Weight Watchers (UK) Ltd v HMRC: Summary7 February 2012
Were ‘Leaders’ engaged to conduct Weight Watchers meetings employees of Weight Watchers Ltd for the purposes of PAYE and NI contributions?
Yes, says the Upper Tribunal (Tax and Chancery Chamber) in the case of Weight Watchers (UK) Ltd v HMRC.
In this case, Leaders engaged by WWUK signed contracts describing themselves as independent contractors and not the servant of Weight Watchers. They were required to pay their own tax and national insurance. The Leaders were only paid if they personally conducted their own meetings and they were required to obtain WWUK’s specific approval in relation to time, date and place of any meetings. Although the contract contained an express substitution clause, the Leaders were obliged to find a suitably qualified replacement if they did not want to lead a meeting.
The Upper Tribunal dismissed WWUK’s appeal and concluded that the Leaders were employees of WWUK rather than self employed contractors. The Upper Tribunal held that the Leaders were required to provide their services personally and that WWUK imposed a high degree of control as they were required to follow WWUK’s programme and expected to turn up and conduct the meetings at a certain time and place each week.
Whilst WWUK had written a ‘substitution clause’ into the contracts, the Upper Tribunal adopted a purposive interpretation of the contracts in accordance with the decision of the Supreme Court in the case of Autoclenz v Belcher and concluded that in reality, the right to substitute was “fettered” because the Leaders were required to find a suitably qualified replacement and show good reason for proposing not to take a meeting.