A heavy blow for Weight Watchers

In the employment status case of Weight Watchers (UK) Ltd & ORS v Revenue & Customs, the Upper Tribunal (“UT”) has rejected the appeal against the original First-tier tribunal (FTT) decision.  The main issue decided by the FTT was that the “leaders” of Weight Watchers’ (“WW”) classes were employees of WW rather than independent contractors and the UT has upheld that decision.

The main issue and grounds of appeal

In the absence of written contracts, the original case involved an examination of working arrangements between the leaders and WW.  To help them reach a decision, the FTT considered internal documents which were found to contain errors and inconsistences.  Following their review, the FTT highlighted the factors pointing towards the employed status of the leaders including:

  • an existence of a mutuality of obligations;
  • control over what the leaders did, and where and when the work was performed, in the form of a veto over any arrangements organised by the leaders;
  • no absolute discretion over how the leaders could carry out the work; and
  • no freedom to choose a substitute to take the leader’s place despite a perceived right within the internal documents. 

Some arrangements did support self- employment.  For instance, the leaders did incur expenses – in particular the cost of hiring their own helpers. There was also an opportunity to profit from sound management in relation to maximising commissions from new members and the sale of merchandise. These factors were not examined in any detail and were to an extent overshadowed by the control and personal service aspects.

All the grounds of appeal – including claims of a misdirection by the FTT over the mutuality of obligations, errors and misconstruction over the control aspects and a failure to carry out a full review of all the relevant factors which supported self-employment status – were rejected.

What practitioners can learn from this case

The case highlights the importance of getting the employment status right at the outset and having sufficient evidence to support it.  Ultimately, such cases are decided on the actual working arrangements between the relevant parties.  A key part of that process is the content of any relevant documentation which if ambiguous and not reflective of the actual working arrangements, can be unhelpful.

Clients should be encouraged to review their internal documents and certainly in high risk cases should consider the preparation of clearly defined contracts reflecting all the hallmarks of the agreed status which supports the working arrangements.  Such contracts should be reviewed regularly.

For more information about the taxation of employed and self-employed individuals phone the Tax Desk on 0845 4900 509 and ask for Martin Mann