Employment tribunal and court judgments | April 2023

Application of IR35; Independent Contractor given Employment Status

The Upper Tribunal in Red, White and Green Ltd v HMRC [2023] UKUT 00083 (TCC) dismissed Red White and Green Limited's (the Respondent) appeal that IR35 did not apply to a TV presenter, Eamonn Holmes, providing services to ITV via the Respondent company.

The First Tier Tribunal (FTT) held that Mr Holmes's contractual arrangement with ITV via the Respondent created an obligation to provide and accept work and as such, there was a mutuality of obligations with a sufficient framework of control. As a result, the FTT declared that Mr Holmes' contractual arrangement was consistent with an employment relationship and that IR35 applied, despite finding that he was an independent contractor in regards to some other activities.

Mr Holmes argued that he was not an employee as he had substantial autonomy over what work was required and how it was to be carried out. The Upper Tribunal (UT) considered the control over how, where and when services are to be performed remain relevant and that given Mr Holmes was required to carry out promotional work, and that it would be "career suicide" for him to disagree with key ITV decision makers, he was found to be an employee of ITV rather than a contractor that provided services via the Respondent company.

This case is a further example of the complex nature of IR35 and highlights the care that would-be contractors need to take when considering whether IR35 genuinely does not apply to a working relationship. Should you have any concern with how any of your staff are engaged please get in touch.

"I'm done" - an assumptive resignation?

The Tribunal in Cope v Razzle Dazzle Costumes Ltd held that an employee who handed in their keys and said "I am done" did not constitute resignation. Ordinarily, if an employee uses clear and unambiguous language, their employer is entitled to take this as unequivocal resignation.

Having accepted that a resignation can be oral or made by way of conduct, the Tribunal held that employers need to recognise situations where it is appropriate to investigate the context in which the words were spoken in order to ascertain what was really intended. In this case, there were multiple factors leading up to the employee leaving the workplace and asserting "I am done" (including, a consistent workplace conflict, a leaking stoma bag and a continuous wait for her line manager to come back to the office). In addition, after leaving the workplace, the employee sent a text to her employer explaining why she walked out.

The message said:

“Sorry to bother you at home. I couldn’t wait earlier to speak to you I tried but I couldn’t stay there any longer. My nerves are shot. Never in my whole life have I ever been made to feel like this.”

The Tribunal decided on the facts that no reasonable employer would have taken the view that the employee had unambiguously resigned in these circumstances. Emphasis was placed on the fact that her words and actions had been made when she was in a highly anxious state. She had not used the words "resign" and her subsequent behaviour was inconsistent with someone who had resigned. Naturally, such events will be fact specific and appropriate legal advice should be sought before any action is taken. Employers should note that (in the absence of a clause requiring written notice in the employment contract) employees can resign verbally. If there is ever any doubt about a resignation, ask for confirmation of intentions before treating their employment as terminated.