The company replied that the ET having decided the contract was not a sham meant it was wrong to focus on whether Mr MacGettigan did the work himself instead of asking what he was required to do under the contract. The ET should have referred to the contractual rights and obligations rather than the performance of the contract. That the contract provided for a right to provide a substitute negated the possibility of MacGettigan being a worker within the meaning of the WTR.
Mr MacGettigan cross appealed against the ET's finding that the contractual right to provide a substitute to perform his work was not a sham. He argued that such that conclusion was perverse.

According to the contract Mr MacGettigan was a self-employed sub-contractor providing steel fixing services who was not guaranteed any work. Necessary safety equipment would be provided but MacGettigan would not receive holiday or sick pay The substitution clause gave MacGettigan the right to:

'Send someone with similar experience and qualification in your place... and must then arrange to pay the substitute yourself. You must notify the Contractor of the substitute for security and Health and Safety purposes.'

Defending itself against the accusation of formulating sham contracts the company maintained that it had self-employed sub-contractors in addition to an employed workforce and that Mr MacGettigan understood his self-employed status.

The ET however doubted MacGettigan had either read or understood his contract The ET decided MacGettigan provided services personally, that he was not running his own business, that the company was not his client, that although under his contract Mr MacGettigan could subcontract he could not do it and keep his position.

The company argued that as there was no sham contract the case of Express and Echo Publications Limited v Tanton [1999] applied whereby the Court of Appeal considered whether a contract with a driver was a contract of service (employee) or a contract for services(contractor). Peter Gibson LJ said, “ the difficulty in approaching the identification of the terms of the agreement by concentrating on what actually occurred rather than looking at the obligations by which the parties were bound. Of course, it is important that the Industrial Tribunal should be alert in this area of the law to look at the reality of any obligations. If the obligation is a sham it will want to say so. But to concentrate on what actually occurred may not elucidate the full terms of the contract. If a term is not enforced that does not justify a conclusion that such a term is not part of the agreement."

Peter Gibson LJ stressed the importance of finding the common intention of the parties that Mr Tanton be a self-employed contractor and not an employee. The terms of the contract were consistent with that common intention. He concluded that clause 3.3 entitling Mr Tanton to provide a substitute was wholly inconsistent with a contract of service.

In Wright v Redrow Homes [2004] Pill LJ at the Court of Appeal said,”the fact that the work was done personally (doesn't mean) that there was a contractual obligation to do it personally". Holman J continued, 'it is irrelevant that applicants did the work personally. The question is whether the contracts themselves bound or required the applicants to do the work personally.'

The respondent agreed that a qualified right of substitution can exist with a contracting party performing the work himself and whilst the worker comes under the WTR (MacFarlane v Glasgow City Council [2001] and Byrne Brothers (Formwork) Ltd v Baird & Others [2002] ,Premier Groundworks v Mr Jozsa [2009] EAT). This is in contrast to where there is an unqualified right of delegation (Tanton and Premier Groundworks v Mr Jozsa [2009] EAT) where the worker is excluded from the WTR Regulation 2(1) provisions.

The claimant cited Redrow Homes (Yorkshire) Ltd v Buckborough [2009] to argue that if a worker must provide a substitute this sufficed as being a personal service obligation bringing a worker under the WTR. The respondent supported by the EAT said this was not the law but obiter dicta (remarks made by the judge but not part of the court's decision).

It was agreed that whether the power of delegation was limited or unlimited denoted whether an obligation personally to perform work or services existed. A limited power of delegation could imply an obligation personally to perform work or services and the existence of a contract of employment (Ready Mixed Concrete Ltd. v Minister of Pensions and National Insurance [1968] ).

The judgment in Autoclenz Ltd v Belcher EAT was quoted whereby the workers came under the WTR despite a substitution clause allowing the workers to have work done for them, “provided that such an individual is compliant with Autoclenz's requirements of sub-contractors as set out in this agreement …."

Similarly in Bly Construction Ltd v Cochrane the EAT found that the the qualified right of substitution in the contract did retain the personal service element. The substitution clause stated:
"7. The Sub Contractor may send a substitute at his absolute discretion but such substitute may be rejected by AD BLY Construction if AD BLY Construction is reasonably satisfied that the substitute does not possess the necessary skills, qualifications and experience required." Mirror Group Newspapers Group Limited v Gunning [1986] was quoted whereby Balcombe LJ in the Court of Appeal said, "one has to look at the agreement as a whole, and provided that there is some obligation by one contracting party personally to execute any work or labour, one then has to decide whether that is the dominant purpose of the contract”.

In Buckborough where an obligation to provide a substitute was an obligation to personally perform services HH Judge Burke QC said that the obligation to provide a substitute 'was an obligation personally to perform at least services.'

The claimant argued that after the Court of Appeal in Protectacoat Firthglow Ltd v Miklos Szilaghyi [2009] that a clause in a contract is a sham when it misrepresents the true relationship between the parties. But a sham can exist where there is no intention to deceive. Lady Justice Smith said,
"If the evidence establishes that the true relationship was, and was intended to be, different from what is described in the document, then it is that relationship and not the document or the document alone which defines the contract."

The MacKenna dictum (Ready Mixed Concrete) founded the principle that under the WTR:

• an unqualified power of substitution undermines the status of 'worker'
• a limited power to provide a substitute does not.

ordinary principles of construction are to be applied. If the substitution clause is clear and unambiguous, its meaning and effect are to be determined in accordance with its terms.

The EAT in Premier Groundworks held that unfettered substitution right undermined the status of 'worker' under the WTR, “even though the person actually performing the contractual obligations has to meet certain conditions."

In MacFarlane v Glasgow City Council [2001] however the EAT distinguished Tanton as the appellants could not simply substitute another worker but the substituion had to come from a council's own register, the council could hire the replacement with the replacement being paid direct by the council. The EAT held that the substitution clause in MacFarlane did not inescapably lead to a conclusion that no contracts of employment existed (The case was remitted to an Employment Tribunal for a decision on employee status).

Elias P in Consistent argued that an unfettered power to delegate was not necessarily undermined if an employer asked that a substitute was skilled and experienced enough to do the job.

The EAT decided that the substitution clause gave Mr MacGettigan an unfettered right to delegate the performance of his duties. This right is inconsistent with an obligation to perform personally any work or services within the meaning of WTR Regulation 2(1). Elias P (Consistent )was quoted whereby:
"The concern to which tribunals must be alive is that armies of lawyers will simply place substitution clauses, or clauses denying any obligation to accept or provide work in employment contracts, as a matter of form, even where such terms do not begin to reflect the real relationship. Peter Gibson LJ said,” it is important that the industrial tribunal should be alert in this area of the law to look at the reality of any obligations. If the obligation is a sham, it will want to say so."
So if there is no real expectation that a substitute can be used or work can be refused the worker may well be protected under the WTR.

In Protectacoat Lady Justice Smith commented,

"55.
The question is always what the true legal relationship is between the parties. If there is a contractual document, that is ordinarily where the answer is to be found. But, if it is asserted by either party, or in some cases by a third party, that the document does not represent or describe the true relationship, the court or tribunal has to decide what the true relationship is.”

• The ET erred in law in failing to consider whether the substitution clause accurately represented the intention of the parties and whether it was a sham based on that consideration.
• whether or not the substitution clause was a sham could not be determined from the ET's findings of the ET and the decision that it was not a sham was therefore perverse.
• The substitution clause gave an unqualified right of substitution meaning the ET erred in deciding Mr MacGettigan was a worker within the meaning of WTR 2(1)(b)
• Unless the substitution clause was a sham, Mr MacGettigan was not a worker within the meaning of the WTR.
• The ET should have considered whether both both parties inended the unfettered substitution clause in the contract. What actually occurred in practice could have helped determine whether the substitution clause was a sham.
• The finding of the ET was set aside and remitted for a rehearing.