The Decision of the Supreme Court in Autoclenz V. Belcher - Case Study Example

A case on the decision of the Supreme Court in Autoclenz v Belcher UKSC 41. T Introduction The Supreme Court in its latest decision concerning Autoclenz ltd v. Belcher and Others focused on applying the right approach in solving employment disputes of written contracts (Davies, 2009, p.321). It sought to establish the actual employment context between the concerned parties as well as the legitimacy of the written term. In this case, the main question to attend to was as to whether the claimants were actually workers, by taking into consideration the already existing regulations such as the 1998 working time regulation (WTR) and the 1999 national minimum wage regulation (NMWR). The decision offered by this court confirms that a lot of consideration should be given to what exactly was the agreement between the concerned parties alongside a written contract terms (Brodie, 2009, p.6). This does not only imply that an employment tribunal (ET) should only consider the terms written at the commencement of the contract, but also at any subsequent phase which might have altered the terms of the contract. Moreover, ET does not need to be confronted by an evidence or intention of third party deceit for it to search beyond an agreement’s written terms. According to the court, the decision does not change in any way employment laws in any way since rationality is allowed in cases that call for it (Middlemiss, 2007, p.101). Background to the case Autoclenz (appellant) is an organization that participates in the provision of car-cleaning services to both auctioneers and motor retailers (Davies, 2009, p.324). On the other hand, the claimants (respondents) consist of 20 valeter individuals who offered their services to Autoclenz as car valeters. All these valeters signed a contract at the begging with Autoclenz which stated that they were self-employed hence their taxation will be based on that. However, later in 2007, the claimants were subjected to new contracts by Autoclenz which they were required to sign. The new contract had two main clauses: The first clause allowed the valeters to engage another individual to perform services on their behalf as long as that individual met Autoclenz employment standards. Secondly, by handing over responsibilities to another person, that particular individual’s services will no longer be needed by Autoclenz. There was also a clause that accorded the veleters a right to work refusal. Moreover, the veleters were to give their absence notification in advance (Freedland (2003, p.94). The claimants later placed a case at the employment tribunal seeking to be recognized as workers considering the definition of a worker by the WTR and MNWR. Basing on these two employment regulations, they also claimed that their remuneration should be in harmony with the NMWR. On the contrary, these claims seemed to be inconsistent with what the written terms of the contract depicted (Collins, 1998, p.353). Autoclenz considered the valeters to be self-employed individuals who were not in a position to claim the statutory benefits of an actual employee. The two mentioned regulations look at worker from an identical ground as a person who works under: An employment contract. Or other contracts (implied or express). At first the ET held a stand that the veleters can be taken to be workers as well as employees, since Autoclenz exercised much control over them and they were completely in the business (Middlemiss, 2007, 104). Furthermore, all the veleters seemed to have no idea of the substitution clause and for the fact that no one of them had participated in it. However, later the EAT giving the saga a different approach argued that since no clauses whether those of substitution or obligation can be inconsistent with employment contracts or personal performance contracts according to the law, then using the written agreement, the valeters were workers but not employees (Smith, Thomas & Smith, 2010, p.122). Finally, the Court of Appeal settled on the ET’s decision that considered the valeters as being both workers and employees. Main issue and judgment The main issue in this case was for the Supreme Court to establish whether there is a dispute over what is written down, the actual nature of the agreement between the concerned parties and eventually to what extent can the terms written be dismissed in favor of the actual nature of the agreement (Davies, 2009, p.334). From this kind of reasoning, the substantive judgment by the Supreme Court can hold since the claimants worked under employment contract as stipulated in the regulations of WTR and NWMR. Reasons for the Decision Upon assessment, the ET found that the expectations of each party differed from the other hence the written terms could not hold. Freedland (2003, p.55) explains that the agreement which was written was not complying with what was the exact parties’ agreement. While the claimants expected to be treated as employed staff with all the employment benefits awarded to them, Autoclenz saw them as self-employed staff. As a result, in the context of employment, courts are allowed to dig dipper into what was actually the agreement with disregard to the written terms. This is mainly because employers are fond of including clauses that aim at statutory result avoidance, even when that is not the real relationship on the ground with his/her employee (Smith, Thomas & Smith, 2010, p.127). Furthermore, workers may not understand the implication of such added clauses and may end up signing them ignorantly. In situations where one of the concerned party seems to doubt the genuineness of the written agreement, it is clear that the party’s expectations differs with what is being presented on paper thus the need to go past the papers (Brodie, 2009, p.7). There is no need for a party to depict intentions of deceiving anyone but rather expresses a dissatisfaction of its expectations. In every case the question is aimed at discovering what the real relationship between the parties was expected to be. In finding this the court will be expected to carry out an intensive investigation to discover the actual requirements of the parties legally. All the related evidence should be brought forth, examined and relevant conclusions drawn from them. Middlemiss (2007, p.105) concurs that in regard to that, the written agreement will be expected to be read in the perspective of the entire agreement with the inclusion of the parties’ conduct both in practice and in theory. Consequently, the context in which employment contracts take place should not be disregarded (Fredman, 1997, p.337). First, one needs to understand that the parties involved in such a case are not of equal power. An employer has more experience in the employment field as compared to an employee who may be having that contract as his/her first one. Thus, taking advantage of his/her expertise in this field, an employer may lure an employee into signing a contract which he/she has no sufficient implications of it. Taking that in consideration, the judgment by the court of appeal cannot be regarded as altering ordinary contracts’ principles (Brodie, 2009, p.8). For instance, such perspective cannot hold in cases of commercial contracts since here both parties possess equal negotiation capability. Using the above rationality in the case of Autoclenz v Belcher and others, the ET upon investigation came out with these conclusions. David (2007, p.2003) asserts that the conclusions held as the actual agreement that was signed to and what was existed being practiced on the ground: The valeters performed their work within a specified timeframe and also presented quality work. The valeters expected a particular amount of pay for their work as agreed with Autoclenz. While the valeters had an obligation of performing effectively any work assigned to them, Autoclenz had the role of ensuring the valeters had work. Finally, the valeters were expected to personally perform the work without substitution as depicted in the written document. In comparing what the ET found out with what the written document stated, the Supreme Court was quick to note a difference. According to (Diane, 2009, p.25), the difference actually represented the dissatisfaction brought forth by the claimants. For example, after analyzing the clause in the written contract that described the valeters as self-employed, the ET found the clause non practical to the actual situation on the ground. According to the Supreme Court, the ET findings were the real terms of the contract thus the written terms were not a true reflection of actual party relationship. Autoclenz might have included some additional clauses that were not included in the other party’s expectations (Busby, 2002, p.175). Due to this the, the ET had every right to declare the written document null and void. Conclusion Though many may consider the court’s decision to be controversial, the fact remains that the court acted rightfully according to the law (Diane, 2009, p.23). The primary test presented in this case seems mixed up in regard to the original way of handling contractual issues. In fact, this has not actually changed, only that more freedom has been accorded to tribunals/courts to an extent that they can look past the written agreement itself. This is done with the aim of ascertaining the true intentions and conduct of the parties; sham contracts can thus be challenged. This will instill discipline among employees who seek to overlook the statutory duties associated with employees such as heath and insurance covers. Written contracts are also of great importance, but should always depict the terms of the real agreement (David, 2007, p.198). Unfortunately, the task of establishing the “true relationship” has proven to be very challenging as it needs a lot of rationality. References Brodie, D ‘Sham contracts and contracting out’, Employment Law Bulletin, [2009], 91, June, pp. 6-8. Busby, N ‘IR35: resolution of a taxing problem?’, Industrial Law Journal, [2002], 31(2), pp. 172-82. Collins, H ‘Independent contractors and the challenge of vertical disintegration to employment protection laws’, Oxford Journal of Legal Studies, [1998], 10, p. 353. David, Cabrelli Discretion, power and the rationalisation of implied terms, ILJ, [2007], 36(2), p. 194-206. Davies, A.C.L. ‘Sensible thinking about sham transactions’, Industrial Law Journal, [2009], 38(3), pp. 318-29. Diane, Irving The role and development of mutual trust and confidence as an implied term of the contract of employment, Cov. L.J., [2008], 13(1), p. 22-27. Fredman, S ‘Labour law in flux: the changing composition of the workforce’, Industrial Law Journal, [1997], 26, p. 337. Freedland, M, The Personal Employment Contract, Oxford University Press, Oxford, [2003]. Middlemiss, S ‘Discriminating material? Legal liability of employers for job advertisements’, International Journal of Discrimination and Law, [2007], 9, pp. 95-111. Smith, I, Thomas, G, & Smith, M, Woods Employment Law, Oxford,10th edition, [2010]. Read More