Earlier this year, the Court of Appeal decided two cases which dealt with the question of deemed employment status for the purposes of IR35. The cases had similar facts and concerned broadcasters who provided their services through personal service companies. The Court of Appeal's judgments provide guidance on the approach to be taken when determining employment status, both for the purposes of IR35 and for employment law. In this article, we reflect on the elements relevant to determining deemed employment status in the context of IR35.
But first, when deciding whether there is an employment relationship more generally, courts will consider the terms of the contract between the parties and the actual working arrangements in place, as well as the intentions of the parties at the time the contract was entered into. Based on this assessment, the court will identify the terms of a "hypothetical contract" which reflects the actual relationship and from this determine whether the contract is one of employment.
To do this courts use the test established in the 1968 case of Ready Mixed Concrete (South East) Ltd v. The Minister of Pensions and National Insurance. This test sets out specific criteria that must exist for there to be an employment contract. At the risk of oversimplifying what is often a complex balancing of factors, an employment contract will be found to exist when there is:
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