Local authority was not the employer of a caregiver whose support to his brother was funded using direct payments

EAT: local authority was not the employer where it did not manage or control the carer.

In this article, we look at the case of Scully v Northamptonshire County Council [2025] EAT 83: Mr_Kieron_Dominic_Scully_v_Northamptonshire_County_Council__2025__EAT_83.pdf and the implications the decision may have for caregivers and local authorities.  

The Care Act 2014 (the “Act”)

Under the Act, local authorities have a duty to promote the wellbeing of individuals who require care and support.  Once a local authority has reason to believe that an adult may require assistance, it must undertake a needs assessment. If the assessment determines that there are care and support needs, subject to certain eligibility criteria, the local authority is under a duty to meet those needs.

Support to meet an individual’s needs can be arranged by the local authority, or the local authority can make direct payments to individuals so that they can arrange and pay for their own care and support, rather than having it arranged for them. 

This support includes care and support at home or in the community, support with counselling, advice, information, goods and facilities, the provision of care home accommodation and/or other types of social work.

Background

Between 2013 and 2020, Mr Scully acted as a carer for his adult brother, (“S”), who has a learning disability.

Northamptonshire County Council (“NCC”) provided direct payments to S’s family, which funded his care under the Act, which was in turn provided by Mr Scully.  Mr Scully received payslips which named S as his employer.

The payroll process for the payments to Mr Scully was initially carried out by a charity, but subsequently this function was taken over by NCC under its Personal Budget Support Service (“PBSS”).  This arrangement continued until Mr Scully brought a claim in the Employment Tribunal against NCC in December 2020.

Employment Tribunal decision

Mr Scully’s complaints in the Employment Tribunal were of race and disability discrimination, arrears of pay and other payments said to be due to him as an employee. In each case, he submitted that his employer was NCC.

There was no dispute between the parties that, in providing care and support to S, Mr Scully worked under a contract of employment. NCC denied, however, that Mr Scully did so at any time as its employee.

At a preliminary hearing in the Employment Tribunal, all of Mr Scully’s complaints were dismissed on the basis that Mr Scully was not an employee of NCC.

The Tribunal considered the payroll situation and examined the practical arrangements in place between 2013 and 2020. It noted several points, including:

• There was a contract in place between S and Mr Scully, which the Tribunal considered was a contract of employment.

• Mr Scully did not have any appraisals with NCC, nor did he receive any training or continuing professional development.  His performance and conduct were not managed by NCC. 

• Whilst at one point, the PBSS had provided advice to Mr Scully’s mother about how to make Mr Scully redundant, she did not follow this advice.

• S’s family took responsibility for arranging cover for S’s care when Mr Scully was on holiday.

• S’s mother retained control over decisions as to who should be engaged to care for S, and she had previously dismissed a carer looking after S.

• Mr Scully was unable to identify any occasion when he had received instructions from NCC in relation to his provision or support and care to S.

The Tribunal found that on the evidence, Mr Scully was employed by S, or by S’s mother on his behalf, as it remained unclear whether S had capacity to enter into an employment contract with Mr Scully.

Mr Scully appealed to the Employment Appeal Tribunal (“EAT”).

EAT decision

When the appeal hearing took place in the EAT, Mr Scully raised several arguments, some of which were not raised in his original appeal. 

He argued that NCC was not able to discharge its duty to provide care and support under the Act by making direct payments.  He further argued that a recipient of direct payments was acting as an agent for NCC and in his case, this meant that he must have been an employee of NCC.

Mr Scully asserted that it was necessary to imply a contract of employment between him and NCC because:

1. S did not have capacity to enter into such a contract;

2. it would have been unlawful for Mr Scully to have provided care services to S, which were “regulated activities”, unless he was an employee of NCC; and

3. S and/or his mother had received direct payments in the capacity of trustee.

Mr Scully relied on the case of South Lanarkshire Council v Smith UKEAT/873/99 which found that where direct payments were made by that council under The Social Work (Scotland) Act, 1968, the council was the employer. 

Mr Scully’s appeal was dismissed. 

The EAT found that the Tribunal was entitled, on the basis of the evidence it accepted, to reach the conclusion that there was no contract of employment, either express or implied, between Mr Scully and NCC.

The Act was clear that NCC could discharge its duty to provide care and support by making direct payments, and there was no need to imply that Mr Scully became an employee of NCC either directly or indirectly because direct payments were made. 

The Tribunal’s findings of fact were that S took control of his own budget and that from that time, his family received direct payments to fund his care.  There was a contract of employment in place which accurately reflected the care and support provided by Mr Scully.   

The EAT did not consider itself bound to follow the South Lanarkshire case.  That case did not specifically address whether implying a contract was necessary, but instead focussed on whether the council had retained control over the carer concerned. The later case of James v Greenwich London Borough Council [2008] ICR 545, which focussed on whether there was a necessity to imply a contract, superseded the South Lanarkshire case.

In any event, the South Lanarkshire case concerned a different statutory framework and the local authority had retained control as to how care was provided, including framing and placing the advertisement for a carer, organising the interview selection process, arranging a short list, appointing the carer and organising her training. 

It was not necessary to imply a contract between Mr Scully and NCC because a valid employment relationship could exist between Mr Scully and his brother.

Whether Mr Scully’s brother lacked capacity was a matter for medical evidence, which was not produced by Mr Scully as part of the proceedings.  The EAT considered that even if S lacked capacity, that would not automatically void any employment contract, it would simply make it voidable.  

As the Tribunal had made extensive findings about the role S’ mother played in the arrangements for his care, it would nevertheless not have been necessary to imply a contract between Mr Scully and NCC.

It was not unlawful for Mr Scully to provide care services to S in these circumstances, as the services were not “regulated activities” under the relevant legislation.

Implications for the arrangements of care

At first glance, local authorities are likely to be comforted by the Scully decision, which supports the position that councils will not be considered an employer simply by making direct payments. However the case serves as a reminder to local authorities to ensure that where direct payments are made, they act consistently in a way that reflects the fact that they are not the employer in any care arrangements.

The Tribunal commented in Scully that “little or no thought was given…to the employment law implications of the arrangements put in place”.

The Scully case illustrates the need for the party receiving and/or utilising direct payments to ensure that they know whether they personally or the person they are acting in the best interests of, are stepping into the shoes of the employer when care arrangements are made.  Having clear contractual documents which reflect the intentions of the parties is also essential. 

If there is any ambiguity resulting from the care arrangements in place utilising direct payments, advice should be obtained to ensure that any employment related risks can be addressed. 

If you would like to discuss any aspect of this article further, please contact our employment team on 0113 244 6100. 

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.