The WRC held that, despite a corporate contract, the reality of the working relationship showed employee status, emphasising control, limited substitution and the factual day-to-day arrangements between the parties.

The case centred on whether Mr Lingard was an employee or an independent contractor even though the documented contractual relationship was between Mr Lingard’s private limited company, PSL (Aberdeen) Ltd (PSL) and Randridge (the Contract).

The Complainant accepted that when the Contract was entered into, his company had simply been retained to provide his services as an independent contractor. However, he claimed the relationship morphed over time and at the time the Contract terminated, he had become an employee of Randridge.

Randridge maintained the Complainant could not be deemed one of its employees – as there is a legal distinction between a contract of service (i.e. an employment contract) and a contract for service (i.e. a contract with an independent contractor).

The Complainant submitted that other than for the fact Randridge did not deduct tax on payments made indirectly to him at source, his relationship with Randridge was identical to that of a directly employed employee.

The WRC applied the Revenue Commissioners v Karshan Midlands (Ltd t/a Domino’s Pizza) test finding:

• the exchange of remuneration for work was in place, albeit between two commercial entities;
   
  
• while substitution was permitted under certain circumstances in the contract with PSL, it was a limited right and one that was never utilised; and
   
  
• day-to-day “micro” control was not possible over the work performed by the Complainant – but on “reading the contract closely the degree of control over the complainant was quite explicit” (examples provided included contractual provisions in respect of deadlines, the necessity for clocking in/out, and the potential need for medical certification in cases of absence). There was also a restriction on Mr Lingard’s ability to take on other work during and after the Contract terminated.

The WRC found “the relationship on a day-to-day basis, the “Working Relationship” as referenced by the Supreme Court was on, the balance of all probabilities, that of Employee to Employer – A Contract of Service”.

The WRC is willing to look behind the corporate veil to establish the reality of the Working Relationship.

WRC are becoming more and more willing to carry out a “factual” or “reality on the ground” analysis which can include a lifting of the corporate veil to consider the true nature of the relationship between the parties, looking crucially at the evolution of the relationship.

Exchange of remuneration for work, whether substitution is utilised and control of work performed are crucial factors that may turn a case.

You can read more about this case in our Q&A article here.