In Shanks v Scottish Qualifications Authority, the Employment Tribunal ruled an exam invigilator was a worker under employment law and entitled to holiday pay. This case highlights the importance of aligning contractual terms with actual working practices and serves as a warning to employers about the importance of correctly assessing the employment status of those working for them.
What were the facts in the Shanks v Scottish Qualifications Authority Case?
The Scottish Qualifications Authority (“SQA”) is the awarding and accreditation body for national (and other) qualifications in Scotland. It is responsible for writing assessments, quality assurance, invigilating exams and delivering certifications. It engages some 10,000 invigilators each year to assist with the delivery of its functions.
Ms Shanks worked for SQA as an invigilator, and then as a chief invigilator, from 2022 to 2024.
SQA invigilators are engaged on short term fixed-term contracts for the duration of each “exam diet”. They work at local assessment centres, but are subject to the rules and requirements of the SQA; including having detailed job descriptions, being under a number of contractual obligations (including around confidentiality and social media), being required to comply with the Protection of Vulnerable Groups (“PVG”) scheme and registration, being subject to a detailed and relatively prescriptive SQA handbook (which governs how their roles must be carried out day-to-day), and having to comply at all times with a Code of Conduct (with failure to do so resulting in termination of their engagement). All invigilators must also undertake compulsory training (mandated by the SQA) before commencing their work.
Invigilators report to the chief invigilator (who reports to the SQA directly). The chief invigilator is responsible for arranging shifts and logging hours worked (for payment purposes). If an invigilator is unable to carry out an upcoming shift, they have to inform the chief invigilator, who will arrange cover from the “pool” of invigilators in the local area. If the chief invigilator is unable to carry out a shift, they will usually be covered by the deputy chief invigilator. In practice, this tends to only happen when invigilators are unable to work (rather than when they simply don’t want to work).
Pay is by the hour (with a minimum day rate), pegged to the National Living Wage, and is paid monthly via PAYE with deductions for tax (but not National Insurance). It is calculated on the basis of a spreadsheet of monthly hours which is collated by the chief invigilator and submitted to the SQA on the invigilators’ behalf.
Those who are eligible are enrolled automatically into a pension scheme, and pay employee pension contributions. Invigilators are not paid holiday pay, on the basis that the SQA views them as “self-employed”. Invigilators are not entitled to any other benefits or expenses, nor are they subject to the SQA’s disciplinary or grievance procedures.
In 2024, Ms Shanks wrote to the SQA requesting holiday pay. They informed her that invigilator roles “did not attract holiday pay” as they were not classed as employees or workers, but also stated that this was currently under review. After her grievance about this was rejected (on the basis that the grievance procedure did not apply to her) Ms Shanks brought a claim in the Employment Tribunal for holiday pay (amongst other things).
What was the Employment Tribunal’s decision?
The Tribunal found that, despite the SQA’s arguments to the contrary, Ms Shanks was a worker for employment status (and therefore holiday pay) purposes.
In reaching this decision, Employment Judge Robison carefully considered the statutory test for worker status (contained in section 203(3)(b) of the Employment Rights Act 1996), and found that each of the requirements of that test had been met:
- there was a contract to perform work or services in place between Ms Shanks and the SQA,
- there was (in effect) a requirement that Ms Shanks perform the work personally, and
- the SQA was not a client or customer of a profession or business undertaking carried on by Ms Shanks.
When considering the statutory test, the Judge also considered a number of factors highlighted in the applicable case law as pointing towards worker status, including:
- In relation to the contract to perform work or services:
a) It did not matter that there was no “mutuality of obligation” between the parties between contracts, what mattered was that there was a requirement to provide services (and be paid for those services) on a particular occasion for each contract. Once an invigilator had accepted the allocation of a shift, and undertaken the shift, the agreement between the parties required that the invigilator should be paid. This was enough “mutuality of obligation” between the parties. The fact that the parties were not obliged to offer, or accept, a minimum number of shirts, or any future work after the assignment had ended, was irrelevant.
b) The SQA had a relatively high level of control over its invigilators. It recruited and selected them. The requirements of the role were heavily prescribed, and set out in both the terms and conditions of appointment published by the SQA and its invigilator handbook. Invigilators were required to undertake work (when performed) on particular dates, times and locations. They were required to act in line with prescribed requirements, under the direction and supervision of the chief invigilator or SQA (as applicable).
c) Invigilators were subjected to various codes of conduct and other policies and procedures, including those set out in the terms and conditions of appointment, the Code of Conduct, child protection guidelines, health and safety guidelines, environmental impact guidelines, equal opportunities policies, data protection and confidentiality guidelines, and social media guidelines.
d) In relation to pay and tax, pay was on an hourly rate / minimum day rate basis, and working hours were logged and submitted to the SQA by the chief invigilator (rather than being invoiced directly). Income tax was deducted by the SQA via PAYE arrangements.
e) Though invigilators were not entitled to company benefits, they were automatically enrolled into a pension scheme if eligible. Significantly, this practice had come about as the result of a direct verbal instruction from the Department of Work and Pensions.
- In relation to the requirement to perform services personally:
a) There was no “unfettered right to substitute”. Invigilators were required, at the very least, to inform the chief investigator (and the chief investigator to speak with the deputy chief investigator or SQA) that they were unable to carry out their shift, and request cover. Cover would then be arranged from a limited pool of local invigilators who already held contracts with the SQA (and had therefore been vetted by them).
b) To the extent that an invigilator had a limited right to substitute, any right was limited or occasional, and would rarely be relied on in practice.
c) In fact, this limited right of substitution was only really used when an invigilator was unable to work (rather than simply not wishing to). This was consistent with a requirement to perform services personally.
- In relation to whether the SQA was a client or customer of Ms Shanks:
a) The SQA had accepted that it was not a client or customer of Ms Shanks in a profession or business undertaking, and this was a significant admission in the Tribunal’s eyes.
The Tribunal also considered a number of other relevant (albeit not determinative) factors, including the fact that Ms Shanks had worked in similar invigilator roles for other organisations, and been paid holiday pay in those roles. It also attached weight to the fact that the SQA had told Ms Shanks that it was in the process of reviewing the employment status of its invigilators.
Taking all of the above factors into consideration, Employment Judge Robison found that “[Ms Shanks was] engaged under a contract to undertake personally work or services for the SQA, which is not a client of any business of [Ms Shanks]. Taking into account the various other factors indicative of worker status, and bearing in mind the lower threshold or pass mark, I have concluded that the circumstances satisfy the requirements of section 230(3)(b) such that [Ms Shanks] is a worker…I have taken the view that both the invigilator and the chief invigilator role meet the test”.
Ms Shanks was subsequently awarded holiday pay.
Key Lessons for Employers
We have set out below some key take-away points from the Shanks v Scottish Qualifications Authority case, that employers should bear in mind in relation to employment status:
- Employers should objectively assess the level of control over the individual.
There are many roles, such as exam invigilation, where a level of control over a particular role is absolutely necessary. This may be to ensure excellence and consistency, such as in the role of an examiner or invigilator, or to ensure compliance in regulated sectors, for example in education or healthcare. Employers should not assume that because the need for control is externally motivated, such as in regulated sectors, or is an inherent factor in the particular work, such as in examinations, that this control will not be sufficient to establish a worker or employment relationship. An objective assessment should be undertaken of the individual circumstances to determine whether the level of control would point away from the usual autonomy of a self-employed contractor and towards a worker or employment relationship.
- The right to substitute is a crucial factor in determining personal service.
In order for an individual to be found to be a worker or employee the contract must be a contract of personal service. If the individual has unlimited freedom to send someone else to undertake the work, they cannot be a worker or employee. The right to substitution is therefore a crucial factor to consider when determining an individual’s employment status.
Employers often wish to have some control over who might undertake the work in the alternative. The Tribunal in Shanks noted that a conditional right to substitute may not be inconsistent with self-employment, but that it will depend on the nature or degree of the limitation. In this case, the right to substitution was limited to when Ms Shanks was unable to perform the services (such as due to illness) and was in fact rarely used in practice. It was therefore not found to be unfettered.
Putting limits on the right of an individual to send a substitute to undertake the work is likely to indicate a worker relationship and must therefore be carefully considered in each case.
- A portfolio career is not automatically indicative of self-employment.
Increasingly individuals are exploring varied ways in which to work and progress their careers. In many sectors, portfolio careers, where individuals undertake a number of different roles for different organisations at different times, are prevalent. The fact that an individual works for a number of organisations does not automatically meet the requirement that the organisations are clients or customers.
The Tribunal in Shanks took into consideration the fact that Ms Shanks had carried out other short term invigilator roles for other organisations on very similar terms. In addition, the SQA conceded that they were not a client or customer of Ms Shanks.
When considering the employment status of an individual a Tribunal will assess particular circumstances of each role against the factors of employment status. While the fact of a portfolio career may be relevant background, it will not be determinative and should not be relied on by employers as automatically indicating self-employment.
- Factors beyond employment status should also be considered.
Workers benefit from a wide range of employment rights, including protection from discrimination and protection as whistleblowers. Compensation for breaching these rights can be significant.
In Ms Shank’s case, her primary claim was for holiday pay which is quantifiable. She had been paid at a rate which met or exceeded the National Minimum Wage (NMW) and had been enrolled into a pension scheme. Had she not been, the SQA could have faced significant financial liabilities. These could have included include back pay for underpayment of the NMW, penalties in relation to the NMW shortfall, backdated pension contributions, and potential fines from The Pensions Regulator. Additionally, failure to meet these obligations could have led to reputational damage and further legal costs, making the overall financial impact much greater.
Employers should objectively assess the employment status of the individuals that work for them and consider the broader liabilities such as pension auto enrolment. Contracts must reflect actual working practices, including reflecting a genuine right of substitution if this is truly the case. Regular audits, clear documentation, and aligning written terms with day-to-day operations are essential to mitigating the risks of the legal and financial consequences of an incorrect assessment of employment status.
If your organisation needs further advice on any of the issues outlined in this article, please get in touch and our team of experienced Employment Lawyers would be happy to help.