Tribunal: Law firm’s part-time FD was worker, not self-employed

Tribunal: Case can go ahead

An accountant who acted as a law firm’s part-time finance director through a company was a worker and not self-employed, even though he had another client, an employment tribunal has ruled.

It said Geoff Maclauchlan became “so integrated” into Newcastle firm Short Richardson & Forth that “an outside observer would be unable to distinguish him from other employees of that business”.

Mr Maclauchlan initially traded as a sole trader through a business called Bottom Line and then incorporated Kingsmere Finance, through which he runs his business affairs. He worked with one other client in addition to Short Richardson.

This did not militate against a finding of his ‘worker’ status, said Employment Judge Green in Newcastle.

“Many people run businesses through corporate intermediaries primarily because it confers certain tax advantages but also affords them a degree of protection through limited liability.

“To suggest that trading through an intermediary automatically creates a business/client relationship would effectively exclude all people in business on their own account from being workers.

“As stated in [the 2013 Court of Appeal case] Hospital Medical Group, if Parliament had intended that result, it would have said so.”

Mr Maclauchlan is claiming holiday pay for the five years until 2019 that he worked for the law firm and the tribunal considered as a preliminary point whether it had jurisdiction to hear the claim.

While the accountant said he was a worker for the purposes of the Working Time Regulations 1998, the law firm maintained that he was self-employed.

The judge had “no doubt” that a contract existed between the parties, even though it was never committed to writing: “This is clear evidence of an intention to create mutually binding legal relations.”

Though it was never intended that Mr Maclauchlan should go on the payroll and be employed and taxed as such, he met the firm’s bank as its finance director, had his own office keys, had unrestricted access to its IT systems and had his own office.

His responsibilities and time commitment grew – to 10 days a month, with three people reporting to him – and he was given a profit share.

The tribunal said that while, “at first blush”, the fact he worked for another client could be seen as fatal to Mr Maclauchlan’s claim to be a worker, the facts did not support the conclusion that he was genuinely self-employed.

Judge Green concluded: “In the final analysis, [Short Richardson & Forth] contracted with Mr Maclauchlan to provide his personal services. They wanted him to assist them in the running of their practice and had chosen him because of his experience and skill of working with law firms.

“Whilst Mr Maclauchlan is a professional person with a high degree of autonomy as to how the work is performed, and how he markets his skills to the world in general although he had more than one string to his bow, the facts in this case are that he was so closely integrated into [Short Richardson & Forth’s] operation as to fall within the definition of a worker.”

The tribunal ruled that it had jurisdiction to hear Mr Maclauchlan’s claim.

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