ESM0533 - Guide to determining status: right of substitution

Where a substitution provision is not as strong as that in the Tanton case (see ESM0532), it will probably lead to the conclusion that there is a requirement for personal service.

Usetech Ltd v Young (76TC811)

Mr Justice Park reviewed most of the case law on the subject of substitution at paragraphs 48 to 54 of his judgment in the case of Usetech Ltd v Young.

At paragraph 51 he refers to the case of Byrne Brothers (Formwork) Ltd v Baird [2002] IRLR 96, which contains some useful observations by the Employment Appeal Tribunal on this issue. The case concerned building workers who were engaged under contracts which plainly set out not to be contracts of employment. The agreements in that case included the following clause:

’Where the subcontractor is unable to provide the services, the subcontractor may provide an alternative worker to undertake the services but only having first obtained the express approval of the contractor.’

The EAT concluded that the building workers did have to provide their services personally as ‘the clause falls far short of giving the subcontractor a blanket licence to supply the contractual services through a substitute.’

In reaching their conclusion they indicated that the substitution provision in that case ‘only makes sense against the background of an understanding that, subject to its provisions, the services are to be provided by the subcontractor personally.’

In such cases MacKenna J’s first condition in the Ready Mixed Concrete case (see ESM0513) will be satisfied but the substitution provision will in most instances be regarded as a pointer to self-employment. In other words it is a factor to be weighed with others in deciding whether MacKenna J’s third condition is met.

At paragraph 53 in his conclusion, he says:

“The presence of a substitution clause is an indicium which points towards self-employment, and if the clause is as far-reaching as the one in Tanton it may be determinative by itself.”

Generally speaking then a right to send a substitute is only an indicator of self-employment and not determinative by itself. However, where the worker has a wholly unqualified right to provide a substitute, the courts may well consider that to be a strong indicator of self-employment or determinative by itself.