The degree of control exercised by an engager has been a long-standing factor in determining employment status. In the recent case of Troutbeck SA V White & Anor [2013] the Court of Appeal has ruled that the absence of actual day-to-day control does not preclude an employment relationship. Instead, a much broader review of any agreement between the parties and the circumstances is required. This emphasis on taking “a step back” echoes the ruling in Autoclenz Ltd v Belcher [2011].

The respondents, White and Todd, were engaged as resident managers of a farm estate. The owners of the property, Troutbeck SA, lived abroad but visited occasionally. The terms of the written agreement between the parties were vague. White and Todd were paid to undertake all necessary maintenance duties, albeit payment was irregular. There were no fixed hours and they were able to undertake other work, if they chose to do so. The agreement provided for holiday.

When the agreement was ended by Troutbeck, a dispute arose over employment status: White and Todd believing they had been unfairly dismissed. The Employment Tribunal (ET) found White and Todd to be workers, not employees, a decision which the Employment Appeal Tribunal (EAT) subsequently overturned. The Court of Appeal has now confirmed the EAT’s finding that they were in fact employed.

The agreement between White, Todd and Troutbeck was accepted as genuine and set out basic terms relating to maintenance responsibilities. The EAT concluded that, in reality, Troutbeck had deliberately divested itself of responsibility for day-to-day control and merely wanted someone to be responsible for the maintenance and management of their property and to make decisions.

The EAT found that the ET had placed too much emphasis on the lack of day-to-day control on the part of Troutbeck in finding that White and Todd were not employees. The EAT found that the key question was not whether an engager has day-to-day control over the work but whether the engager has a sufficient degree of contractual control. The EAT found that Troutbeck did have this contractual control. The Court of Appeal agreed.

Conclusion

The case of Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance [1968] established that there must be a “sufficient degree of control” for an employment relationship to exist. What the Troutbeck case clarifies, however, is that this control should be considered in a wider context and the fact that an engager has divested himself of day-to-day control does not preclude an employment relationship if the engager retains the ultimate right to exercise control.

The case also echoes recent decisions that have emphasised the importance of taking a multi-faceted approach when assessing employment status. 

About the author

John Dormer Partner

John specialises in employee incentive work and regularly provides advice on the structuring, implementation, maintenance and vesting of management and employee incentive arrangements to both UK and overseas companies of varying sizes.