Parties’ true intentions not represented by sham contract
When the performance of a contract bore no resemblance to its terms, a tribunal was entitled to look beyond the agreement, at the way that the parties actually conducted themselves.
The Agreement stated “no mutuality of obligation” ie the employer was purportedly not obliged to offer work nor the worker to accept it. However, the worker had reported for work 5 days a week for many years, was given work which he always performed personally and always gave the employer notice of his holiday arrangements in good time. The tribunal decided that the written agreement did not represent the true intentions of the parties. The tribunal was not therefore restricted to determining whether there was an employment relationship or a self-employed one, on the basis of the contract.
The tribunal considered a number of factors that pointed either towards employment or self-employment, such as:-
- Regularity of work and pay – employment
- The provision of a vehicle and fuel – employment
- Lack of say in which jobs he did and when – employment
- Claimant’s responsibility for his own tax and national insurance – self-employment
The tribunal concluded that the self-employed contract was a sham; the claimant was employed under a contract of employment.
Launahurst Ltd. v Larner 
If you need advice on contracts, please contact us – we would be pleased to discuss them with you.