Employment Judge EmertonMr N Williams (instructed by Counsel) for claimantMr J Bryant (instructed by Counsel) for respondentDate 17 January 2018
JUDGMENT
[1]The claimant was at all material times a worker for the purposes of section 230(3) of the Employment Rights Act 1996.[2]The claim of unauthorised deduction of wages (relating to holiday pay) is well-founded.[3]The respondent is ordered to pay to the claimant compensation of £5,763.25.00[4]The sum in the previous paragraph is ordered gross and may be liable for deductions lawfully made by the respondent, whether under the construction industry scheme or otherwise. Case Number: 2404931/2017 2[5]The claimant’s application for costs is refused. ______________________ Employment Judge M S Emerton Date 17 January 2018
REASONS
[1]The claimant presented an ET1 claim referring to the period when he was engaged as a bricklayer by the respondent Company, claiming unpaid holiday pay. The claim was resisted, primarily on the basis that the claimant was neither an employee nor a worker. The case was listed for hearing, initially for half a day; at the claimant’s application this was extended to one day. Standard case management directions were given.[2]Both parties attended on 17 January 2018, represented as set out above. Each Counsel provided a skeleton argument and supporting paperwork. The parties presented an agreed bundle of 150 pages.[3]The Tribunal confirmed the issues in the case, which were in essence as follows:(1) To determine whether the claimant was employed under a contract for employment, or was alternatively a worker, by virtue of section 230 of the Employment Rights Act 1996. The claimant’s case is that he was a worker (he does not seek to argue that he was an employee, and need not do so in order to succeed in his claim). The respondent maintains that the claimant did not fall within the “worker” definition and was a self employed sub-contractor, running his own business.(2) If the claimant had the necessary worker status, what holiday pay was he was entitled to? This claim is being brought primarily as a deductions claim, although it could be brought in the alternative under the Working Time Regulations, and no points arise from that. The parties were able to agree (on the basis of Mr Williams’ calculations), that if the claimant was a worker, he had not been paid holiday pay, and would be entitled to £5,763.25 (gross). It is therefore not in dispute that if the claimant was a worker, the holiday pay claim would be well founded, with compensation payable in the agreed amount.(3) The other details of issues in dispute are as set out in the parties’ submissions.[4]It was agreed that the claimant would give evidence first. It was also agreed that the Tribunal would make a ruling on employment status first, in the hope that (as indeed turned out to be the case) that liability and remedy in respect of the holiday pay claim would then be agreed.[5]The claimant had previously raised by email that there might be an application for costs. It was not clear from the papers how such an application might be argued, but Mr Williams reserved his position on this. Matters were left by the judge that there might be an application for costs at a later point, and there might or might not be sufficient remaining time to hear any such application, if made.[6]The timings for witnesses were agreed (and were not in fact exceeded). Having completed its reading, the tribunal heard the claimant’s oral evidence. The respondent called Mr Clive Upton, a manager working for the Company, and Mr Andrew Howell, Site Foreman for the site where the claimant worked. Finally, the respondent called Mr John Beale, Director of the respondent Company (which bears his name). The tribunal then heard oral submissions from both Counsel before adjourning before lunch to consider its judgment.[7]The parties were called back in mid-afternoon to hear the tribunal’s oral judgment and reasons in respect of employment status. The tribunal ruled that he was a worker, after which the parties confirmed that it was agreed that the tribunal should find that the claim of unauthorised deduction of wages was well founded, and compensation awarded in the sum referred to above.[8]Mr Williams then made a costs application on behalf of the claimant, which was refused.[9]Mr Bryant requested written reasons. The parties were informed that a judgment would be signed the same day, and that written reasons would be produced in due course. The parties’ submission[10]What appears below is intended as an overview of the salient points of the parties’ submissions, which were set out in written submissions and oral submissions. It is not intended to summarise every point.[11]Mr Bryant’s oral submissions took some thirty minutes and Mr William’s were somewhat more concise and carefully focussed, and took less than fifteen minutes.[12]Mr Bryant, on behalf of the respondent, provided a four page skeleton argument and copies of the following cases:(1) Pimlico Plumbers Ltd v Smith [2017] EWCA Civ 51(2) Cotswold Development Construction Ltd v Williams UKEAT/0457/05/DM(3) Autoclenz Ltd v Belcher [2011] UKSC 41(4) Roberts v Redrow Homes (North West) Ltd [2004] EWCA Civ 469(5) Consistent Group Ltd v Kalwak UKEAT/0535/06/DM(6) Independent Workers Union of Great Britain v Roofoods Ltd (t/a Deliveroo) CAC 14 Nov 2017[13]The respondent’s skeleton argument set out the issue of the definition of a worker under the Working Time Regulations [which is, of course, identical to the definition in the Employment Rights Act]. In this case there was a written agreement, and the Tribunal had to decide whether it represented the truth of the situation (Autoclenz v Belcher). It was argued that the written terms contained important provisions inconsistent with worker status, including no obligation to do or perform work or services personally, and the respondent also argued that they were a customer of the claimant’s business. In oral submissions Mr Bryant made it clear that his main point related to the personal performance of work for the respondent Company, and he relied on the contents of his written skeleton, which he developed in submissions, suggesting that the case law he had provided pointed, on the facts of this case, to the suggestion that the written agreement represented the reality, that it was a valid agreement and (properly interpreted) showed that the claimant could not be a worker. He invited the tribunal to prefer the evidence of the respondent witnesses and suggested that the claimant was not credible on matters in contention. The claimant had freely signed a written contract and had the opportunity to examine it, and this set out that his status was as self-employed sub-contractor, with expressly no right to paid holiday. There was no mutuality of obligation, for example, and in particular the claimant had the power to substitute somebody else to carry out the work for him, even if he chose not to exercise this right under the contract.[14]Mr Williams presented a six-page note of submissions and provided copies of Autoclenz v Belcher, and Pimlico Plumbers v Smith (see above). This summarised the factual background, and the claimant’s underlying case that the written contract he signed did not reflect the actual agreement he had with the respondent; the relationship “had all the hallmarks of him being a worker”. He asserted that he was entitled to holiday pay, and it was not in dispute that no holiday pay was paid. The statutory framework at Section 230 of the Employment Rights Act, and the relevant part of the Working Time Regulations, was set out and reference to the status of the written agreement made (Autoclenz v Belcher). Reference was made to case law on worker status, and in particular the recent Pimlico Plumbers case (not yet heard in the Supreme Court), which summarised the principles involved. For example, an unfettered right to send a substitute to do the work was inconsistent with worker status, but a conditional right of substitution may not be, depending upon the facts. He submitted, in relation to personal performance, that the claimant did in fact carry out the work personally, and not only did he never send a substitute, but there would have been no benefit to him to do so. This was not a genuine right of substitution. As for the second limb of the test, in relation to the claimant carrying on his own business, it was clear that he worked as part of the respondent’s business and was not providing services to the respondent by virtue of the respondent being a client or customer of any professional or business undertaking carried on by the individual. In his oral submissions, Mr Williams suggested that the Deliveroo case (provided by the respondent) provided a helpful summary of the correct approach at paragraphs 95 and 96. He suggested that the insertion of a substitution clause, in the written agreement that was given to the claimant to sign, did not in fact reflect the reality of the situation. There was no clear evidence as to when the respondent had ever relied on such substitution clauses, and certainly nothing as to whether it had ever done so with bricklayers engaged at the site where the claimant worked (who had signed a similar agreement). He suggested that in fact the substitution clause made little sense, and it would not be in the claimant’s interests to exercise it, particularly if the respondent had no obligation to provide work to the person nominated by the claimant. He suggested there was in reality no obligation or real opportunity to provide a substitute, and the reality was that the claimant was obliged to provide work himself. The claimant was clearly a worker. Mr Williams relied on written submissions as to the fact that the claimant was not carrying on his own business.
The Facts
[15]Most of the facts turn out not to be in dispute, or issues in dispute relate to matters where there is in reality little challenge to the facts.[16]Although Mr Bryant suggested that the claimant gave unreliable evidence, the tribunal considers that this is a somewhat over-optimistic gloss on the respondent’s case. The tribunal does not consider that the claimant’s evidence was realistically disputed on any material matter, and it found him to be a broadly credible witness.[17]There was indeed a dispute as to where the claimant was when he was given a copy of the contract to sign, for example: he was either in the building site car park or elsewhere on the building site. But the tribunal does not consider that this is material. The claimant’s key evidence as to the circumstances of his being given the form to sign, and being expected to sign it and hand it back immediately, were not disputed. There was also a dispute over whether the claimant was, at the time, given a second copy of the contract to keep, or whether, as he recalled, it was provided to him a couple of weeks later with his payslip/invoice, which the tribunal again considers is not material. It is perfectly possible, for example, that a second copy was available to give to the claimant but that it for some reason was not, or that he left it in the office because he had to work outside, and that later on somebody used their initiative to make sure that it was passed on to him. That is neither here nor there. The key point is that the tribunal has accepted the claimant’s undisputed evidence that a few weeks after he started work, he was handed the contract by the foreman, somewhere on the building site at the end of a work break, and was expected to sign and return it immediately: the foreman held his hand out to indicate that he expected to be handed back the signed contract immediately.[18]Although there had appeared to be some dispute over what discussions the claimant had, or might have had, with management at the respondent Company prior to starting work or at the beginning of his engagement, the reality was that his account was not challenged in cross-examination. Indeed, it turned out that the foreman (Mr Howell) who subsequently gave him a copy of the contract to sign, was not in fact working at this location when the claimant started work there.[19]There is a dispute over at what point the claimant was provided with the foreman’s phone number, and therefore the arrangements for providing information to the respondent as to when the claimant was going to take time off. The key underlying point was claimant was clear that he gave advance notice to the respondent when he was to take time off for (for example) pre-booked holiday. He recalled that he had done this by text message to the foreman: his recollection as to the method might or might not be incorrect, albeit the respondent provided no evidence as to whether or not the previous foreman or anybody else on the respondent’s staff had or had not provided a mobile telephone number. The key evidence, which the respondent did not dispute, was that the claimant plausibly stated that he only took time off after giving notice to the respondent.[20]It is not in dispute that at no stage did the claimant seek to offer a substitute when he was taking holidays, and at no stage did the respondent request or suggest that he did so.[21]Having taken into account the oral and documentary evidence placed before it, the tribunal makes the following findings of fact upon a balance of probabilities:(1) The respondent is a construction Company which sub-contracts to provide brickwork for developers. It has operated as a limited Company since 1995. It contracts with major house-builders. It engages some 118 bricklayers and labourers, on the stated basis that they are engaged as self-employed, and they are not given any paid holiday.(2) The claimant has worked as a bricklayer for some 35 years.(3) In 2016 the respondent needed to engage bricklayers to work at a housing development for CALA Homes at its building site at Englefield Green, Surrey. Advertisements for bricklayers were posted, although it is apparent that the claimant did not see one, and the respondent has not provided the tribunal with a copy of any advertisement. The claimant was, however, aware that the respondent was taking on bricklayers. He made contact with the respondent’s office by telephone. Other than brief contact with Mr Upton, the arrangements were made with the then site foreman, who did not give evidence to the tribunal. The tribunal accepts the claimant’s account of his dealings with the foreman, and the agreed arrangements established when he started work. It accepts his assertion that “I was told what my pay would be, and my hours of work. It was a very casual conversation”. The tribunal accepts the claimant’s assertion that there was no assertion at this point that he was seen as a self-employed contractor without worker status, and accepts that there was no suggestion that he might be able to provide a substitute of he was unable or unwilling to work. Quite plainly, any oral discussions were on the basis of engaging the claimant personally to carry out work as a bricklayer for the respondent.(4) The tribunal accepts that the claimant was invited to start work at 7.30 on 14 April 2016, on a fixed rate of pay, and that he was not told anything about his formal employment status. It was, however, made clear that he was expected to work full-time hours, as a bricklayer at the Englefield Green site.(5) The claimant’s fixed working hours were 7.30am to 4.30pm, Monday to Friday, with fixed lunch and rest breaks. The claimant worked under the supervision of the respondent’s site foreman. He was told what work to do, and provided with the materials for doing so. He wore a high visibility jacket with the respondent’s logo, and the tribunal accepts that he would have been seen by others on the building site as being part of the respondent’s organisation. He provided his own hand tools, which the tribunal considers is customary for bricklayers, but all the other materials were provided by the respondent or CALA Homes.(6) The tribunal is satisfied from the claimant’s evidence that he was initially taken on, and continued to work, as an individual bricklayer. The tribunal accepts that there was never any oral suggestion to him at the time that it would be acceptable if he was to nominate anyone else to substitute for him. Although the claimant was not paid for time he took off as holiday, it is clear from the evidence that the respondent’s expectation was that the claimant would turn up for work (for his full-time hours). The tribunal accepts that the claimant did indeed work full-time hours and that he rarely took time off: he notified the respondent in advance if he would be unable to work on any particular day.(7) The claimant worked exclusively for the respondent and did not carry out paid work for any other business, or on his own account, whilst he was engaged full-time by the respondent in the period from April 2016 until his last working day on 25 May 2017.(8) Having agreed to work for the respondent full-time, the claimant worked for some two-and a half months without any written or oral confirmation of the nature of his employment status, or any written agreement governing the working arrangements. In essence, the position until the end of June 2016 was that the claimant would be paid £25 per hour, to work as a skilled bricklayer for the respondent, during fixed working hours, and under the foreman’s supervision. The respondent’s evidence was that not all bricklayers are paid the same rate, and that the claimant was initially taken on at a lower hourly rate, but that a few days after the claimant started work, once it was established that he was indeed an experienced and skilled bricklayer, his hourly rate was increased to £25 to reflect his personal degree of competence. This was clearly not a generic rate for “subcontractors”. The hourly rate is not set out in any written agreement.(9) During this initial period, before a written contract was given to the claimant, little paperwork was provided. Despite the respondent’s assertion that he was a “subcontractor”, when the claimant started work he was given a “New Employee Form” to complete. Although the tribunal would not afford significant weight to this document, it does tend to some extent to undermine any argument that he was an arms-length commercial subcontractor running his own subcontracting business. A regular “invoice” was prepared, which was in many ways akin to a payslip. Albeit the claimant prepared it, it was a straightforward document, in a standard format, setting out the work the claimant had carried out over the previous period. It included a 20% deduction for tax under the construction industry scheme (which is normal practice in the industry). The claimant was registered as self-employed for tax purposes with HMRC, under the scheme.(10) There was no further negotiation as to the terms of the contract. This remained, in essence, that that the claimant would be expected to work specified full-time hours, and would be paid a personal rate of £25 per hour for doing so.(11) The claimant asserts, and the respondent does not dispute, that when he had signed a written contract, there was no material change in the working or payment arrangements.(12) The Tribunal accepts the claimant’s evidence that he has never sought to nominate a substitute, and indeed in 35 years of working as a bricklayer he has never done so. He has not been aware of any colleagues ever seeking to do so, whether when working for the respondent or on other occasions.(13) Although Mr Beale indicated during his oral evidence (albeit in extremely vague terms), that there had been “occasions” when bricklayers had nominated a substitute, he gave no evidence as to how frequent this was, what the precise status of those bricklayers were, what conditions were attached, and made no suggestion that this related to any other bricklayer engaged at the same site as the claimant in 2016-2017, and certainly no suggestion that this related to a person engaged on a written agreement in the same form as that given to the claimant. Indeed, the tribunal draws the clear inference from Mr Beale’s evidence that substitution was a very rare occurrence, and notes that Mr Beale did not seek to provide any elaboration as to in what circumstances (exception or otherwise) it had been seen by either party as appropriate.(14) The Tribunal accepts that, apart from ensuring that he remained qualified for his “CSCS” card and carrying out periodic health and safety accreditation, the claimant does not run his own business, save in the sense that from time to time he offered his services to different Companies as a skilled bricklayer. Although, like most bricklayers, he has his own portable tools of the trade, his work has always been, and always was for this respondent, purely on the basis of being personally engaged at an hourly rate. He does not employ any sort of accountancy support, he does not employ anyone else, has no public liability insurance, and does not hold himself out as running a business.(15) The underlying position was, and remained, that from April 2016 to May 2017 the claimant was paid an hourly rate to work full-time for the respondent. On those few occasions when he did not work, he would not be paid, and would not be given holiday pay.(16) The Tribunal accepts that on 27 June 2016, Mr Howell, by then the claimant’s foreman, gave him a copy of a contract to sign. This contract had previously been signed by Mr Beale, and was in identical form to the contracts which Mr Beale had prepared for all the other “self-employed subcontractors” engaged to work on this site as bricklayers or labourers. This was worded in the same way as the other agreements, with no opportunity for the individual to negotiate any particular agreement. One matter which might vary was the hourly rate an individual was paid, but clause 7 makes it clear that this would be subject to a separate agreement, which might be oral. It is plain to the tribunal that the expectation was that each bricklayer or labourer who had been engaged was given the contract to sign, and were expected to do so if they wished paid work to remain available to them.(17) The respondent is a medium-sized Company, albeit with relatively few people formally on their books as employees. As referred to above, they engage the services of 118 “self-employed” bricklayers and labourers. In addition, the Company had Directors, and employed a Company Manager, an Administrator, a Quantity Surveyor, and 11 Bricklaying Foreman.(18) As indicated above, the claimant was given a copy of a contract to sign. Mr Beale had made arrangements for two copies of the signed contract to be produced so that each bricklayer or labourer would sign one copy and would have their own copy to keep.(19) The Tribunal accepts that the position was that at the end of his rest break on 27 June 2016, the claimant was given the four-page written agreement to sign, with no suggestion that he should take it away and read its contents, but very much on the basis that this was mere paperwork and a formality which represented what had been happening already, and that he was expected to sign it immediately and hand it back. It is significant that the claimant had already been working there since April 2016, there had been nothing in writing suggesting he was not a worker (save for the “new employee form” suggesting that he might be an employee), and the working arrangements had appeared to operate smoothly – there was no suggestion that the written agreement would put anything on any different footing, and nothing to alert the claimant to any matter of legal significance in the document he was being asked to sign.(20) The tribunal has accepted that Mr Howell held his hand out in order to receive back the signed copy and that the claimant immediately signed it without reading it, and handed it back. He did subsequently look at it, but did not particularly note its contents, or consider that there was any need for him to query any matter within it. The Tribunal notes, that as Mr Beale pithily put it, bricklayers such as the claimant “had mouths to feed”, and if they were paid a good hourly rate on the basis of working from 7.30 – 4.30 daily, the expectation was clearly that people such as the claimant would turn up for work, and would be paid accordingly.(21) Turning to the agreement itself, the Tribunal notes that this is headed “self-employed contract for services”, naming Mr J Keen as “the subcontractor”.(22) The beginning of the contract, under the heading “Background” asserts that “the subcontractor has skills and abilities which may from time to time be available to the contractor”. This indicates to the tribunal that the subject matter of the agreement is the particular skills and abilities associated with the individual, rather than with a business. The individual is clearly expected to sign a document, the contents of which are dictated entirely by the respondent, with no opportunity being given to negotiate individual provisions within it. Indeed, as Mr Beale made clear, if the claimant wanted to be paid for his work, he would be expected to not merely turn up for work, but to sign whatever paperwork his employer had previously drafted.(23) Clause 1 provides that the respondent is not is not obliged to offer work, and that the claimant as subcontractor is not obliged to accept work. The tribunal agrees with the claimant, however, (on a balance of probabilities) that reality was that work was always made available for the claimant during the working week during the period of over a year when he worked for the respondent, that he expected it to be available (and indeed it was), and that the respondent expected him to make himself available for work and to turn up during the specified hours, unless there was some good reason such as a family holiday which prevented him coming to work.(24) Clause 13 of the written agreement expressly excluded an entitlement to holiday pay.(25) Clauses 17 and 18 purported to permit substitution. The subcontractor was told that he “may, at his absolute discretion, send a substitute or hire an assistant to perform the services”. The Tribunal accepts the claimant’s evidence that he did not seek ever to exercise such a clause, that he was not aware of anyone else ever having done so, and accepts his explanation that there would be little purpose in doing so. He would only be paid for the hours worked, subject to the 20% deduction for tax/National Insurance, and that there would be no personal gain to him to send a substitute, whom he would then have to pay from his net earnings.(26) Indeed, the Tribunal notes that the contract itself clearly indicates that the claimant was himself engaged as having the particular skills required. The respondent’s own evidence was that the claimant was paid an increased hourly rate because of the claimant’s own personal level of experience and skills. Furthermore, the respondent expressly limits the right of substitution under clause 17, by specifying that the substitute or assistance “may be rejected by the Contractor [ie: the respondent] only if in the reasonable opinion of the Contractor, such substitute or hired assistant does not possess the necessary skills or qualifications to carry out the Services”. Although the wording of clause 17 suggests that the circumstances for refusing the substitute are limited, the reality is that the respondent could under the express terms of the agreement refuse to provide work to that substitute at all. Furthermore, as indicated, the agreed hourly rate related to the skills and experience of the “subcontractor”, with no stated method for setting a different hourly rate if the substitute was competent, but not as skilled.(27) The Tribunal notes that Clause 18 refers to the financial arrangements and stresses that “the subcontractor is solely responsible for arranging payments to the substitute or hired assistant”. Although the respondent’s case is that it expressly relies upon the wording of the written contract as reflecting the genuine intentions of the parties, as well as the reality of the situation, there is inconsistency in this approach. In his oral evidence, Mr Beale made it perfectly clear that if (unusually) anybody was to arrange a substitute, he would have no difficulty in the office making financial arrangements directly with that individual, and the Company paying that individual directly into their personal bank account, if that is what the individual wished. This indicates to the tribunal that in reality the mind-set was very much that the respondent would be intending to engage a named individual, but also that if (no doubt unexpectedly) and one did in fact seek to substitute, the respondent would not regard itself as bound by the precise terms of the written agreement it had itself produced.(28) There are various other provisions in the four-page, 26-Clause agreement, some of which are of a technical legal nature, and none of which have not been relied upon by the parties in this case.(29) As indicated above, the claimant took various short periods off as holiday, or time off, but was not paid for them. He was content not to query the arrangement; the hourly rate was a fair one and the claimant did not take much time off. On each of these occasions, it was never suggested or queried that it might in some way be appropriate to arrange someone else to cover the work which the claimant would otherwise have done.(30) The working arrangement came to an end on 25 May 2017, after which the claimant initiated a claim for outstanding holiday pay. The Tribunal’s Conclusions[22]The key issue to be determined in this case is whether the claimant was a worker for the purposes of section 230(3) of the Employment Rights Act 1996. The claimant does not need to rely on being an employee, and does not in fact do so for the purposes of his claim, relating to his entitlement to holiday pay (and entitlement to bring a wages claim in the Employment Tribunal).[23]There must be some sort of contract (section 230(3)(b), line 1), and plainly there was in this case, whether one relies on any oral or implied agreement or whether one relies on the terms of the written contract which the claimant signed on 27 June 2016. This is not in dispute, and plainly the first part of the test in section 230(3) is satisfied.[24]The key question is the next (two-fold) limb of the test, namely whether the contract in question must be “whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual” (section 230(3)(b) line 2 onwards).[25]To take the issue of “any profession or business undertaking” first, the tribunal has no difficulty in accepting the claimant’s submissions that he was not carrying on a business undertaking. The respondent challenges this, but this is not the main thrust of the respondent’s case. The tribunal accepts that the claimant was in essence a skilled and experienced bricklayer, who carried out bricklaying for whoever paid him to do so. Although he had his own hand tools, which I accept is normal practice for bricklayers, regardless of employment status, it is quite clear to the tribunal that he was not running his own “business undertaking” or “profession”. He had personal trade skills which he used when working for other businesses engaged in the building trade. Although he was registered as self-employed with HMRC, he was paid through the construction industry scheme with deductions by the respondent; the reality was there was no business risk of any significance on his part, and he worked in a way that was plainly integrated into the organisation of the business which engaged him: in this case JC Beale Brickwork Limited. This was on the basis of an hourly rate of pay, express daily and weekly hours, and under the supervision of the foreman. As a jobbing bricklayer, and taking into account the other facts of the case referred to above and below, the tribunal has had no hesitation in accepting that the claimant does not fall foul of the “profession or business undertaking” provisions – plainly the respondent was not his “client” or “customer.”[26]The question of whether there was a contract of employment does not arise in the case, albeit there might even be a respectable argument that the claimant was an employee – but he does not need to take that point and does not do so.[27]The key issue, upon which the case principally hinges, is the first part of the test under section 230(3)(b), as to whether the individual undertakes to perform work personally. The tribunal has been referred to the case law in cases such as Uber, Pimlico Plumbers or Deliveroo, and has taken that case law into account (whilst noting that at the date of decision there had not yet been a Supreme Court decision in Pimlico Plumbers). The tribunal has also been referred, in particular, to the important guidance in Autoclenz v Belcher. The case to be determined here relates to facts where there is indeed a written contract, relied upon by the respondent, albeit one only provided to the claimant some two and a half months after the claimant commenced working for the respondent Company.[28]Applying the Autoclenz v Belcher approach, on a literal interpretation of the written agreement relied upon by the respondent, that agreement would on the face of it appear to give strong support the contention that the claimant is not a worker under the definition in the Employment Rights Act, and that the parties had intended that he was not a worker. The respondent in particular relies upon substitution clauses, the lack of obligation to provide work for the claimant, and the express provision that he is not entitled to holiday pay (for example). Under the approach in Autoclenz, employers/businesses may seek to place substitution clauses in a contract, denying any obligation to accept or provide work, as a matter of form even where such terms do not reflect the real employment relationship. Indeed, in the Deliveroo case referred to me by the respondent, but also quoted by the claimant at paragraphs 95 – 96, there is a helpful summary of the approach in Autoclenz and Kalwak, in the latter noting that “the concern to which Tribunals must be alive is that armies of lawyers will simply place substitution clauses, or clauses denying any obligations to accept or provide work in employment contracts, as a matter of form, even where such terms do not begin to reflect the real relationship.” I accept that the same issue can arise in respect of worker status.[29]The question in every case is what is the true agreement between the parties, and where there is a dispute as to a genuine written term in a contract (in this case, a specified contract for services) the focus and enquiry must be to discover the actual legal obligations of the parties, and all the relevant evidence must be examined including the written term itself but read in the context to the whole agreement. Of course, other written and oral evidence may be relevant. The tribunal accepts that the circumstances in which contracts relating to work or personal services are concluded are often very different from those in which commercial contracts between two parties. There can be inequality of bargain power, and as suggested in Autoclenz, the tribunal must be realistic and wise when it investigates allegations that the written contract does not represent the actual terms agreed. I should stress that although Mr Bryant at one stage sought to refute that the contract was a “sham”, my focus is not on dishonesty or a deliberate sham, but rather to consider whether the written contract reflects the reality of the parties’ intentions and the reality of the actual working arrangements.[30]In this case the respondent had some difficulty in establishing that the nature of the initial agreement was one between client and a subcontracting business, because the person who came to the initial agreement with the claimant when he started work, and dictated the day-to-day working arrangements with him, was a site foreman who has moved on and was not called to give evidence by the respondent. The respondent’s evidence is somewhat vague as to what was discussed before and at the start of the period of the claimant working for the respondent. Mr Upton (who did give evidence) had some contact with him, and that much of the evidence is supposition as to what the respondent expects would have been the case, rather than what actually happened or had been agreed. The position is therefore whatever agreement was reached, and whatever working practices were established, they had already been well-established in the two and a half months before anyone thought to give the claimant a written contract.[31]It would appear that the claimant’s understanding was in essence he be paid an hourly rate, and the respondent’s evidence (which in fact appears to benefit the claimant’s case) is it was initially a slightly lower hourly rate, but when they established in the first few days the claimant was very competent, it was put up to £25 which was seen as the going rate for somebody of the claimant’s level of experience and expertise. In essence, the oral agreement was that working hours were fixed, breaks were fixed, the work was dictated by the respondent’s site foreman and if the claimant accepted the contractual arrangements he would work 7:30 – 4:30 five days a week and in return he would be paid £25 an hour. If he did not work he would not be paid; payments would be made under the construction scheme whereby 20% was deducted at source albeit the claimant was registered with HMRC self-employed. Registration as self-employed is a factor I take into account, which may make it less likely that the claimant was a worker. This is, however, not fatal to any claim based on worker status. Self-employment for tax purposes is different from the statutory definition of being a worker for the purposes of the safety-net of basic employment rights under the Employment Rights Act and Working Time Regulations. Similarly, applying the approach in Autoclenz, the fact that in the written agreement which the claimant was in effect required to sign if he did not want to lose his work, the claimant was engaged as a “self employed subcontractor”, does not necessarily mean that the reality was not that he was a worker.[32]As indicated above, one of the key issues is personal performance and substitution. If it would be easy for the claimant to substitute somebody else to carry out the work, this would make it rather less likely that the claimant could satisfy the “perform personally” requirement of section 230(3).[33]The position was that, in fact, the claimant has never in his many years as a bricklayer ever sought to substitute anybody. He is not personally aware of anyone else doing so and it is quite plain that that was never suggested in the first two and a half months that this was even a remote possibility. Without a written agreement, it would be clear that the intention was that the claimant would turn up for work, and would be paid for that work. When the written contract was belatedly given to the claimant to sign, there was no discussion about the detail of any additional contractual clauses such as mutuality of obligations or substitution. Mr Beale himself clearly operated his Company on the basis that they would make work available (at least whilst bricklaying continued on the site in question), and the bricklayer in question who had been engaged would be expected to provide the work himself, under the respondent’s supervision, unless he was ill or wanted to book time off (effectively as holiday).[34]It is relevant that the claimant has paid on presentation of an invoice, but this was the respondent’s choice of method. The claimant was concerned that he should be paid correctly for the hours which he had worked. Effectively, he would make himself available for work, with his bricklaying tools, in the expectation that the respondent would provide work to him personally (until the work was completed at the building site in question), and he would be paid at his personal hourly rate, with the appropriate deductions. This evidence would give strong support that the claimant was plainly a worker.[35]One of the key points in the case is whether, when (belatedly) on 27 June 2016 when the claimant was given a contract which had been signed some two weeks earlier by Mr Beale, that changed anything, or clarified anything which had been unclear, and whether that contract reflected the reality. This is not an issue of fraud or bad faith: as indicated above the key issue is whether the written contract reflects the reality of the situation in particular the intentions of the parties. Whilst the respondent doubtless hoped to avoid any legal liability it might owe to the claimant as an “employee” or “worker” that does not mean that it was genuinely intended by both parties to create an arms-length commercial contractual arrangement outside the scope of section 230.[36]I have accepted that there was an inequality of bargaining power. Whilst on the face of it, it would have been open to the claimant to read it through a draft contract and say (for example) “I am not signing that unless you change some of the clauses”, I consider the reality was very different. A medium-sized business who uses a standard form of contract designed by them (which Mr Beale makes clear he had signed in the office, in advance, for all of the 118 labourers and bricklayers), and gives the contract to existing bricklayers to sign before they have read the agreement, is unlikely to be concerned by the intentions of the other contracting party. There was not really any opportunity for the claimant to negotiate or to query the contract, or (in reality) to do anything other than immediately sign the agreement, if he wished to keep his job with the respondent. It was basically a standard form contract, with a lot of legal language, given to the claimant at the end of a break, so that he could sign immediately and return it for keeping on file. There was no expectation that the claimant would examine its contents before signing, and it was effectively presented as a formality which would make no difference to the arrangements for working.[37]It would be somewhat unrealistic to see the written agreement as an open contract between two businesses, on equal terms. The claimant is not a businessman. He does not run a business. He is a bricklayer, with practical skills honed over many years, which he had offered to the respondent business. He was given something to sign by the respondent, having been happily working there for two and a half months, at what appears to be reasonably good hourly rate of pay (which would be the going rate for a skilled bricklayer), and when asked to sign the paperwork agreed to do so. There is a strong implication that if he wanted to keep working there, he would need to put his signature on the documents. Not surprisingly, he did so without reading the contract.[38]Looking at the terms of agreement itself, which must be my starting point, I have noted the main contents in the findings of fact above. It is called a “self-employed contract for services”, but the fact that it bears this heading, and that the claimant may be registered with HMRC as self-employed, does not of course mean that he cannot be a worker. The tribunal notes that this is not a case where the claimant is seeking to prove that he is an “employee”, usually a rather more onerous matter to prove. He only needs to establish that he is a worker, within the statutory definition, so that he can qualify (for example) for holiday pay and the right to bring a wages claim in the Employment Tribunal.[39]Focussing on the wording of the agreement itself, although on the face of it, it supports the respondent’s contentions, some of the detail itself gives a hint that the reality of the situation might be somewhat different. It is of some significance that the contact (albeit under the heading “background”) refers to the claimant’s own “skills and abilities”. This strongly suggests that it is the specified individual’s skills and abilities which are being engaged by the respondent, not services provided by a business which might on occasion use any number of different individuals. If the claimant was, as a matter of law, entitled to paid holiday, the purported contractual exclusion of entitlement to holiday pay would have no force. If it was the genuine intention of both parties that the agreement was not between worker and the respondent business, then such a clause would be of more significance. But if in reality the claimant had to sign the agreement, regardless of his own wishes and intentions, then such an exclusion can be of little weight in assessing the reality of the situation.[40]A key point raised by the respondent is that the agreement suggests a lack of mutuality of obligation. Although this is not necessarily fatal to a claim of “worker status”, it is certainly a point in the respondent’s favour relating. Lack of mutuality of obligation is of particular importance in an “employee” case, but is also relevant to worker status. However, Mr Beale (in his oral evidence) referred to the expectation (which admittedly might be slightly less clear-cut than “obligation”) that work would be available and that the individual would provide his work to the respondent. The reality was, in any event, that for the entire period of over a year, when the claimant worked at the particular site for the respondent, he worked there full-time. Work was always available to him. He was available for work, unless there was a good reason why he should not be present at the work-place, such as going on holiday with his family. There was no suggestion that he had periods of sickness, or sought to take extra time off, and it is clear that at no point did he carry out other paid work for another business (or seek to do so). The reality was that the intention of both parties, during the currency of the agreement whilst bricklaying work remained available, that the claimant would personally turn up for work during the specified working week, and that he would be paid for that personal work.[41]Clauses 17 and 18 of the agreement, replied upon by the respondent, which attaches particular significance to these provisions, purports to permit the claimant to send a substitute or hired assistant.[42]The tribunal does not, however, consider that the suggestion that the written agreement reflected the reality of the situation is quite as clear-cut as the respondent suggests. Firstly, in the claimant’s experience it never happened: there was never any suggestion that either party would ever contemplate another person being permitted to carry out the claimant’s work. The respondent’s evidence as to occasional use of substitution clauses, as indicated above, is vague and limited in the extreme. I attach very little weight to it.[43]Secondly, I accept that there is considerable force in the claimant’s argument that there would really have been little point in substitution, and that he would never wish to do so. In those circumstances, it would never be his intention to agree to such a clause (or if he did, it would be on the basis that both parties knew that substitution would not happen and that it was therefore a pointless clause). The reality was that he received his personal payment of £25, and less experienced bricklayers would be paid less. He received this agreed sum due to his own personal skills. Whilst he might in theory substitute, as the respondent asserts, this would not make business sense for either party. Firstly, on the face of the agreement the claimant was receive only his £25 an hour minus the 20% deduction, and there would be no business sense for him to seek to pay a substitute out of his net pay. Furthermore, if the £25 is based on his own level of skill, it would make no sense for the respondent to pay the same rate for a less skilled or efficient bricklayer.[44]Thirdly, it is of some significance that the substitution clause is by no means unfettered. The respondent reserves the right not to offer work to the substitute at all. There would be no point in the claimant making arrangements to engage a substitute, only for that substitute to be rejected by the respondent under the terms of clause 17. The reality would be that it would be open for the respondent to reject any substitute on the basis that it was not confident that he had the necessary level of skills. Mr Beal suggested that such an arrangement would keep the claimant happy, because he needed to get work in the future, and if the claimant was uncooperative, this would not help him. The reality, however, was very different: It is clear that the respondent had selected the claimant personally as having the skills they wanted to use, that they wanted the claimant to work, and the claimant wanted to work for the respondent (full-time).[45]Fourthly, the tribunal accepts the claimant’s un-contradicted evidence that the reality was that it would be extremely difficult to find somebody suitable at short notice. Whilst there is some merit in the respondent’s argument that having a CSCS card means that an individual would have shown they had a relevant qualifications and were up-to-date in health and safety, this is of little weight if they could reject the individual anyway.[46]It is also of relevance that any new individual on site would need to familiarise themselves with the local arrangements, and would need to receive a site briefing of up to half-an-hour, for which of course the respondent would have to effectively bear the cost of lack of productivity. This would make it less likely that the respondent would be happy with any suggested substation.[47]Finally, as the claimant pointed out, the money for the work was paid personally to his own bank account, with deductions already made, and it was not clear how it would be financially feasible for him then to pay money to the individual he might have engaged as a substitute, after the net amount he received. Although Mr Beale suggested it would be easy to make temporary arrangements with somebody else to get their bank details, this is not what clause 18 provides (which suggests that it is solely the subcontractor the claimant who is responsible for making payments). If Mr Beale is correct, this would indicate that he had little intention of being bound by the letter of the written agreement which he had himself drafted and signed. This further undermines the respondent’s arguments under Autoclenz.[48]The claimant plainly never had any intention whatsoever of ever substituting another person to carry out his work, and the tribunal accepts that the respondent also had no such genuine intention. Even if, in limited and rare circumstances, they contemplated that the substitution clause might be invoked by the claimant, they took care to ensure that the written agreement made it clear that there was no unfettered right of substitution.[49]Taking the broader Autoclenz approach, I consider that the reality of the situation was that neither party ever intended any substation clause to be relied upon. The reality was that the respondent wished to engage the claimant to use his personal skills as an individual craftsman. That is indeed what happened. Work was made available to the claimant as an individual, and he provided his personal skills as was accordingly paid at £25 an hour.[50]Looking at the case in the round, the tribunal has taken into account all the various factors referred to in Autoclenz and the other case law referred to. In summary, whilst the position is not completely clear-cut, but the weight of evidence is on the claimant’s side. The burden of proof is upon the claimant to show that he was a worker, and he has persuaded me, on a balance of probabilities, that that is indeed the case and that he falls within the statutory definition.[51]I am persuaded that whilst the written agreement itself is not quite as clear as the respondent would have me accept, it does not in any event reflect the reality of what was agreed between the parties. The effective requirement that the claimant should sign the agreement as soon as he was given it, does not mean that the agreement reflected the reality of the situation. It did not reflect that reality.[52]The claimant did have a contract with the respondent. This was not a contract between a client or customer and a profession or business undertaking carried on by the claimant. The claimant had undertaken to do or perform personally work or services for the respondent. That contract was effectively made by the claimant being offered an hourly rate for work, and by him accepting that offer and by his for turning up for work and being paid for the work he personally carried out for the respondent. The claimant was a “worker” for the purposes of section 230(3) of the employment Rights Act 1996.[53]The claimant was a worker. He was not paid the holiday pay to which he was entitled by virtue of his statutory status.[54]It is common ground between the parties that as holiday pay was not paid, it follows from that, that the wages claim, based on failure to pay holiday pay, is well-founded.[55]The parties having agreed that the calculation carried out by Mr Williams is correct (as set out at paragraph 25 of his opening note), the tribunal consequently orders the respondent to pay compensation in then agreed sum of £5,763.25 (gross). This sum may be liable for deductions lawfully made by the respondent, whether under the construction industry scheme or otherwise. If no deductions are made, the claimant would need to account to HMRC for any tax and national insurance which may be due. The Claimant’s Costs Application[56]After the tribunal had delivered its judgment, Mr Williams made an oral application for costs.[57]It is regrettable that, having represented the claimant’s case so well earlier in the hearing, Mr Williams then chose to take up the tribunal’s time with an unmeritorious application. As experienced counsel, Mr Williams must be familiar with the costs regime in the Employment Tribunal, and indeed with counsel’s duty to further the overriding objective. The tribunal considers that in the light of the tribunal’s oral judgment and reasons, it should have been readily apparent that it was highly improbable that Mr Williams’ application would have any chance of passing the initial 76(1) threshold, let alone succeeding.[58]Mr Williams explained that the application was on the basis that the response had no reasonable prospect of success (rule 76(1)(b)), and that it was unreasonable to proceed with the response when there was no arguable basis for doing so (rule 76(1)(a)). There was no genuine right of substitution and so it was unreasonable for the respondent to maintain that stance. The claimant had offered to settle (for £3,500) and it was unreasonable not to accept the offer; the hearing could have been avoided. The claimant’s costs of representation at the hearing were £530.[59]The tribunal did not call upon the respondent to reply to the costs application.[60]The tribunal would characterise the claimant’s case as a strong one, but it was by no means inevitable that it would succeed. It is of particular relevance that there was a written agreement (signed by the claimant) which contained a substitution clause and purported to describe the claimant as a self-employed subcontractor who was not entitled to holiday pay. The success of the claim would rely (amongst other things) of the claimant demonstrating at an Employment Tribunal hearing that the written agreement did not represent the reality of the situation. After hearing oral evidence, the tribunal ruled in favour of the claimant, on a balance of probabilities.[61]Whilst this was not a borderline case, and in the event the tribunal had little difficulty in agreeing with the claimant that he was a worker and entitled to holiday pay, having “a strong case” is not the same as the other party having “no reasonable prospect of success”, especially when that case depends upon oral evidence.[62]The respondent was under no duty to withdraw its response. It was under no duty to settle the claim under terms offered by the claimant. The parties both needed to call detailed oral evidence, and the tribunal’s decision was made in light of the evidence as a whole. It was not unreasonable, in the circumstances, for the respondent to resist the claim (relying upon the written agreement), to reject the pre-hearing offer of settlement, to proceed to a hearing and to invite the tribunal to rule on disputed worker status in light of the evidence as a whole. The tribunal has now made a ruling, and the respondent must now, as a result of the hearing, be in no doubt as to where it stands.[63]Costs are unusual in the Employment Tribunal jurisdiction, and the judge cannot consider his or her discretion unless it has been made out that the specific circumstances fall within rule 76(1). This case does not fall within the scope of rule 76(1), and in consequence the costs application must be refused.[64]The tribunal would observe that this ruling as to costs is not in any sense intended to tie another judge’s hands should there be a costs application in any subsequent Employment Tribunal case involving the respondent, where similar factual and legal issues may arise.