AD Bly Construction Ltd v. AT Cochrane

Factual and Procedural Background

The parties before the Bedford Employment Tribunal were the Plaintiff and Company A. The Plaintiff, engaged as a labourer, commenced work with Company A in 2001 on a self-employed basis and was not challenged as an employee. Company A operated in the construction industry, employing approximately 225 construction workers, 30 administrative staff, and engaging around 220 self-employed sub-contractors. The Plaintiff was paid a daily rate subject to tax deductions under the CIS 4 scheme. Prior to December 2003, no written contract existed between the parties; on 11 December 2003, the Plaintiff signed a contract containing terms emphasizing the absence of mutuality of obligations, the right to send substitutes, no entitlement to holiday pay, and freedom to undertake other contracts.

The Employment Tribunal found that although the Plaintiff was not an employee, he was a worker within the meaning of the Working Time Regulations 1998 (WTR). The Tribunal concluded that the Plaintiff personally performed the work despite the contract allowing for substitution and that the Plaintiff was entitled to holiday pay subject to further determination pending the House of Lords decision in a related case. The present appeal by Company A challenges the classification of the Plaintiff as a worker under Regulation 2(1) WTR.

Legal Issues Presented

1. Whether the Plaintiff was a worker within the meaning of Regulation 2(1) of the Working Time Regulations 1998 ("the Worker point").
2. If so, what is the Plaintiff's entitlement to holiday pay from Company A in accordance with the Court of Appeal decision in CIR v Ainsworth ("the Ainsworth point").

Arguments of the Parties

Appellant's Arguments

• The contract signed by the Plaintiff was a valid contract for services without mutuality of obligations, as the Plaintiff was not obliged to accept work and Company A was not obliged to offer work.
• The Plaintiff’s status as a worker depends on the existence of mutuality of obligations, which was absent under the contract.
• Reliance was placed on established case law including Stephenson v Delphi Diesel Systems Ltd, Ready Mixed Concrete Ltd v Minister of Pensions and National Insurance, and Byrne Brothers (Formwork) Ltd v Baird to argue that the absence of mutual obligations precludes worker status.
• It was submitted that the contract’s terms allowing substitution and absence of obligation to work or offer work demonstrated the Plaintiff was not a worker under Regulation 2(1)(b) WTR.

Appellee's Arguments

• The Plaintiff personally performed the work, and the contract did not truly reflect the intentions of the parties regarding substitution and mutuality of obligations.
• The broad definition of worker under Regulation 2(1)(b) WTR and the purpose of the Directive and Regulations to protect health and safety through paid holidays support the inclusion of the Plaintiff as a worker.
• Reliance was placed on the purposive interpretation of the Directive and the Court of Appeal decision in Mingeley v Pennock & Ivory t/a Amber Cars, arguing that the Plaintiff’s personal service and continuous work for Company A establish worker status despite contractual terms.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed whether the Plaintiff fell within the limb (b) definition of "worker" under Regulation 2(1) WTR, focusing on three key elements: the terms of the contract, mutuality of obligations, and personal service.

The court accepted that the written contract allowed substitution, no obligation to accept or offer work, and expressly denied mutuality of obligations. However, the Tribunal found the Plaintiff personally performed the work and always accepted offered work, suggesting a factual matrix contrary to the strict terms of the contract.

The court considered established authority requiring mutuality of obligations—an obligation on the employer to offer work and on the worker to accept it—as the minimum for classifying a contract as one of employment or worker status. The court found that the absence of mutuality in the contract was decisive, as the Plaintiff was not obliged to do the work and Company A was not obliged to offer it.

While personal service was agreed by all parties to be present, the court held that personal service alone was insufficient to establish worker status without mutuality of obligations. The court rejected the submission that the contract’s terms were a sham, emphasizing that the contract reflected the true agreement.

Consequently, the court concluded that the Plaintiff was not a worker within the meaning of Regulation 2(1) WTR. This determination rendered the second issue concerning holiday pay entitlement under the Ainsworth point moot.

Holding and Implications

The appeal is allowed and the Plaintiff is not classified as a worker under Regulation 2(1) of the Working Time Regulations 1998.

This decision dismisses the Plaintiff’s claim for holiday pay entitlement under the WTR on the basis that he was not a worker. The ruling is limited to the facts and contractual terms of this case, and no new precedent beyond the application of existing legal principles is established. The related issue of holiday pay entitlement under the Ainsworth point is rendered unnecessary to consider following this determination.