Poor Contract Drafting Leaves the Door Wide Open to Employment Disputes

Inept and non-professional drafting of contracts is an open invitation to employment disputes. That was certainly so in a case where a property manager’s contract left substantial room for doubt as to whether he was employed or self-employed.

The man was, under the terms of a written contract, for many years engaged by a company to provide site management services in relation to two blocks of flats. He lodged Employment Tribunal (ET) proceedings against the company but, in order to succeed in his claim, he first had to establish that he was employed, within the meaning of Section 230(1) of the Employment Rights Act 1996 (ERA).

He pointed out, amongst other things, that the contract granted him the right to 28 days’ paid annual leave. The company provided him with most of the tools he needed to do his job and had honoured the contractual requirement to give him 30 days’ notice of termination. He was provided with a company mobile phone and the contract was silent as to whether he was entitled to substitute someone else to perform his role.

In arguing that he was nevertheless self-employed, the company emphasised that he invoiced for his work on a monthly basis, that no pension arrangements were made for him and that neither tax nor National Insurance Contributions were deducted from his pay. He had a number of other clients, ran his own sign manufacturing business for a time and enjoyed a wide discretion as to when and how he went about his work.

Ruling on the matter, the ET noted that the contract was poorly drafted without any thought having been given to his status. It did not, for example, deal with many of the particulars of employment required by Section 1 of the ERA. Taken as a whole, it was not consistent with the provisions of a contract of employment.

On the limited evidence available, the ET was not satisfied that the company exercised a sufficient degree of control over him and his work to give rise to an employment relationship. On balance, it found that he was self-employed and in business on his own account. That ruling was fatal to his claim.