IR35 is an ever evolving subject…
Regular readers will know that we have written articles on the key tests of IR35 before. As a reminder the three key tests as determined by the courts are:
1. The right to send a substitute;
2. Control over how the work is completed (not where and when); and
3. Mutuality of obligation.
What is mutuality of obligation?
This term refers back many decades and is defined as the master-servant relationship. How this relates in a modern world is tricky to interpret. There has been a recent case at the Employment Tribunal and the Employment Appeal Tribunal that help to clarify this concept.
The master-servant test questions is, “Is there an obligation on worker to work and on the other party to pay him or her and make work available during the time of the contract?”
Sometimes this is referred to as “specific MOO”.
The case of Miss Lane-Angell (LA) v Hafal Ltd (H) has thrown light in this concept. LA was a worker for H. LA would tell H when she was available for work whereupon she would be added to the on-call shift rota. If work was available H would call LA and at this point LA could accept or decline the shift. H operated a three strikes and out policy; if work was declined three times the workers was excluded from future rotas. LA was removed from the rota under the policy and claimed unfair dismissal. The Employment Tribunal found in LA’s favour, however the Employment Appeals Tribunal (EAT) overturned the decision and found in favour of H. The EAT found that there was no overarching employment contract and found that the terms of the appointment letter were clear; they stated there was no obligation to provide work. The EAT found that between shifts there were no mutual obligations.
LA was not an employee of H and the removal from the rota was not unfair dismissal.
What does this tell us for IR35?
Clearly it is still an important factor in employment status – this is particularly worrying when HMRC’s CEST (Check Employment Status Tool) includes no specific MOO questions or checks.
The inclusion of MOO wording in a contractor contract is still worth having.