The trade union Unite has recently won a case at the employment appeal tribunal that has potential implications for the payroll industry, the gig economy and flexible workers. The case revolved around  Russ Blakely a pipefitter that worked for the NHS via an employment agency and their payroll company between January and May 2016.

Mr Blakley was charged a weekly fee of £18 described as “management company margin” and he was charged employer’s national insurance contributions totalling £725.

Mr Blakely was asked to sign a contract that denied his right to an auto enrolment pension, sick pay and holiday pay. The contract also contained an indemnity clause that was designed to stop Mr Blakely from pursuing legal claims and gagging him from complaining to HMRC.

Unite said the contract was intended to deny Mr Blakely the most basic workers rights. Mr Blakely refused to sign the contract and continued to work until  May 2016 when he took a holiday. He was then told he was not needed to return to work. He was owed £1,453 in unpaid holiday pay, management fees and NICs deductions.

The case was initially brought to Reading employment tribunal in March 2017. The reading tribunal was found to have wrongfully applied the law. Unite then appealed the case to the EAT. The fact that the decision was made by the EAT means that the decision is binding on all future employment tribunals  and must be applied in other cases.

The EAT’s findings have potentially far reaching impacts on employers and their payroll providers. These were:

• When determining whether there was a contract between Mr Blakely and his employer, employment tribunals must consider the intentions of the worker and their circumstances in addition to the intentions of  the employer.
• There was a contract between Mr Blakely and the agency. The use of a payroll company did not circumvent this relationship.
• Mr Blakely and other workers of the agency could be considered workers of the agency, the payroll company or both.

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