It is a peculiarity of English litigation that a person can be told by one court that they were never employed, and by another — examining substantially the same working relationship — that they were employed all along. This is not a hypothetical. It happened to Richard Morgan, a farmer in a family enterprise, within the space of twelve months.
The two decisions — Morgan v SMS Farming Limited (ET, Case Nos 3315216/2023 & 3315217/2023, EJ Skehan, 28 February 2025) and Morgan v Morgan & Ors [2026] EWHC 384 (Ch) (HHJ Paul Matthews, 26 February 2026) — are worth reading side by side, because together they illustrate something practitioners know instinctively but rarely see demonstrated so starkly: employment status is a question of fact, and questions of fact can go either way.
The Background
SMS Farming Limited was a family farm owned equally by four brothers. Richard Morgan held 25% of the shares and was a director. He and his wife Julie both worked in the business — Richard on the physical farming (livestock, long hours, calving through the night), Julie developing a direct meat-selling operation through a subsidiary, Fields Farm Fresh Ltd.
There were no written contracts. The brothers and their families had always been paid modest weekly sums — £350 for Richard, £300 for Julie — described in the company's books as wages, processed through PAYE, and supported by P60s. No dividends were ever declared. The family also received accommodation, vehicles, utility payments, and other benefits, none of which appeared on the P60s.
When relations between the brothers broke down in 2023, the litigation forked. Richard and Julie brought employment claims in the ET. Richard also presented a section 994 unfair prejudice petition in the High Court. The question of whether they were employees arose in both proceedings.
The Employment Tribunal: Not Employees, Not Workers
Employment Judge Skehan applied the framework from HMRC v Professional Game Match Officials Ltd [2024] UKSC 29, starting with mutuality of obligation and control as necessary (but not sufficient) conditions.
On control, the ET found that nobody told Richard what to do, how to do it, or when. Farming matters were "delegated in the main" to him. He chose his own holidays. Julie identified and developed the Fields Farm Fresh business on her own initiative, with her hours fluctuating without comment from the company.
On substitution, the ET found that both claimants could and did provide substitutes for the physical elements of their work. Julie had arranged for someone else to do deliveries. Richard accepted that a substitute could do the physical farm work, even if they lacked his knowledge of the land.
On pay, the ET concluded that the labelling of payments as "employment" was a paper exercise on accountants' advice, without active consideration of the actual relationship. The disconnect between hours and pay — Richard working up to 126 hours a week for £350, Julie's pay unchanged when her hours dipped — pointed away from an employment relationship. The payments were "more closely aligned with director's or de facto director's drawings".
Taking the relationship in the round, the ET concluded: no employment contract, and no worker status either (the absence of an obligation of personal service being fatal to the limb (b) claim). All claims dismissed.
The EAT refused the appeal at the sift. Applying Uber BV v Aslam [2021] ICR 657 at [118], the Appeal Tribunal confirmed there was no arguable error of law. The ET's findings were evaluative judgments on the facts, not susceptible to appeal.
The High Court: Employees
HHJ Paul Matthews, sitting in the Chancery Division on the section 994 petition, reached the opposite conclusion on the same underlying relationship.
His starting point was different. The ET had been asked a binary question — employee or worker under section 230 ERA 1996 — in proceedings between Richard and Julie on one side and SMS on the other. The High Court was deciding an unfair prejudice petition in which the relevant dispute was between Richard and the other family members (the "Active Respondents"). SMS itself was neutral and had filed no defence.
On the documentary evidence, HHJ Matthews found it compelling. The accounts showed "Directors' remuneration" as a deductible expense. The bank records marked payments as "wages". There was a run of P60s and tax returns. The company had written to Richard and Julie in September 2023 formally terminating their "contracts of employment". The brothers' own evidence was that SMS had been initially financed from "redundancy compensation from the brothers' employment" by the predecessor company.
There was also a telling footnote. HHJ Matthews noted that the bank records had been "childishly altered to drawings shortly before the Employment Tribunal hearing in January 2025".
On substitution, the High Court took the opposite view: "it is absurd to think that Richard or Julie could have sent a substitute worker in their places." On control, the judge found that SMS, through morning meetings held by the brothers, "was in charge of what was to be done from day to day. Richard could not have simply done anything he wanted." On pay, the wages paid to Julie — who was neither a director nor a shareholder — could not be explained as directors' drawings. And the argument that the weekly payments were really loan repayments was undermined by the fact that similar sums had been paid from the outset, before any loans were made.
Conclusion: Richard and Julie were both employees, and the weekly sums were wages for work done under a contract of employment.
Hollington v Hewthorn: Why Both Decisions Stand
How could HHJ Matthews reach an opposite conclusion on what was, in substance, the same question about the same people doing the same work? Because the rule in Hollington v Hewthorn [1943] 1 KB 587 meant he was not bound by — and indeed had to ignore — the ET's decision.
The rule, recently reaffirmed by the Supreme Court in Evans v Barclays Bank plc [2025] UKSC 48, provides that findings of fact made by one tribunal are inadmissible in subsequent proceedings before another. The rationale, as Christopher Clarke LJ put it in Rogers v Hoyle [2015] 1 QB 265 at [39], is that "the decision at that trial is to be made by the judge appointed to hear it, and not another."
HHJ Matthews identified two reasons why the rule applied. First, the parties were different: the ET proceedings were between the Morgans and SMS, but in the petition the dispute was between the Morgans and the other family members. (This also defeated any issue estoppel argument.) Second, the inroads made by the Civil Evidence Act 1968, sections 11-13, only apply where a party seeks to rely on a criminal conviction in civil proceedings, or on certain specific findings — not where one civil decision is tendered in another civil case.
The result is that HHJ Matthews was "free to decide the question 'employee or not' for myself, on the evidence presented to me in these proceedings." And so he did — with opposite results.
What Explains the Different Outcomes?
The divergence is not simply a matter of one tribunal getting it right and the other getting it wrong. Several structural factors are at work.
Different evidence. The ET heard from Richard, Julie, and Jane Morgan. The High Court trial ran for eight days with a wider pool of witnesses and a broader documentary record (including the High Court pleadings, the full loan documentation, and the altered bank records). HHJ Matthews expressly noted the footnote about the bank records being changed before the ET hearing — evidence that may not have been before EJ Skehan in the same light.
Different framing. The ET was asking the section 230 question in isolation. The High Court was assessing whether there had been unfairly prejudicial conduct in the management of a quasi-partnership company — a context in which the characterisation of the weekly payments (wages or drawings) had direct consequences for whether Richard had been excluded from the benefits of membership.
Different weight on the same indicators. Both tribunals considered substitution. The ET focused on the practical ability to substitute for physical work. The High Court thought it "absurd" that anyone could have substituted for the individuals concerned. Both tribunals considered the morning meetings. The ET saw them as informal co-ordination between co-owners. The High Court saw them as evidence that the company directed daily work. Reasonable minds, different conclusions.
Practical Takeaways
- Employment status findings do not travel. A determination by the ET that someone is (or is not) an employee has no evidential force in subsequent civil proceedings between different parties. Practitioners should not assume that an ET preliminary hearing resolves the question for all purposes.
- Hollington v Hewthorn is alive and well. Evans v Barclays Bank plc [2025] UKSC 48 has confirmed the rule for English law. The Civil Evidence Act 1968 does not extend to admitting civil findings in subsequent civil proceedings.
- Family companies are status minefields. Where individuals are simultaneously shareholders, directors, and workers in an informal family enterprise, the status question will depend heavily on the factual evaluation of the particular tribunal. Tax treatment, P60s, and payroll records are relevant but not determinative — particularly where, as here, they were established "on accountants' advice" without active consideration.
- Document integrity matters. The High Court's footnote about the bank records being "childishly altered" before the ET hearing is a pointed reminder. If documents are going to be relied upon in multiple sets of proceedings, altering them for tactical reasons in one forum will be noticed — and commented upon — in the other.
- The EAT sift is not vindication. Refusal of permission to appeal confirms only the absence of an arguable error of law. It does not validate the factual findings, and it certainly does not preclude a different court from reaching a different factual conclusion on different (or even overlapping) evidence.
The law of employment status prides itself on being a holistic, multi-factorial assessment conducted in the round. The Morgan litigation is a reminder of what that actually means in practice: two judges, looking at the same working life, seeing different things. Neither was wrong. That is not a comfortable conclusion — but it is the honest one.
Table of Authorities
| Case | Citation | Point |
|---|---|---|
| Morgan v Morgan & Ors | [2026] EWHC 384 (Ch) | High Court found claimants were employees; Hollington v Hewthorn applied to exclude ET decision |
| Morgan v SMS Farming Ltd | ET Case Nos 3315216/2023 & 3315217/2023 | ET found claimants were neither employees nor workers |
| Hollington v Hewthorn | [1943] 1 KB 587 | Findings of fact in one proceeding inadmissible in another |
| Evans v Barclays Bank plc | [2025] UKSC 48 | Supreme Court reaffirms Hollington v Hewthorn for English law |
| Rogers v Hoyle | [2015] 1 QB 265 | Trial judge must decide on evidence before them, not another decision-maker's findings |
| HMRC v Professional Game Match Officials Ltd | [2024] UKSC 29 | Employment status framework: mutuality and control necessary but not sufficient |
| Uber BV v Aslam | [2021] ICR 657 | Status is a question of fact; appellate review limited to error of law |