The claimant, a hairdresser, commenced work for the respondent as an apprentice hair stylist in 2013.    She fully qualified in October 2014 and the respondent gave her a document to sign headed ‘Independent Contract for Services’.  This stated that the claimant was to be a ‘self-employed hair stylist’.  The reasoning for this in the contract was that the respondent believed that it would not be able to retain high quality hair stylists as employees and that the stylists would want to take the financial risk and have flexibility.

The provisions of the contract included a substitution clause, it allowed the claimant to choose when to be in the salon subject the caveat that they would inform the respondent.  However, it also noted that the claimant would have to use the respondent’s price list and that they would take the customers to the reception where they would be informed of the charges.  The claimant was to be responsible for their own tax and VAT if applicable.  Section 5 of the contract stated that the claimant was to receive 100% of the gross fees paid by customers but in actual fact there was a deduction of 67% of the fees per week.  The respondent stated that this was for the fittings, hot water and other services with no negotiation over that figure.   There were also a series of restrictive covenants to the contract which stated that the Claimant would not carry on business competing with the respondent within 0.5 miles nor could she solicit business from those who had been a client of the respondent.   The Tribunal noted that in reality she was not able to send a substitute and that any absences she had were covered by other hair stylists in the salon.

The question for the Tribunal was the employment status of the claimant in line with Section 230 of the Employment Rights Act 1996 (Article 3 of the Employment Rights (Northern Ireland) Order 1996).  In looking at the factual situation between the claimant and the respondent it was held that the ‘Independent Contract for Services’ document was not reflective of the working arrangements.  The fact that the Salon did not allow her to substitute properly, that they determined her hours of work and that they booked clients for her with no option of refusing, could not be considered to be a truly self-employed relationship.  Indeed, as the claimant only received one third of the money without negotiation and it was the respondent who took all of the economic decisions and bore the risk of profit and loss.  Accordingly, the Tribunal found that the claimant was an employee rather than being self-employed.   The tests in terms of mutuality of obligation and control were clearly made out.    The only factor that went towards self-employment was to keep her own accounts and attend to taxation, but this was out of the claimant’s control.

Practical Lessons

This case could have significant ramifications for the employment status of hairdressers and others in similar positions.  From a factual standpoint it is clear that the claimant was not self-employed due to the control the respondent had over her work.  For this reason, the Tribunal found that it clearly met the tests for an employee-employer relationship.  This will have the effect of giving additional rights to the claimant in relation to sick pay, holiday pay and the right not to be unfairly dismissed.
https://www.gov.uk/employment-tribunal-decisions/ms-m-gorman-v-terence-paul-manchester-ltd-2410722-2019