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Actor was an employee, not an independent contractor

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Legal news
calendar 25 April 2021
globus Sweden

An actor was hired to act in a play, but due to the coronavirus, performances were cancelled and working time was shortened. The actor considered himself to be an employee, but the organization that had hired him considered him to be an independent contractor. He therefore decided to submit a claim for additional compensation. The Swedish Labour Court agreed that he was in fact an employee and therefore entitled to compensation.

An actor had entered into an agreement with a non-profit organization that he would perform in a play for three months. However, due to the outbreak of coronavirus, performances were cancelled, and the actor ended up working just over two months instead of three.

Before the cancellations, the organization had paid the actor about half of the agreed compensation but then made no additional payments. The reason was that the organization considered the actor to be an independent contractor which meant that he should not be entitled to the same salary benefits as an employee. The actor disagreed and maintained that he was to be considered an employee. He therefore submitted a claim arguing that he was entitled to additional compensation.

Case-by-case assessment of the agreement and circumstances

Whether someone is an employee or an independent contractor, depends on an overall assessment. The assessment takes the agreement between the parties and the circumstances the performing party has worked under into consideration. In this case, the performing party was the actor.

If the conclusion is that the performing party is an employee, the Swedish Employment Protection Act applies, irrespective of the agreement between the parties.

Circumstances that may indicate that someone is an employee and not an independent contractor include that:

  • Work is carried out by a specific person and not, for example, a legal person. In this case, the actor had been hired personally for the performances
  • Work is carried out under direction and control. In this case, the actor had been subject to the organization’s directions without choice as to when and how he would perform
  • Equipment is provided to perform the work. In this case, the actor had received necessary equipment to perform
  • Payment is determined based on the scope of the work, not the results of the work, which was also the case in this case

Furthermore, according to the Swedish Labour Court, the agreement between the parties was unclear as to whether the actor was a contractor or employee. Also, the court emphasized that it was justified that the actor had believed that he was an employee, not an independent contractor. On that basis, the court concluded that the actor was an employee under the Swedish Employment Protection Act.

IUNO’s opinion

The decision shows the importance of drafting clear agreements with independent contractors and that any conditions relevant for the classification of a contractor or an employee should be clearly established. If the someone is considered to be an employee, it’s irrelevant if the agreement between the parties stated otherwise, and the rules for employees apply instead.
IUNO recommends that companies, before entering into agreements with contractors, carefully consider all terms and conditions to avoid the relationship between the parties being classified as an employment. The parties should also carefully discuss what terms apply to avoid misunderstandings and conflicts to the extent possible.

[Swedish Labour Court Case 13/2021 of 31 March 2021]

An actor had entered into an agreement with a non-profit organization that he would perform in a play for three months. However, due to the outbreak of coronavirus, performances were cancelled, and the actor ended up working just over two months instead of three.

Before the cancellations, the organization had paid the actor about half of the agreed compensation but then made no additional payments. The reason was that the organization considered the actor to be an independent contractor which meant that he should not be entitled to the same salary benefits as an employee. The actor disagreed and maintained that he was to be considered an employee. He therefore submitted a claim arguing that he was entitled to additional compensation.

Case-by-case assessment of the agreement and circumstances

Whether someone is an employee or an independent contractor, depends on an overall assessment. The assessment takes the agreement between the parties and the circumstances the performing party has worked under into consideration. In this case, the performing party was the actor.

If the conclusion is that the performing party is an employee, the Swedish Employment Protection Act applies, irrespective of the agreement between the parties.

Circumstances that may indicate that someone is an employee and not an independent contractor include that:

  • Work is carried out by a specific person and not, for example, a legal person. In this case, the actor had been hired personally for the performances
  • Work is carried out under direction and control. In this case, the actor had been subject to the organization’s directions without choice as to when and how he would perform
  • Equipment is provided to perform the work. In this case, the actor had received necessary equipment to perform
  • Payment is determined based on the scope of the work, not the results of the work, which was also the case in this case

Furthermore, according to the Swedish Labour Court, the agreement between the parties was unclear as to whether the actor was a contractor or employee. Also, the court emphasized that it was justified that the actor had believed that he was an employee, not an independent contractor. On that basis, the court concluded that the actor was an employee under the Swedish Employment Protection Act.

IUNO’s opinion

The decision shows the importance of drafting clear agreements with independent contractors and that any conditions relevant for the classification of a contractor or an employee should be clearly established. If the someone is considered to be an employee, it’s irrelevant if the agreement between the parties stated otherwise, and the rules for employees apply instead.
IUNO recommends that companies, before entering into agreements with contractors, carefully consider all terms and conditions to avoid the relationship between the parties being classified as an employment. The parties should also carefully discuss what terms apply to avoid misunderstandings and conflicts to the extent possible.

[Swedish Labour Court Case 13/2021 of 31 March 2021]

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Anders

Etgen Reitz

Partner

Franziska

Brüggemann

Associate

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