The claimants (a husband and wife) decided to become foster parents.  They undertook the training and signed a document under the Looked After Children (Scotland) Regulations 2009.  This document provided that the claimants would be paid a fee (c. £30,000 p/a) and would be entitled to four weeks’ holiday.   The claimants sought to bring a number of claims against the Council, yet the preliminary issue of their employment status had to be determined first.  The Payment Policy outlined that the foster carers were to be ‘self-employed’ and the general position taken by the Council was that the relationship was a statutory one rather than a contractual one so they should not be regarded as employees.

To determine the employment status of the foster carers, the EAT examined the terms and nature of the written document.  Many elements such as the procedure for handling complaints were regarded as being non-contractual but actually required by statute as argued by the Council.   Other terms in the agreement went beyond a mere duplication of the obligations required by statute such as the control that can be exerted by the Council and the financial arrangements.  This was important as the EAT outlined that there are instances where the duplication of statutory obligations could be regarded as providing information rather than having a contractual basis.  As the terms went further than this, even though the statute did outline that the written agreement was to outline any financial arrangement, it was held that the relationship was contractual in nature.

Having determined that the relationship was contractual rather than merely statutory, the second issue was the nature of that contract and if it created an employment relationship.  The EAT compared it to ordinary foster care and it differentiated on the basis that the claimants were paid a substantial fee rather than expenses.  There was also a degree of control in the relationship that existed such as the Council requiring the claimants to report daily and requiring them to give up other employment.  The nature of the relationship seemed, on the face of it, to meet the tests that had been set out in finding an employee-employer relationship rather than one of an independent contractor.

One of the difficulties faced by the EAT was that there had been a number of other decisions made in England stating that the relationship between foster carers and councils was one based upon statute rather than contract.   However, the Scottish EAT here stated that those cases are not binding and could in fact be distinguished as they were fact specific.  This was clear from the leading case of W v Essex County Council (1998) where there was no package of conditions and limited control exercised when compared to the index case.  For this reason, there was an application of the ordinary tests looking at control and mutuality of obligations and it was held that the claimants were employees.

Practical Lessons

This case demonstrates the way in which the tests for employment status are able to mould themselves and fit into all aspects of working life.  The position of a foster carer is an odd one on the basis of the statutory obligations that are being outlined in the agreement.  However, the fact that the agreement went only slightly further than the statutory requirements meant that it was a contractual relationship rather than statutory one.  This opened up the arrangement to be considered as an employment one.  When this happened, the application of the normal tests demonstrated very clearly that there was control exerted by the Council and this was an employment relationship.   For those working in heavily statutory regulated industries there may be a need to consider the implications of this decision.
https://www.bailii.org/uk/cases/UKEAT/2019/0011_18_2310.html