What is mutuality of obligation?

16 December, 2011

QCan you explain what the term 'mutuality of obligation' means and how it applies to contracts of employment?

AMutuality of obligation is one of the factors the tribunal will look at when deciding whether or not an individual works under a 'contract of service' in other words, via a contract of employment or a 'contract for services' where they are self-employed. It means that there is some obligation on the individual to perform work and some obligation on the provider to pay for it. Where both parties must do this for example in the case of permanent employees , a contract of employment will always exist. However, if an individual can refuse work, or the provider does not have to offer it, the tribunal will consider other matters in order to determine their employment status. This will include whether the provider:

1. Exercises a sufficient degree of control over the parties' relationship; and

2. Allows the individual to substitute their labour.





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