Employment status in the UK: Insights from case law

Employment status remains one of the most contested areas of UK employment law. Our team looks into a case that could offer some important insight.

Employment status and the classification of individuals as employees, workers, or self-employed contractors determines access to key statutory rights, including unfair dismissal protection, holiday pay, and whistleblowing safeguards. The case of Joanne Maclean v Partnership of East London Co-operatives Ltd (PELC) provides a useful lens through which to examine these issues.

Case background

Joanne Maclean, a qualified nurse, worked as a clinical streamer at urgent treatment centres operated by PELC. She invoiced through her personal service company (PSC), ‘Maclean J Ltd’, and was treated as self-employed. When her engagement ended, Maclean claimed unfair dismissal, whistleblowing detriment, and holiday pay. Her argument was that the true nature of the relationship was one of employment, despite the PSC arrangement.

The Employment Tribunal (ET) initially agreed, finding:

• the real contract was between PELC and Maclean personally
• she was required to provide personal service
• substitution rights were ‘impracticable’
• there was sufficient mutuality of obligation based on regular shifts
• she was integrated into PELC’s operations.

The appeal

PELC appealed to the Employment Appeal Tribunal (EAT), challenging mutuality of obligation, substitution analysis, and employee status conclusion. The EAT partially upheld the appeal, and:

• confirmed the contract was with Maclean personally, not her PSC
• overturned the finding of employee status due to insufficient evidence of mutuality of obligation
• criticised the ET’s reasoning on substitution.

Legal principles

Three core tests dominate employment status analysis:

1. Personal Service – Was Maclean obliged to perform work personally? Substitution clauses often complicate this.
2. Mutuality of Obligation – Did PELC have to provide work and Maclean have to accept it? The EAT found no binding obligation.
3. Control – Did PELC control how Maclean worked? Evidence suggested operational integration, but this alone was insufficient for employee status.

Broader context

The Maclean case highlights:

• Healthcare sector risks: Flexible staffing and PSC use create ambiguity.
• IR35 vs employment law: While IR35 governs tax status, tribunals focus on employment rights – often leading to conflicting outcomes.
• Policy reform: Government consultations continue simplifying employment status tests, but clarity remains elusive.

Practical implications

For employers:

• Draft clear contracts – avoid vague substitution clauses
• Ensure practice matches contractual terms
• Monitor long-term engagements for risk of implied employment rights.

For contractors:

• Understand the difference between tax status and employment rights
• Keep records of autonomy and substitution arrangements.

Comparison table: Employee vs Worker vs Self-employed

Conclusion

The Maclean case underscores the importance of substance over form in employment relationships. While contractual structures like PSCs offer flexibility, they do not immunise organisations from employment law risks. Until legislative reform provides clarity, tribunals will continue to scrutinise the real-world dynamics of work arrangements.

If you have any questions relating to any of the topics discussed above, please don’t hesitate to get in touch with our team of employment law experts.

Our Legal 500-rated employment law & business immigration team are experts in guiding businesses of all sizes and backgrounds through a range of issues that may arise.