Mr E D Wells v Rugby Farmers Mart Ltd: 1308185/2023
EMPLOYMENT TRIBUNALS
Case No 1308185/2023
Between
Mr E D WellsClaimantRugby Farmers Mart LtdRespondent
Before
Employment Judge AkhtarMrs C Trayers (instructed by Counsel) for claimantMr D Jones (instructed by Counsel) for respondentDate 3 April 2025
JUDGMENT
[1]The Claimant is not an employee of the respondent within the meaning of section 230 (1) Employment Rights Act 1996 or section 83(2)(a) of the Equality Act 2010.[2]The claimant is not a worker of the respondent under section 230(3)(b) Employment Rights Act 1996.[3]In light of the above, the Claimant’s claims of unfair dismissal, direct age discrimination, failure to provide a statement of written terms and for unpaid notice and holiday pay are dismissed in their entirety.
REASONS
Oral reasons, having been given to the parties on 13 January 2025 and written reasons having been requested in accordance with rule 62(3) of the Employment Tribunal Rules of Procedure 2013, the following reasons are provided:[1]This preliminary hearing was listed to determine whether the Claimant was an employee within the meaning of section 230 (1) Employment Rights Act 1996 (ERA) or of section 83(2)(a) of the Equality Act 2010. In the alternative, if it is determined that the Claimant was not an employee, whether he was a worker under section 230(3)(b) ERA.[2]I heard oral evidence from the Claimant and Mr Tom Wrench (Senior Auctioneer) for the Respondent. There was a Tribunal bundle of 287 pages. Both parties provided written closing submissions as well as making oral submissions.[3]The Claimant pursues claims of unfair dismissal, direct age discrimination, failure to provide a statement of written terms and for unpaid notice and holiday pay.[4]The Claimant’s primary position is that at all material times he was under a contract of employment with the Respondent. If the Tribunal is not with the Claimant on this, it is submitted that at all material times the Claimant met the definition of a worker under section 230(3)(b) Employment Rights Act 1996 (“ERA”) as mirrored in the definition of employment in section 83(2)(a) of the Equality Act 2010 (“EqA”).[5]The Respondent’s primary position is that at all material times the Claimant was a self-employed contractor. If the Tribunal is not with the Respondent on this, it is submitted that at the highest, the Claimant met the definition of a worker under section 230(3)(b) ERA but not that of an employee under section 230(1) ERA.[6]The issues for me to determine at the preliminary hearing were as follows:4.1 Was the Claimant an employee of the Respondent within the meaning of section 230(1) of the Employment Rights Act 1996 (“ERA”)?4.2 Was the Claimant an employee of the Respondent within the meaning of section 83(2)(a) of the Equality Act 2010 (“EqA”)?4.3 Was the Claimant a worker of the Respondent within the meaning of section 230(3)(b) ERA?
Relevant Law
[7]Section 230(1) ERA states: “In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”.[8]Section 230(3) ERA 1996 states: “In this Act “worker” … means an individual who has entered into or works under (or, where the employment has ceased, worked under)—(a) a contract of employment, or(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly”.[9]In terms of employee status, the correct approach is to start by considering the leading case of Ready Mixed Concrete (Southeast) Limited v Minister of Pensions and National Insurance [1968] 1 All ER 433.[10]At p515 , MacKenna J set out the elements of a contract of employment: “A contract of service exists if these three conditions are fulfilled.(i) The servant agrees that in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.(ii) He agrees expressly or impliedly that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.(iii) The other provisions of the contract are consistent with its being a contract of service.”[11]As regards the first condition (mutuality of obligation) Mackenna J emphasised the need for an employee to provide his or her own personal service, in consideration for payment: “there must be a wage or other remuneration. Otherwise, there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill. Freedom to do a job either by one's own hands or by another's is inconsistent with a contract of service, though a limited or occasional power of delegation may not be……”.[12]In terms of worker status, an individual is a worker where they are engaged under a contract, and they perform the work personally and the Respondent is not a client or customer of the Claimant’s business.[13]Following the Supreme Court judgment in Uber BV and others v Aslam and others, UKSC/2019/0029, when deciding if a person is a worker, Employment Tribunals should look at the wording and purpose of employment legislation first, before looking at the terms in an individual’s written contract. This is because most employment legislation seeks to protect individuals who are vulnerable to unfair treatment, when deciding the terms and conditions of their services and pay.[14]Tribunals should therefore focus on the reality of the situation if the written contract doesn’t reflect the day-to-day reality of the relationship. This recognises that generally the stronger employment rights that individuals seek to rely on are statutory employment rights (from laws brought by parliament) rather than contractual rights.[15]The leading case of Byrne Brothers (Formwork) Ltd v Baird and others [2002] IRLR 96 sets out that: “Drawing that distinction (between worker and someone in business on their own account) in any particular case will involve all or most of the same considerations as arise in drawing the distinction between a contract of service and a contract for services — but with the boundary pushed further in the putative worker's favour. ………. The basic effect of limb (b) is, so to speak, to lower the pass-mark, so that cases which failed to reach the mark necessary to qualify for protection as employees might nevertheless do so as workers.’[16]The issue of Employment Status was recently before the Supreme Court in the decision of Commissioners for His Majesty’s Revenue and Customs v Professional Game Match Officials Ltd [2024] UKSC 29 (‘PMOL’). A number of relevant propositions can be derived from this case:a. Mutuality of obligation and control are necessary, but not necessarily sufficient, conditions of a contract of employment [30];b. The tribunal must address “the cumulative effect of the totality of the provisions…and all the circumstances of the relationship created by it’ and view “in the round, the relationship between the parties recorded in the agreement in the setting of the surrounding circumstances.”; White v Troutbeck SA [2013] EWCA Civ 1171 [30];c. It is an essential element of a contract of employment that the employee provides his or her personal service for payment by the employer [40];d. The extent of control in any particular case remains a relevant factor in the overall determination of whether there exists an employment relationship. It is not the case that once the pre-conditions of mutuality of obligation and control are satisfied, they drop out of the picture as relevant factors in the overall assessment of whether a contract of employment exists [32];e. Control is expressed in the most flexible terms [39]. On the one hand, the requirement for control extends only so far as there is scope for it and, on the other hand, that there must be some control, if only in incidental or collateral matters. What matters is lawful authority to command so far as there is scope for it; Zujis v Wirth Brothers Pty Ltd (!955) 93 CLR 561. Existence of a contract[17]My task is to determine whether the statutory definition of employee or worker is met. The rights are created by legislation, the task is one of statutory interpretation and not contractual interpretation. It is therefore for a Tribunal to assess the true position between the parties irrespective of whether any written agreement was entered into. The abundance of legal authorities in this area of law tells us that it is for a Tribunal to determine the true agreement between the parties, and this will often have to be gleaned from all the circumstances of the case.[18]The first thing I considered was whether there was in existence a contract between the parties, either written, oral or implied.[19]It is not in dispute that there was no written contract between the parties setting out the Claimant’s employment status. There is in fact, very little in the way of any written documentation that has been available to me as part of my considerations.16. It is however agreed that the work arrangement between the parties was verbal and lasted from around 16 May 2008 until around 4 July 2023. The Claimant provided services which were cleaning (washing down) duties and droving work (moving livestock) on market days.17. The Claimant agreed his rate of hourly pay from the outset, it is unclear from the evidence whether this was £10 or £11 initially, but in 2013 he negotiated an increase to his hourly rate to £12.50 an hour. This was the hourly rate that the Claimant put forward to the Respondent in 2013 indicating at the time that if it was not agreed he would not undertake any work. The Respondent agreed the rate of pay, which remained in effect until termination of the contract between the parties.18. From the outset, the Respondent agreed that the Claimant could submit weekly invoices for payment, this arrangement was at the request of the Claimant and was due to the Claimant’s cashflow problems for his own farming business. The Claimant duly submitted invoices on a weekly basis. These invoices all included VAT amounts, and the Claimant was registered for VAT throughout the contractual period. 19. It is clear and accepted that the Claimant was not paid subject to PAYE, but I reminded myself that is not of itself determinative of his employment status. There are many instances where the true reality of an arrangement between parties is that of employee and employer, where on the face of it an employee is paid without deduction of Tax and National Insurance. That is not uncommon. I therefore also reminded myself it is one thing that I must take into account, but it is not a determinative factor.[20]As per the terms of the verbal arrangement between the parties entered into at the outset in 2008, it is also accepted that the Claimant was described as being self-employed by the Respondent and that he accepted that label without question. That said, I also do not find the use of the term by the parties determinative of employment status.[21]In light of my findings above, I conclude that there was a contract in existence between the parties.[22]Once I established that there was a contract in existence, I then went on to consider what type of contract was in existence, whether this was a contract of service i.e. employment, or a contract for services. In addition to any contractual terms, I considered the reality on the ground and how the parties were operating in practice.[23]Having considered the legal position, I firstly went on to consider each of the Ready Mixed Concrete factors individually before reaching my conclusions. Mutuality of Obligation/Personal Service[24]There must be an irreducible minimum of obligation on each side to create a contract of service. The employee must be obliged to provide his own personal work and the employer to accept it when it is provided.[25]I firstly considered whether the Claimant had to turn up to do the work personally, or whether he could send someone else to do it.[26]The parties were in disagreement about this, the Claimant’s position was that he had to do the work personally. It was not practical for him to substitute someone else to do the work as he would have to show them what needed to be done and therefore would need to be present. The parties accepted that the work carried out by the Claimant did not require a specialist skillset and was relatively straight forward in what was required to be done. I do not accept the proposition that the Claimant would necessarily have to be present to instruct someone else what needed to be done. He could have if he wanted to, instructed someone in advance and given them information on how to go about doing the tasks that needed to be done. The Respondent’s position was they did not require the Claimant to do the work personally and that the Claimant was able to substitute. He did not need their permission to do this.[27]It does not appear that the Claimant ever substituted anyone to do the work on his behalf. I accept that the limited occasions that his nephew turned up to assist him, the Claimant was always present doing the work, the nephew was not paid and was not carrying out the work by way of substitution.[28]That said the mere fact that substitution did not take place, does not necessarily mean that the Claimant was unable to substitute. The Claimant chose to carry out the work personally, I find it is likely that he needed all of the money from the work personally due to the cashflow problems relating to his own farming business. It is also relevant to my considerations that another contractor carrying out droving work for the Respondent, SJ Crane, did on occasions substitute someone else to carry out the work, the Claimant was aware of this as he referenced this in his evidence. In my view, this supports the conclusion that the Claimant was aware that he was able to substitute; he was aware that SJ Crane, another contractor was carrying out the same work as him and had substituted someone else to do the work for them on occasions. The Claimant presented no evidence in support of the contention that different rules applied to him or that he had been prohibited from substituting. I find that whilst the Respondent did not expressly make the Claimant aware that he could substitute, they equally did not expressly state that he could not substitute.[29]In such circumstances, I conclude that the Claimant was not required to carry out the work personally, this is fatal to the question of mutuality of obligation as per Mackenna J’s judgment in Ready Mixed Concrete. That said, I did go on to consider other factors relevant to mutuality of obligation as these considerations will assist later in addressing the overall picture.[30]I find that the claimant was not obliged to accept work offered to him and the Respondent was not obliged to offer him any work. The schedule appended to Mr Wrench’s witness statement provides a summary of the Claimant’s attendance during 2022/23 which demonstrates the sporadic work pattern undertaken by him, including days completely missed, work declined and Sales which were not attended. There were occasions when the Claimant was not offered work and there were occasions when another contractor, SJ Crane carried out the work. There were also occasions when the Claimant was offered work, and he declined and occasions where he simply did not attend to carry out work that had been offered to him.[31]The Claimant made himself available to fit around his other farming and work commitments. He ran a small Livestock Farm and did occasional farm work for various local farmers, one specifically being Mr J Arthers. Whilst the Claimant fitting his work for the Respondent around his personal commitments is not incompatible with mutuality of obligation, the bottom line is he did not attend site on the days he did not wish to work. Equally, if he had a problem on the farm, he would leave his work to attend. The Claimant did not need to seek approval of the Respondent, nor did he do so. He had the freedom to dictate the days and hours he wished to work. He would determine his own start times and finish times.[32]Mrs Trayers on behalf of the Claimant submitted that the Claimant’s regular attendance, Monday to Thursday each week appears to have hardened into a form of an expectation between the parties. I find that whilst that may be the position of the Claimant, however, that was not the expectation of the Respondent.[33]The fact that the Claimant chose to undertake work frequently and there was a business need for the work to be carried out by the Respondent is not indicative of a mutuality of obligation in this case. I do not find there was a dependence on the Claimant by the Respondent, particularly in light of my conclusions on personal service. I accept the evidence of Mr Wrench that the Claimant would generally be offered work on busy days such as Thursdays, however as to the other days on the calendars provided in the bundle, the calendars do not evidence how many hours the Claimant completed on each given day. There were other contractors, SJ Crane available to do the work and in fact as the schedule shows on a number of occasions these contractors did pick up the work when the Claimant declined or was unavailable. The Claimant was not the only person carrying out this work. Sufficient degree of Control 27. Even if I am wrong about personal service and mutuality of obligation, I also conclude that the Respondent did not exercise a sufficient degree of control over the Claimant. I set out my reasons for this below. 28. The correct question to ask here, is whether the relationship between the worker and alleged employer created general control rather than actual day to day control whilst on shift, White and another (Respondents) v. Troutbeck SA (appellant) [2013] IRLR 949.29. After Humberstone v Northern timber Mills (1949) 79 CLR 389, the correct test is described as follows: “The question is not whether in practice the work was in fact done subject to a direction and control exercised by any actual supervision or whether any actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions”.30. It is agreed that there was flexibility in the hours the Claimant worked, and he could choose his own hours, however Mrs Trayers submitted it is not the case that the Claimant was entitled to work whatever hours he pleased. She submits in reality, the Claimant’s attendance was dictated in large part by the needs of the market. He needed to be present on market days for droving work and could only carry out cleaning work when the animals were no longer in their pens. I do indeed find that those were the constraints around the work that needed to be done, but ultimately, it was up to the Claimant as to when he did the work, how he did the work and how long he worked.31. The Claimant did not have to book annual leave in accordance with the Respondent’s policies for employees, he simply chose when he would pick up work. He was only paid for the work that he carried out, he was not paid for holidays or days that he did not do any work. The Claimant chose when he would attend to carry out the work, how he would perform his tasks, how long he would perform the tasks for. He did not clock in or clock out. He was not subject to any internal policies including discipline policies.32. The Respondent cited examples of the Claimant being rude and aggressive towards other staff, however, he was not subject to disciplinary measures as they considered him a contractor. The most they could do was to decline to offer him further work, which they did on one occasion, following which the Claimant apologised and taking into account his personal circumstances, the Respondent agreed to start offering him work again. 33. All of these factors point to the fact that the Respondent did not exercise a sufficient degree of control over the Claimant. The overall picture[34]I then went on to weigh up all relevant facts and circumstances to decide if any factors point towards or away from full employment or worker status and then come to an overall decision.[35]The Claimant accepts he provided his own Personal Protective Equipment ‘PPE’ to carry out the role. He was not provided a uniform although I accept it would be impractical for him to carry out the work that he was doing in a gilet and tie.[36]The only other equipment required by the Claimant to carry out his work was a pressure washer and spade. It is accepted that the Claimant used the pressure washer that was available on site, however, I accept that this pressure washer was available for use by others as well and was not solely supplied to the Claimant for him to carry out his role.[37]I have already covered the position around the Claimant not being subject to PAYE, he was responsible for completing his own self-assessments for tax purposes and was aware of this. The Claimant was not part of the Respondent’s pension scheme and was never offered this like other employees.[38]The Claimant set his own rate of pay; he was not subject to automatic pay reviews like other employees.[39]Considering all factors in the round, I conclude that the Claimant is neither an employee or worker. My conclusions on there being no personal service and lack of sufficient degree of control is fatal to both employee and worker status. I conclude that the relationship is a business one where the Claimant is in business on their own account with the Respondent being a client or customer.[40]In the circumstances, the tribunal does not have jurisdiction to hear the Claimant’s claims, and they are therefore dismissed in their entirety. Approved by: