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When is an employee not an employee?

10 June 2011

The Supreme Court’s decision in Autoclenz v Belcher is expected soon. This decision will determine how far employers and those who work for them can dictate, in the contractual documents, whether someone is employed or a contractor.

The consequences are highly significant for businesses, as employees have greater employment protection than contractors.

The current law allows the court to look at the true legal relationship between the parties, how the relationship operates in practice – not just the contractual agreement. Autoclenz is arguing that the nature of the relationship is defined by the agreement – not by its practical operation. The only exception should be where evidence shows that the contractual documents are a sham.

If the Supreme Court agrees with Autoclenz, consultancy agreements may become more common and more people may be made to work with reduced employment protection.

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