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Employers Warned Over Contractual Agreement Accuracy

Supreme Court Rejects Appeal In Autoclenz Case


An employment law expert at Irwin Mitchell has called for firms to make every effort to ensure their agreements fully reflect their intentions, following an important Supreme Court judgment.

The Court unanimously rejected the appeal of Autoclenz Ltd in its case against Belcher and others, which related to a dispute over whether car valets were actually employees despite their contracts stating they were self-employed.

During the case, it was revealed that the workers’ contracts stated substitutes could undertake valet work, while they were not obliged to provide services to Autoclenz Ltd and the firm in turn could not guarantee work for them, all matters that would point away from “employee” status in law.

However, the valets brought their case arguing they were employees of Autoclenz Ltd despite the agreement suggesting otherwise after it was revealed they could not provide substitutes and were expected to work every day, meaning their contracts were not fully reflective of their work with the company involved which was genuine employment.

It was decided in this case that the valets were actually employees of Autoclenz and entitled to further wages as a result.

Glenn Hayes, a Partner and employment law specialist at Irwin Mitchell’s Leeds office, said: “This case highlights clearly that if employers intend to enter a contractual agreement with another party they need to ensure that the terms of work are clearly stated and accurate.

“Issues like this are not uncommon, as some businesses look to take advantage of regulations in which only certain rights are available to certain types of worker. For instance, rights to claims for unfair dismissal are only offered to “employees” and not contractors.

"This is often a reason why firms look to portray their relations with some workers as something different to what they actually are in practice.  Previous case law suggested that only where there had been an attempt to mislead that the Courts could look behind the wording of the contractual document itself, but this case suggests this does not have to be the case.

“This decision highlights how courts can look behind the actual agreement and examine matters carefully where the working practices transpire to be a lot different than first thought.

“It is vital that businesses take steps to ensure every agreement they make is clear and concise, for the sake of both employees and themselves, and that they are accurate."