A legal judgment that could seriously dent housebuilders’ profits

An employment tribunal has ruled that two recently dismissed bricklayers were not self employed, whatever the contract they signed said. The consequences could be huge, says Merryn Somerset Webb.

In all the excitement of the possible pandemic and the central bank reaction to it, all sorts of less extraordinary looking stories are being ignored. One that might end up being quite a big deal is a recent (first) judgment in the case of Harris and Kearny v Excel Brickworks Ltd.

The point of the case is to establish the exact employment status of two men who once worked for the construction company. One was a foreman and one a bricklayer. The former had worked for the company for 17 years and the latter for less than a year. Both had signed a contract called a Self Employed Contract for Services and both were dismissed without notice.

But were they really, as the contract suggested, subcontractors who were able to do all the things subcontractors can technically do (take on what work they like, refuse what work they don’t like, work the hours they wish, work in whatever method they wish, leave the site without permission and send substitutes to do the work) or were they in fact not able to any of those things – and hence really employees?

The judge felt it was the latter. The contract may have existed but it did not, he felt, reflect the actual obligations of the workers.

This is only a first instance judgment (details here). But it does have obvious implications for the two men – not only should they not have been let go as they were but they should have had the rights of employees (holiday pay etc) while employed – as well as for the construction industry as a whole.

At the moment around 50% of the nation’s construction workers are classified as self-employed (although, weirdly, they are taxed at source under the tax-evasion prevention Construction Industry Scheme). Think of the hit construction company – and, say, housebuilder margins might take if it turned out many of them were actually all employees entitled to sick pay, holiday pay and pension contributions?

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