https://www.accountingweb.co.uk/tax/...g-relationship
Reads like the nurse sort of wanted to have her cake and eat it by claiming for some employment rights despite working via her own limited company for years...
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Employment case pivots on actual working relationship
Clarifying how mutuality of obligation and substitution should be treated, the Employment Appeal Tribunal has decided that a nurse who worked through her limited company was wrongly found to be both a worker and an employee.
A nurse who worked through her limited company was wrongly found to be both a worker and an employee, the Employment Appeal Tribunal (EAT) has decided. The decision clarifies how mutuality of obligation and substitution must be analysed and reminds engagers that IR35 tax status and employment law are not the same thing.
In the case of Partnership of East London Co-operatives Ltd (PELC) vs Miss J Maclean [2025] EAT 142, PELC is an industrial and provident society that provides healthcare services at community urgent treatment centres (UTCs) in East London. Like many NHS providers, PELC engages a mix of permanent employees, bank staff and self-employed contractors to fill clinical shifts.
Joanne Maclean, a qualified nurse, worked for PELC as a clinical streamer between August 2018 and March 2023. She did so through her company, Maclean J Ltd, and was paid gross, being responsible for her own tax and national insurance. However, when her engagement ended, she brought claims for unfair dismissal, whistleblowing detriment and holiday pay. All of which depended on her being either an employee or a worker under section 230 of the Employment Rights Act 1996 (ERA) and the Working Time Regulations 1998 (WTR).
Tribunal decision
At first instance, the employment tribunal (ET) found in Maclean’s favour. The judge held that:
In reaching that conclusion, the tribunal gave particular weight to:
PELC appealed to the EAT, arguing that the tribunal had misapplied the law on employment status, reached inconsistent conclusions and failed to explain its reasoning adequately.
EAT’s decision
The appeal was handed down on 7 October 2025. The EAT’s judgment runs through three main grounds.
Ground 1: Who was the contract with?
PELC’s first argument was that it contracted with Maclean J Ltd, not with Maclean personally. The EAT disagreed. It held that the tribunal was entitled to find that the contract was personal.
The PAD was decisive: it was signed by Maclean herself and stated that payment to her company would “discharge any liability owed by PELC to me”. That wording suggested that PELC’s obligation was owed to Maclean, not to the company. The members agreement also referred to a contract between PELC and an individual practitioner, not a corporate entity.
The EAT emphasised that, while IR35 forms and invoices were relevant, they were not determinative of employment status. The tribunal was right to treat the IR35 documentation with caution and to look instead at the substance of the parties’ arrangement.
The decision was that the contract was with Maclean personally, not with her company. Ground 1 was dismissed.
Ground 2: Mutuality of obligation and employee status
The second and most significant issue was whether there was an overarching contract of employment or simply a series of individual engagements per shift.
The tribunal had concluded that, although the documentation said there was no obligation to offer or accept work, “the natural inference from the facts” was that Maclean and PELC each had an expectation to offer and undertake a reasonable amount of work. The EAT found that reasoning insufficiently supported.
The evidence showed that:
Simply working regularly over several years was not, by itself, enough to imply mutual obligations beyond each discrete engagement. The tribunal’s conclusion that an “umbrella contract” existed was therefore unsound.
The EAT also identified a contradiction: at one point, the tribunal had said that Maclean was a limb (b) worker each time she accepted work, but later stated that she was an employee throughout the period. Those findings could not stand together.
The tribunal’s findings on mutuality were held to be inadequately reasoned and inconsistent. Ground 2 was upheld.
Ground 3: Personal service and substitution
The tribunal had accepted that there was a right of substitution in the documentation but found that substitution would have been “impracticable” in reality. On that basis, it held that Maclean was required to perform the work personally.
The EAT found this conclusion inadequate. The tribunal had not properly explained why substitution was impracticable or considered whether there was a ready pool of qualified nurses who could have substituted. Nor had it analysed whether a conditional right of substitution, for example, limited to suitably qualified individuals, would be inconsistent with personal service.
Citing Pimlico Plumbers vs Smith and Stuart Delivery vs Augustine, the EAT reiterated that the question is not whether substitution was used, but whether the dominant feature of the contract remained personal performance. The tribunal’s bare assertion of impracticability did not meet that test.
The decision was that finding on personal service not properly reasoned. Ground 3 was upheld.
Tribunal outcome
As a result, the EAT quashed the findings that Maclean was a worker and employee. The question of her status will be remitted for reconsideration, though the EAT left open whether this will be to the same tribunal or a fresh one. The only finding that stands is that PELC contracted with Maclean personally.
Legal context
The EAT reaffirmed that determining employment status requires a multi-factorial assessment, guided by the principles in Ready Mixed Concrete. Written terms are relevant but not conclusive; tribunals must look at the reality of the relationship.
Crucially, the judgment distinguishes between:
The tribunal observed that the “IR35 binary classification of workers into employed and self-employed is not the same as the categorisation(s) in employment law.”
Legally sensitive boundary
PELC vs Maclean serves as another reminder that the boundary between employment and self-employment remains legally sensitive and fact-specific. The EAT’s decision doesn’t resolve the question of Maclean’s status, it simply sends the issue back for a better-reasoned answer. It does, however, reinforce the analytical discipline required of tribunals.
For employers and engagers, particularly in the healthcare sector, there is a clear message: labels, tax outcomes and convenience of payment mechanisms will not protect against employment law obligations. Contracts must reflect the real substance of the working relationship, and the operational reality must match the paperwork.
Reads like the nurse sort of wanted to have her cake and eat it by claiming for some employment rights despite working via her own limited company for years...
====
Employment case pivots on actual working relationship
Clarifying how mutuality of obligation and substitution should be treated, the Employment Appeal Tribunal has decided that a nurse who worked through her limited company was wrongly found to be both a worker and an employee.
A nurse who worked through her limited company was wrongly found to be both a worker and an employee, the Employment Appeal Tribunal (EAT) has decided. The decision clarifies how mutuality of obligation and substitution must be analysed and reminds engagers that IR35 tax status and employment law are not the same thing.
In the case of Partnership of East London Co-operatives Ltd (PELC) vs Miss J Maclean [2025] EAT 142, PELC is an industrial and provident society that provides healthcare services at community urgent treatment centres (UTCs) in East London. Like many NHS providers, PELC engages a mix of permanent employees, bank staff and self-employed contractors to fill clinical shifts.
Joanne Maclean, a qualified nurse, worked for PELC as a clinical streamer between August 2018 and March 2023. She did so through her company, Maclean J Ltd, and was paid gross, being responsible for her own tax and national insurance. However, when her engagement ended, she brought claims for unfair dismissal, whistleblowing detriment and holiday pay. All of which depended on her being either an employee or a worker under section 230 of the Employment Rights Act 1996 (ERA) and the Working Time Regulations 1998 (WTR).
Tribunal decision
At first instance, the employment tribunal (ET) found in Maclean’s favour. The judge held that:
- the contract was between PELC and Maclean personally, not with her company
- the relationship had the necessary elements of personal service and control
- there was a sufficient degree of mutual obligation to support an ongoing employment relationship
- Maclean was both a worker and an employee for the duration of the engagement.
In reaching that conclusion, the tribunal gave particular weight to:
- the payment authorisation declaration (PAD) signed by Maclean, which authorised payment to her company but referred expressly to PELC’s “liability owed to me”
- the members agreement, which described the relationship as being between PELC and an individual clinician
- the fact that Maclean had worked regularly for over four years and never provided a substitute.
PELC appealed to the EAT, arguing that the tribunal had misapplied the law on employment status, reached inconsistent conclusions and failed to explain its reasoning adequately.
EAT’s decision
The appeal was handed down on 7 October 2025. The EAT’s judgment runs through three main grounds.
Ground 1: Who was the contract with?
PELC’s first argument was that it contracted with Maclean J Ltd, not with Maclean personally. The EAT disagreed. It held that the tribunal was entitled to find that the contract was personal.
The PAD was decisive: it was signed by Maclean herself and stated that payment to her company would “discharge any liability owed by PELC to me”. That wording suggested that PELC’s obligation was owed to Maclean, not to the company. The members agreement also referred to a contract between PELC and an individual practitioner, not a corporate entity.
The EAT emphasised that, while IR35 forms and invoices were relevant, they were not determinative of employment status. The tribunal was right to treat the IR35 documentation with caution and to look instead at the substance of the parties’ arrangement.
The decision was that the contract was with Maclean personally, not with her company. Ground 1 was dismissed.
Ground 2: Mutuality of obligation and employee status
The second and most significant issue was whether there was an overarching contract of employment or simply a series of individual engagements per shift.
The tribunal had concluded that, although the documentation said there was no obligation to offer or accept work, “the natural inference from the facts” was that Maclean and PELC each had an expectation to offer and undertake a reasonable amount of work. The EAT found that reasoning insufficiently supported.
The evidence showed that:
- shifts were posted monthly on a rota system
- clinicians could bid for shifts and were not guaranteed any work
- PELC was not obliged to allocate any particular number of shifts
- the nurse was not obliged to accept work when offered.
Simply working regularly over several years was not, by itself, enough to imply mutual obligations beyond each discrete engagement. The tribunal’s conclusion that an “umbrella contract” existed was therefore unsound.
The EAT also identified a contradiction: at one point, the tribunal had said that Maclean was a limb (b) worker each time she accepted work, but later stated that she was an employee throughout the period. Those findings could not stand together.
The tribunal’s findings on mutuality were held to be inadequately reasoned and inconsistent. Ground 2 was upheld.
Ground 3: Personal service and substitution
The tribunal had accepted that there was a right of substitution in the documentation but found that substitution would have been “impracticable” in reality. On that basis, it held that Maclean was required to perform the work personally.
The EAT found this conclusion inadequate. The tribunal had not properly explained why substitution was impracticable or considered whether there was a ready pool of qualified nurses who could have substituted. Nor had it analysed whether a conditional right of substitution, for example, limited to suitably qualified individuals, would be inconsistent with personal service.
Citing Pimlico Plumbers vs Smith and Stuart Delivery vs Augustine, the EAT reiterated that the question is not whether substitution was used, but whether the dominant feature of the contract remained personal performance. The tribunal’s bare assertion of impracticability did not meet that test.
The decision was that finding on personal service not properly reasoned. Ground 3 was upheld.
Tribunal outcome
- Ground 1 (contracting party): Dismissed.
- Grounds 2 and 3 (mutuality and substitution): Upheld.
- Ground 4 (insufficient reasons): Upheld to the extent of the other errors.
As a result, the EAT quashed the findings that Maclean was a worker and employee. The question of her status will be remitted for reconsideration, though the EAT left open whether this will be to the same tribunal or a fresh one. The only finding that stands is that PELC contracted with Maclean personally.
Legal context
The EAT reaffirmed that determining employment status requires a multi-factorial assessment, guided by the principles in Ready Mixed Concrete. Written terms are relevant but not conclusive; tribunals must look at the reality of the relationship.
Crucially, the judgment distinguishes between:
- the binary IR35 classification (employed vs self-employed for tax), and
- the three-way classification in employment law (employee, worker, self-employed).
The tribunal observed that the “IR35 binary classification of workers into employed and self-employed is not the same as the categorisation(s) in employment law.”
Legally sensitive boundary
PELC vs Maclean serves as another reminder that the boundary between employment and self-employment remains legally sensitive and fact-specific. The EAT’s decision doesn’t resolve the question of Maclean’s status, it simply sends the issue back for a better-reasoned answer. It does, however, reinforce the analytical discipline required of tribunals.
For employers and engagers, particularly in the healthcare sector, there is a clear message: labels, tax outcomes and convenience of payment mechanisms will not protect against employment law obligations. Contracts must reflect the real substance of the working relationship, and the operational reality must match the paperwork.
