The Employment Appeal Tribunal’s decision in Partnership of East London Co-operatives Ltd (PELC) vs Miss J Maclean [2025] EAT 142 reinforces our understanding of questions relating to employment status, but with some helpful tips on the elements of personal service and mutuality of obligation.
Background to the case
PELC, an NHS provider operating urgent treatment centres, engaged Miss Joanne Maclean, a qualified nurse, as a Clinical Streamer from August 2018 to March 2023. She invoiced PELC for shifts via her personal services company, Maclean J Ltd, and handled her own tax and national insurance. Maclean later claimed she had set up the company at PELC’s request.
Two key documents governed the arrangement:
- A members’ agreement between PELC and Maclean personally (not her company), which included a substitution clause and referred to a contract with an individual practitioner.
- A payment authorisation declaration signed by Maclean, authorising payment to her company but referencing liabilities owed to her personally.
Maclean subsequently brought claims for unfair dismissal, whistleblowing detriment, and holiday pay—claims that required her to be either a worker or employee under section 230 of the Employment Rights Act 1996 and/or the Working Time Regulations 1998. PELC argued she was a self-employed contractor providing services via her company.
Legal Framework
The question of whether an individual is an employee, worker (“limb b worker”) or self-employed is one that has come into the limelight over the last 5-10 years with the boom the “gig economy”. However, “worker” is in fact a term defined in the Employments Rights Act 1996 and a string of case law demonstrates that in determining whether someone is a worker or self-employed:
- What matters is the reality or substance of the relationship so whilst the written terms are relevant, they are not conclusive.
- The key factors for determining whether someone works under a contract for services (including a contract of employment) are whether there is:
1. Personal service – i.e., an obligation for an individual to perform work personally;
2. Mutuality of obligation – i.e., an obligation on the company to provide work and for the individual to accept such work; and - Control – i.e., the company has a sufficient level of control over the individual and how they perform work.
Tribunal’s Findings
At a preliminary hearing, the Tribunal held that Maclean was both a worker and employee of PELC for the duration of Maclean’s engagement.
It held that:
- The written members’ agreement was between PELC and Maclean (and not her company) but in any event, it did not reflect the actual working relationship between the parties.
- The substance of the relationship had the necessary elements of personal service and control. In respect of personal service, the Tribunal found that the right of substitution in Maclean’s written agreement was “impracticable” as anyone who stepped in for her would have had to have sufficient knowledge of PELC’s operation as well as checks regarding their background and qualifications.
- There was also a sufficient level of mutuality of obligation. Despite the documentation not suggesting an obligation on PELC to offer work and for Maclean to accept such work, the Tribunal made a finding that such mutuality exists, and it was a “natural inference from the facts” because Maclean requested shifts and was allocated them every month.
The Tribunal relied on the wording of the payment authorisation declaration, the written members’ agreement describing the relationship as being between PELC and an individual clinician (not a corporate entity) and Maclean working regularly at PELC for over 4 years and never having provided a substitute.
EAT’s Decision
PELC appealed. The EAT upheld the finding that the contract was with Maclean personally but disagreed on two key issues—mutuality of obligation and substitution.
Mutuality of Obligation
The EAT found that Maclean’s working pattern did not establish mutuality. Her invoices showed irregular shifts, and the rota system allowed clinicians to bid for work without any guarantee of allocation. PELC was not obliged to offer work, nor was Maclean obliged to accept it.
Substitution
The EAT criticised the Tribunal’s conclusion that substitution was “impracticable” without proper analysis. It should have considered whether a pool of qualified nurses existed who could substitute for Maclean and whether the contract still required personal performance. The EAT referenced Pimlico Plumbers, noting that the key issue is not whether substitution was used, but whether the contract fundamentally required personal service.
As a result, the EAT allowed the appeal and remitted the question of Maclean’s employment status for reconsideration—though the finding that the contract was with Maclean directly remained.
Takeaways
While the judgment doesn’t introduce new legal principles, it reinforces important practical points:
- Focus on the reality of the working relationship: Contracts and tax arrangements should reflect how the relationship operates day-to-day.
- Employment status is fact-specific: Regular work patterns, substitution clauses, and control mechanisms must be carefully assessed.
- Documentation matters—but only if it aligns with practice: HR teams should ensure that written agreements accurately reflect the working arrangements to avoid disputes.