In a decision that will no doubt be of interest to many apparently self-employed hairdressers, Employment Judge Marion Batten, sitting in the Manchester Employment Tribunals, has held on determination of a preliminary issue that a qualified hairdresser who was working under what was described as an Independent Contract for Services, was in fact an employee and was therefore entitled to paid holidays, notice and redundancy pay.
Meghan Gorman started working for Terence Paul (Manchester) Limited as an apprentice hair stylist in or around 2013. In October 2014 she qualified as a hairdresser. She was given a document to sign which described her as a “SEHS”, thought to be short for “self-employed hair stylist”. The preamble to the document stated that Terence Paul “operates its salon by using self-employed hair stylists”. The document went on to state that “the SEHS confirms that she wants to operate on a self-employed basis and does not wish to be an employee of Terence Paul or of any other member of Terence Paul’s group”. Judge Batten noted that Ms Gorman was not offered any alternative contract nor any choice over her status. In evidence, she said that she did not understand what this clause meant when she signed the contract.
The contract went on to include the following provisions:
2.1 The SEHS shall render to any clients who visit the Salon, services as a hairdresser at the Salon.
2.2 The SEHS shall spend such periods at the Salon as the SEHS may in their absolute discretion choose within the normal business hours of [the respondent] or the Salon (as applicable).
2.3 Whilst the SEHS has no obligation to attend the Salon, the SEHS is required to inform [the respondent] when she will not be attending so that, if necessary, [the respondent] can arrange cover.
2.4 The SEHS shall, during periods spent at the Salon, attend to the requirements of any clients who may require their hairdressing services.
2.6 The SEHS may use a suitably qualified and experienced substitute or delegate to perform the hairdressing services. Where a substitute or delegate is used by the SEHS, [the respondent] shall have no contractual, financial or legal relationship with the substitute or delegate . …
2.7 The SEHS agrees that she shall use the [respondent’s] price list displayed in the Salon in relation to any services provided to clients and shall adhere to any promotional offers in force and as advised from time to time . …
2.8 The SEHS shall be responsible for ensuring all customers, at the end of the hairstyling, are taken to reception and the Maitre D is informed of the charges due from the customer. . …
2.9 The SEHS shall maintain their own accounting books and records in addition to those maintained by [the respondent] . …
2.10 The SEHS shall be responsible for their own taxation affairs including VAT (if the SEHS is registered for VAT) ….
2.11 The SEHS shall retain any profits from working at the Salon and shall be responsible for any losses.
2.12 The SEHS shall conform to the general codes and standards of dress and behaviour expected of self-employed hair stylists working in the Salon.
2.15 The SEHS shall have personal liability for any loss, liability, costs, damages or expenses arising from any negligent or reckless act in the provision of the services and shall accordingly maintain … liability insurance covering the risk of a claim by any client.
2.16 The SEHS shall not during the [contract] set up nor work in any business which competes with the business carried on by [the respondent] … and which is within a half mile radius of the Salon or of any [respondent’s] salon in which the SEHS has worked within the last 12 months.
It is clear from these clauses that Terence Paul went to considerable lengths to emphasise the apparently self-employed status of Ms Gorman. However, clause 10 of the contract, contradicting clause 2.6, provided that she would not be paid in respect of any period when she did not perform services at the salon so that, in reality, there was no right of substitution.
Clause 5 of the contract provided that she would receive 100% of the gross fees paid by the customers for whom she provided services. Unsurprisingly, this did not accord with the reality of the arrangement which was that the fees that she received were net of a deduction of 67% applied by Terence Paul for use of their chair, washbasin, surrounding fittings, hot water, consumable stock and other services.
There were no working hours specified in the contract. However, the reality was that Ms Gorman was required to work standard hours from 8.45 a.m. to 6.00 p.m. (10.00 a.m. to 8.00 p.m. on Thursdays). Holidays had to be booked in advance and permission depended on the availability of other staff to cover for her.
Records of the clients were kept by Terence Paul and Ms Gorman was not allowed to have access to them. Terence Paul decided which clients Ms Gorman provided services for and maintained the booking list, as well as directing which products should be used. Similarly, they set all the applicable prices for the services.
Having considered the relevant law, Judge Batten noted that, when considering employment status, a tribunal must consider all aspects of the relationship, no single factor being in itself decisive and each of which may vary in weight and direction. Relevant factors included the degree of control exercised by the respondent over the claimant, the extent to which the claimant was integrated into the respondent’s organisation and the economic reality of the relationship between the parties. She concluded as follows:
In light of all the above matters, the Tribunal concluded that the respondent exercised a significant degree of control over the claimant and her work. It controlled the working hours and days, holidays – all subject to notice for time off, the prices charged, the products used and even the insurance was arranged via the respondent (in contradiction of clause 2.15), on the claimant’s evidence as to insurance, which again was unchallenged. On products, there was evidence that the claimant could buy her own “crazy colours” for specialist applications but even then, the arrangement for billing of such was to the respondent’s benefit as it deducted two thirds from all charges made. The client lists were entirely the respondent’s, maintained by the respondent and in fact accessible only to the respondent’s manager and access to client information was tightly controlled. The Tribunal considered that is was a fallacy for the respondent to suggest otherwise.
In all the circumstances, the Tribunal concluded that the relationship between the parties was that the claimant was an employee of the respondent. The tests of employee status are clearly made out. The written contract does not reflect the reality of the working arrangements in practice, save in respect of the requirement for the claimant to keep her own accounts and attend to taxation, about which the claimant had no choice.Paragraphs 49 and 50 of the judgment
Based on the contractual documents, this arrangement had all the hallmarks of a self-employed arrangement. However, the reality was far removed from what the documents provided for. I suspect that this distinction will be very familiar to many apparently self-employed hairdressers.
Judith Fiddler of Direct Law & Personnel, who acted for Ms Gorman, said:
This ruling could have far-reaching effects not only for hairdressers, but potentially for dentists, hygienists, delivery drivers and bookkeepers and possible many other employees mis-classified as self-employed. The significance of this case is huge, as many people who think they are self-employed are actually employees.https://www.dlp.org.uk/dlp-legal-employment-tribunal-hairdresser/