(c) Sham transactions

(c)     Sham transactions

One other important area for judicial policy in this area has been where one party (usually the employee) argues that an element of the contract is a 'sham', inserted by the other party (usually the employer) to try to alter the normal categorisation of the contract and/or to evade legal liabilities. Arguably this tactic has been encouraged by the tendency for courts to treat one particular facet of employment status as an 'irreducible minimum' of employment status, eg 'mutuality of obligations' or the requirement of 'personal service' by the individual. Is it open to an employer to insert a provision into the contract expressly denying that particular facet (to avoid employment status) if it turns out that that provision does not reflect reality? As will be seen below (at para [21]) this also arose in the context of personal service, with the possibility of an employer putting a clause into the contract saying that the individual does not have to perform the work himself, whereas in practice it is clear that the essence of the agreement is that the individual will always do the work himself. In Staffordshire Sentinel Newspapers Ltd v Potter [2004] IRLR 752, EAT it was said that ultimately such a clause could be ignored if it was a 'sham', but that in itself led to problems. This whole issue finally found its way to the Supreme Court in Autoclenz Ltd v Belcher