Sham Self-Employment in the Supreme Court

Abstract

How are contracts for the provision of work typically negotiated? The answer to this question matters a great deal, and it was central to the Supreme Court’s elaboration of a broad sham doctrine in the context of contracts for personal employment in Autoclenz Limited v Belcher and Others (Autoclenz). One picture of typical contracting practice – let us call it the standard picture – was painted by Lord Hoffmann in Carmichael v National Power Plc., where he observed that it was not ‘untypical’ of employment contracts that they would be partly written, partly oral and partly established by a pattern of evolving conduct over time. In this situation, the court can draw inferences from a wide range of relevant evidence to ascertain what, in objective terms, was agreed between the parties. In recent years, this standard picture has appeared increasingly strained as a description of the reality of contracting practices. The contract in Autoclenz demonstrates the strain. This was a comprehensive written contract drafted by the employer and presented to the worker on a take-it-or-leave-it basis. This article examines the Supreme Court’s approach to the problem of ‘sham’ terms in such contracts. It concludes that Autoclenz has a radical potential to disrupt the application of settled rules and principles of general contract law in the sphere of personal employment contracts, and indeed marks the emergence of a relatively autonomous common law of the personal employment contract.

Keywords: Labour law, work contracts, sham doctrine, personal employment contract, Autoclenz v Belcher