding employee status and indemnities for potential liability for claims.
- Robust contracts in place with provisions that ensure compliance with the EqA throughout the contractual chain.
- Policies and procedures relating to Equality & Diversity.
- Employee Manual and Employment Contract.