31st March 2010
The Court of Appeal has today handed down its judgement in the case of Launahurst Ltd v Larner.
The decision makes clear that the conduct of the parties cannot overide the contractual terms in determining employee status, without a properly formed finding, the contract was a sham.
In considering the Employment Tribunal's judgement that the contract was a sham, the Court of Appeal concluded the Tribunal had fallen into clear legal and procedural error. Mr Larner has not advanced the "sham argument" either on his claim form or in his evidence. The Tribunal had not raised the point before giving its judgement. This, it held, was enough to render the decision an error of law.
However, the Court of Appeal went further stating the evidence clearly showed Mr Larner was a self-employed contractor. In doing so it dismissed factors relied upon by the Tribunal, such as the regular remuneration and lack of control over the choice of work to be done. It was held these factors were "not ...particularly strong indictaions of employment". It further dismissed the apperance to the outside world as having "very little if any weight".
It is established that before a contract is held to be a sham, there must be a common intention of both parties that the contract should not be binding. The important effect of this authority is that when looking at the parties' conduct to ascertain that intention, it is necessary to distinguish between conduct which is inconsistent with the contract, as opoposed to the parties merely not utilising certain terms.
Allan Roberts counsel for the sucessful Appellant.
