Mr C Scully v Digital Communication Systems Ltd: 1400952/2018
JUDGMENT
ON APPLICATION FOR RECONSIDERATION The judgment of the tribunal is that the respondent’s application for reconsideration is refused because there is no reasonable prospect of the decision being varied or revoked.REASONS
[1]The respondent has applied for a reconsideration of the reserved judgment dated 12 December 2018 which was sent to the parties on 27 December 2018 (“the Judgment”). The grounds are set out in its letter dated 7 January 2019. That letter was received at the tribunal office on 7 January 2019.[2]Schedule 1 of The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 contains the Employment Tribunal Rules of Procedure 2013 (“the Rules”). Under Rule 71 an application for reconsideration under Rule 70 must be made within 14 days of the date on which the decision (or, if later, the written reasons) were sent to the parties. The application was therefore received within the relevant time limit.[3]The grounds for reconsideration are only those set out in Rule 70, namely that it is necessary in the interests of justice to do so.[4]The grounds relied upon by the respondent are set out in its letter. These review a selection of the findings of fact which were made and which are recorded in the Judgment, and then makes further submissions with regard to the relevant law which should apply to those facts. However, the matters Case No. 1400952/2018 raised by the respondent, and the relevant legal submissions upon which the respondent sought to rely, were all considered in the light of all of the evidence presented to the tribunal before it reached its decision.[5]The earlier case law suggests that the interests of justice ground should be construed restrictively. The Employment Appeal Tribunal (“the EAT”) in Trimble v Supertravel Ltd [1982] ICR 440 decided that if a matter has been ventilated and argued then any error of law falls to be corrected on appeal and not by review. In addition, in Fforde v Black EAT 68/80 (where the applicant was seeking a review in the interests of justice under the former Rules which is analogous to a reconsideration under the current Rules) the EAT decided that the interests of justice ground of review does not mean “that in every case where a litigant is unsuccessful he is automatically entitled to have the tribunal review it. Every unsuccessful litigant thinks that the interests of justice require a review. This ground of review only applies in the even more exceptional case where something has gone radically wrong with the procedure involving a denial of natural justice or something of that order”.[6]More recent case law suggests that the "interests of justice" ground should not be construed as restrictively as it was prior to the introduction of the "overriding objective" (which is now set out in Rule 2). This requires the tribunal to give effect to the overriding objective to deal with cases fairly and justly. As confirmed in Williams v Ferrosan Ltd [2004] IRLR 607 EAT, it is no longer the case that the "interests of justice" ground was only appropriate in exceptional circumstances. However, in Newcastle Upon Tyne City Council v Marsden [2010] IRLR 743, the EAT confirmed that it is incorrect to assert that the interests of justice ground need not necessarily be construed so restrictively, since the overriding objective to deal with cases justly required the application of recognised principles. These include that there should be finality in litigation, which is in the interest of both parties.[7]Accordingly I refuse the application for reconsideration pursuant to Rule 72(1) because there is no reasonable prospect of the Judgment being varied or revoked.[1]This judgment should be read in conjunction with my earlier reserved judgment dated 11 December 2018 following a preliminary hearing, which determined that the claimant was a worker of the respondent, but had never been an employee. His claims for unfair dismissal and breach of contract were accordingly dismissed, which left two surviving claims for accrued but unpaid holiday pay, and for unlawful deduction from wages, which the claimant remained entitled to pursue by reason of his worker status. This is the judgment which follows the determination of these two claims.[2]I have heard from the claimant, and I have heard from Mr Brendan Mulvenna and Mr David Lawler on behalf of the respondent.[3]There was a degree of conflict on the evidence. I have heard the witnesses give their evidence and have observed their demeanour in the witness box. I also remind myself of my comments about the claimant’s credibility at paragraph 14 of the earlier reserved judgment. I found the following facts proven on the balance of probabilities after considering the whole of the evidence, both oral and documentary, and after listening to the factual and legal submissions made by and on behalf of the respective parties.[4]I deal first with the accrued holiday pay claim. The parties now agree that the relationship between them came to an end on 11 December 2017. The claimant asserts that he had taken no holiday during the calendar year of December 2017 and that he is entitled to the pro rata equivalent from the commencement of the respondent’s holiday year on 1 January 2017 to the termination of the relationship on 11 December 2017. The respondent asserts that its holiday year commences on 1 October annually, which is consistent with the respondent company’s financial year. The respondent asserts that any calculation should be based on the period from 1 October to 11 December 2017 only.[5]Because of the working relationship of the parties the matter was not really addressed. Effectively the claimant was allowed to take holiday whenever he chose. However, I have seen the original contract of employment which was offered to the claimant in 2013, but subsequently withdrawn. I have also seen a contract of employment between the respondent and its account manager Mr Gibson dated 4 September 2017. Although the respondent suggests that it contracts are now being reviewed to record the fact that the holiday year commences on 1 October annually, Mr Lawler also conceded that at the time of the claimant’s departure at least his contractual terms reflected those of Mr Gibson. These all provide the same provisions relating to holiday entitlement and how it can be taken.[6]I find that these were the normal holiday provisions for the respondent company with its employees. The claimant suggests that he understood these to be the relevant provisions because they were in the contract which was offered to him in 2013. In the rather unusual circumstances of this case, I find that these are the provisions which apply.[7]Accordingly, I find that the claimant was entitled to 20 days annual leave in addition to any public holidays, of which five days were to be retained for the Christmas period, with the remaining 15 days to be taken throughout the year. The holiday year is expressed to begin on 1 January annually. I therefore find that the claimant was entitled to this holiday entitlement with effect from 1 January 2017 until the termination of the relationship on 11 December 2017.[8]The claimant was entitled to take holiday whenever he chose, and there is no reason to suggest that he failed to take the bank holidays as they fell due which counted as holiday for which he was paid in the context of his normal monthly retainer fee. In addition, five of these days would have to be retained for Christmas 2017 and so I find that (rounding up any small fraction) the claimant was entitled to 15 days paid holiday from 1 January 2017 to 11 December 2017, and that this was not taken and became accrued and was therefore due.[9]The claimant was paid a rolling monthly retainer of £3,500.00. Over the course of 12 months this equates to a daily rate of £115.07. The claimant succeeds in his claim to this extent, and the respondent is therefore ordered to pay the claimant 15 days’ pay being £1,726.05.[10]I turn next to the claim for unpaid wages. The parties agree that the claimant was not paid for the period between 1 December 2017 and 11 December 2017. The claimant also claims three months’ notice, notwithstanding that the breach of contract claim has already been dismissed.[11]I accept the evidence of the respondent’s two witnesses that there was a conference call late on Friday 8 December 2017 at which the respondent said to Mr Mulvenna, as overheard by Mr Lawler, that he could “Fuck Off” and “Stick his job up his arse” before terminating the call. Mr Mulvenna wished to dismiss him then, but the claimant had already rung off, and did not cancel or return any further calls. The respondent then wrote to the claimant by email on Monday 11 December 2017 confirming that as a result of this conversation the relationship between them was terminated with immediate effect by reason of gross misconduct. That termination was communicated on 11 December 2017. I find that the respondent was entitled to terminate the relationship by reason of gross misconduct as at that date.[12]The claimant therefore succeeds in his claim for unpaid wages but only for the period of 11 days from 1 December to 11 December 2017. Applying the same daily rate, the respondent is ordered to pay the claimant the sum of £1,265.77.[13]The relevant statutory provisions which I have applied are these.[14]The claimant claims in respect of deductions from wages which he alleges were not authorised and were therefore unlawful deductions from his wages contrary to section 13 of the Employment Rights Act 1996.[15]The claimant also claims in respect of holiday pay for accrued but untaken holiday under the Working Time Regulations 1998 (“the Regulations”). Regulation 14 explains the entitlement to leave where a worker’s employment is terminated during the course of his leave year, and as at the date of termination of employment the amount of leave which he has taken is different from the amount of leave to which he is entitled in that leave year. Where the proportion of leave taken is less than that which he is entitled, the employer is required to make a payment in lieu of leave in accordance with Regulation 14(3).[1]This case was remitted for rehearing before a differently constituted Tribunal to determine the issues identified below pursuant to an Order of the Employment Appeal Tribunal dated 5 December 2019 (which was sealed on 19 December 2019) (“the Order of the EAT”) BACKGROUND The Claims[2]By a claim form presented on15 March 2018 the claimant brought claims for(a) unfair dismissal(b) breach of contract in respect of notice(c) unlawful deductions from wages and(d) for accrued but unpaid holiday pay. The claims were resisted by the respondent including on the basis that the claimant was a self-employed consultant and did not therefore have the necessary status, as an employee or worker, to bring such claims. The Preliminary Judgment[3]The matter was listed for a preliminary hearing on 11 December 2018 to determine the claimant’s employment status. A copy of the subsequent reserved Judgment dated 12 December 2018 (“the Preliminary Judgment”) is at pages 3- 8 of the bundle.[4]The Preliminary Judgment records that the Tribunal heard oral evidence from(a) the claimant and from(b) Mr Brendan Mulvenna and Mr David Lawler on behalf of the respondent. The Tribunal also had regard to the available documentary evidence and legal submissions of the parties.[5]The key findings of fact are at paragraphs 4 – 14 of the Preliminary Judgment (pages 4- 5 of the bundle). The Preliminary Judgment also records that the claimant accepted during that hearing that he was genuinely self-employed and no longer asserted that he was an employee of the respondent (paragraphs 25 and 26 of the Preliminary Judgment – page 7 of the bundle).[6]Having considered the matters recorded in the Preliminary Judgment, the Tribunal held that the claimant was a worker (for the purposes of section 230 (3) (b) of the Employment Rights Act 1996 (“the Act”) but not an employee of the respondent (for the purposes of section 230 (3) (a) of the Act. The Tribunal accordingly dismissed the claimant’s claims for unfair dismissal and breach of contract but allowed the claims for unlawful deductions from wages and for accrued but unpaid holiday pay proceed to hearing. The Hearing on 8 May 2019[7]Following a subsequent hearing on 8 May 2019 to determine the claimant’s entitlement to the alleged unlawful deductions from wages and accrued holiday pay the Tribunal held in a reserved Judgment of that date (“the Judgment dated 8 May 2019”) that: -(a) the claimant succeeded in his claims for (a) accrued but unpaid holiday in the sum of £1,726.05 and(b) unlawful deductions from wages in the sum of £1,265.77. There has been no appeal against the Judgment dated 8 May 2019. Further, the parties confirmed at this hearing that they both accepted that if this Tribunal finds that the claimant was a worker for the purposes of section 230 (3) (b) of the Act he will be entitled to the monies referred to above. The Appeal to the Employment Appeal Tribunal[8]The respondent appealed to the Employment Appeal Tribunal (“the EAT”) against the finding that the claimant was a worker for the purposes of section 230(3) (b) of the Act. The respondent’s notice of appeal dated 7 February 2019 is at pages 11- 13 of the bundle. The claimant’s Answer is at pages 14- 16 of the bundle. There was no appeal by the claimant in respect of the finding in the Preliminary Judgment that the claimant was not an employee for the purposes of section 230 (1) of the Act.[9]The respondent was given leave to proceed to a full hearing on the grounds that the Tribunal’s conclusion that the claimant was a worker for the purposes of section 230 (3) of the Act was arguable wrong as :-(a) the Tribunal had concluded at paragraph 11 of the Preliminary Judgment that the contract had included a right of substitution and(b) that the conclusions at paragraphs 26 and 28 of the Preliminary Judgement were inconsistent on the question of whether the claimant had any obligation of personal service (page 51 of the bundle). The outcome of the appeal to the EAT[10]At the full hearing of the appeal on 5 December 2019 his Honour Judge Shanks upheld the appeal in brief summary, on the grounds that there was a contradiction between the findings at paragraphs 26 and 28 of the Preliminary Judgment on the question of personal service making the decision flawed on its face (paragraph G at page 1 of the transcript of Judgment of the EAT). The EAT considered that it would be inappropriate for the EAT to determine the issue and held that :-(a) the matter should be remitted to a different Tribunal and(b) that the Tribunal should proceed on the basis of the primary facts found by the Employment Judge at the preliminary hearing as set out at paragraphs 4 to 14 of the Preliminary judgement and(c) that the appropriate inferences to be drawn from those facts, appropriate findings about the contractual relationship between the parties and the final issue as to whether the claimant was a worker for the purposes of section 230 (3)(b) of the Act were matters on which the parties would be allowed to make submissions at the remitted hearing (paragraphs A – C at page 2 of the transcript of the Judgment of the EAT). This Hearing[11]This Tribunal has had the benefit of the documents referred to above. The Tribunal has also had the assistance of the brief oral closing submissions of the parties.[12]The respondent proposed to rely on additional oral evidence from Mr Mulvenna (who had given oral evidence at the Preliminary Hearing) and served and produced a witness statement for the purposes of this Hearing. The respondent however confirmed at the commencement of this Hearing that it no longer sought to rely upon any additional oral evidence and accordingly formally withdrew the witness statement of Mr Mulvenna. The only findings of fact before this Tribunal are therefore those contained at paragraphs 4-14 of the Preliminary Judgment. The Claimant’s submissions[13]In summary, the claimant relied upon the following legal authorities in support of its contention that the claimant satisfied the test for a worker pursuant to section 230 (3) (b) of the Act. The claimant contended as follows:-(1) The EAT decision in James v Redcats (Brands) Limited [ 2007] ICR 1006 approved a line of authority requiring the Tribunal to determine whether personal service was a dominant purpose/dominant feature of the arrangement. This approach had received further judicial endorsement in the Supreme Court including in Pimlico plumbers Ltd and Mullins v Smith [ 2018 ] UKSC 29.(2) Further the Court of Appeal had previously considered in Pimlico Plumbers Limited v Smith [ 2017] EWCA Civ 51 how the obligation of personal service should be analysed in terms of whether the individual could provide a substitute to perform the work and gave guidance at paragraph 84 including that :- (a) although an unfettered right to provide a substitute was inconsistent with an obligation to perform service personally (b) a conditional right to provide a substitute may or may not be consistent with personal service-this would depend upon the precise contractual terms and the degree to which the right was limited or occasional including that the ability send a substitute subject to obtaining the consent of another person who had an absolute and unqualified discretion to withhold consent was consistent with personal performance.(3) The claimant relies on the EAT authority of Byrne Brothers (Formwork) Limited v Baird and others [2002] IRLR 96 in support of his assertion that the respondent’s status was not simply that of a customer of the claimant’s own business including that (a) the purpose of section 230 (3) (b) of the Act was to create an intermediate class between employees and the genuinely self-employed and (b) that the test for determining whether someone was carrying on a business undertaking/the respondent is a customer is similar to the test of whether a contract is a contract of service or a contract for services including the degree of integration into the business.(4) The claimant also relies on the EAT authority of Cotswold Developments Construction Ltd v Williams UK EAT [2005] UKEAT0457/05 the purposes of assessing whether a person is a worker or self-employed contractor including whether:- (a) the worker actively marketed their services to the world in general-which might infer independent contractor status or (b) they have been recruited by a principal to work as an integral part of the principal’s operation-which would tend to infer worker status.(5) The claimant further relies on the Supreme Court Judgment in the Pimlico Plumbers case in relation to its decision that the dominant feature test was applicable to both the overarching requirement of personal service and whether the individual was carrying out a business undertaking of their own.[14]The Tribunal has also had regard to the claimant’s submissions regarding the application of the law to the facts at paragraphs 14 – 18 of the claimant’s skeleton argument. The respondent’s submissions[15]In summary, the respondent relied upon the following written submissions: -(1) the Order of the EAT limited the rehearing of the matter to an assessment of the application of section 230 (3) (b) of the Act on the basis of the facts set out at paragraphs 4-14 of the Preliminary Judgment.(2) the Tribunal found at paragraph 11 of the Preliminary Judgment that there was a right of substitution.(3) At paragraphs 10 and 11 the Tribunal found that the claimant was not (the skeleton argument says was under but this is clearly a typographical error) the day-to-day control of the respondent and that he could take holiday when he wished to do so.(4) Section 230 (3) (b) of the Act requires: –(a) an obligation that the person performs the work personally and (b) that the person for whom the work is done must not be a client or customer of the business been run by the individual.(5) The finding that there was a right of substitution is a significant indicator - the respondent asserts that the claimant was not obliged to perform the work personally. Further it is not a requirement, in the light of the Judgment in Express and Echo Publications Ltd v Tanton [1999] IRLR 367 that the use of the substitution is ever used to establish its existence. The claimant therefore fails at that hurdle.(6) The claimant had a right to substitute himself and was not obliged to perform any work. The claimant could have taken time away from work when he wanted, he operated a consultancy company and wish to be treated and was treated as self-employed.(7) Further, it is erroneous to consider whether the claimant had other clients-his own evidence was that he could have had other clients and he did run a consultancy business. The respondent was therefore clearly a client of his business based on the findings of the Tribunal.(8) Taking the facts found by the Tribunal in the Preliminary Judgment in the round, the claimant was self-employed and did not satisfy the worker test for the purposes of section 230 (3) (b) of the Act. THE LAW[16]The Tribunal has had regard to the provisions of section 230 (3) (b) of the Act (which is set out below) and to the authorities contained in the authorities bundles provided by the parties (which are referred to above).[17]Section 230 (3) of the Act states as follows: - “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 other 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”.[18]The Tribunal has also had regard to the guidance of the EAT as set out at paragraph 10 above.[19]The Tribunal is required to answer, by applying the statutory provisions/authorities referred to above to the findings of fact at paragraphs 4-14 of the Preliminary Judgment, the following questions: --(1) Was there a contract between the claimant and the respondent for the claimant to perform work or services.(2) Was there was an obligation on the claimant to perform that work/ services personally and,(3) Were the services performed by the claimant provided to the respondent in the course of running a business of which the respondent was a client or customer (and in which case the claimant would not be considered as a worker for the purposes of section 230 (3) (b) of the Act). THE CONCLUSIONS OF THE TRIBUNAL Was there a contract between the claimant and the respondent for the claimant to perform work or services[20]There is limited documentation evidencing the contractual relationship between the claimant and the respondent. The Tribunal is however satisfied having regard to the findings of fact contained at paragraphs 4 – 14 of the Preliminary Judgment that there was a contract between the parties for the claimant to perform work or services as evidenced as follows:-(1) The letter from Mr Mulvenna of the respondent to the claimant dated 23 February 2013 as set out at paragraph 5 of the Preliminary Judgment.(2) The Non – Disclosure Agreement referred to at paragraph 6 of the Preliminary Judgement.(3) The arrangements for monthly billing in the agreed sum of £3,500 per month and associated arrangements as set out at paragraph 7 of the Preliminary Judgment.(4) The exchange of emails between the claimant and the respondent’s company secretary on 3 August 2016 as set out at paragraph 8 of the Preliminary Judgement. Was there an obligation on the claimant to provide such work/services personally[21]This issue is at the heart of this case and the Tribunal has given careful consideration to the competing submissions of the parties.[22]After giving the matter careful consideration, the Tribunal is satisfied that the claimant met the requirement to undertake “to do or perform personally any work or services for another party” for the purposes of section 230 (3) (b) of the Act for the following reasons:-(1) The terms of the respondent’s letter dated 22 February 2013, which formed the basis upon which the claimant was engaged by the respondent (after 2/ 3 months of discussions), is consistent with personal service. The Tribunal has noted in particular, that the respondent stated in that letter that “we would like to offer you a position within our company as follows: I propose that we employ your services for a minimum period of six months, with a rolling three-month termination period thereafter for £3,500 per calendar month excluding VAT… I would like to wish you a long and successful future with the company” (paragraph 5 of the Preliminary Hearing).(2) The claimant thereafter received a fixed monthly fee of £3,500 throughout his period of engagement with the respondent pursuant to the terms of such agreement (paragraph 7 of the Preliminary Judgment).(3) The claimant did not undertake any services for any other party during his period of engagement with the respondent (paragraph 13 of the Preliminary Judgment).(4) There was no agreement between the parties permitting the clamant to provide a substitute. Although the Tribunal accepted the evidence of the respondent that the claimant could have appointed a substitute to carry out some of his services provided that the respondent was notified, there is no finding of any actual agreement to that effect. Moreover, the Tribunal made findings of fact that:- (a) the claimant did not any stage suggest that he wanted to appoint a substitute and (b) “there is no evidence that this prospect was ever actually raised or discussed” (paragraph 11 of the Preliminary Judgment”).(5) This Tribunal therefore rejects the submissions of the respondent at paragraph 15 above regarding substitution and lack of personal service. Were the services performed by the claimant provided to the respondent in the course of running a business of which the respondent was a client or customer.[23]Again, the Tribunal has given careful consideration to the legal submissions of the parties.[24]The Tribunal has also given careful consideration to the helpful guidance contained in paragraph 15 of the EAT Judgment in Byrne (pages 18 – 19 of the authorities bundle) and in particular:-(a) the factors identified at paragraph (5) of that judgment and(b) the recognition that “ 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 worker”.[25]When reaching its conclusions on this matter the Tribunal has balanced the competing contentions of the parties in the light of the findings of fact contained in the Preliminary Judgment.[26]The Tribunal has taken into account the matters which support the case that the claimant was providing services to the respondent as a client or customer of his business undertaking including :-(a) that the claimant represented himself in the NDA as Charles Scully Consultancy (paragraph 6 of the Preliminary Judgment)(b) the claimant’s tax and related arrangements in which he was treated as self-employed (paragraph 6- 8 of the Preliminary Judgment) and(c) the findings in the Preliminary Judgment regarding the high degree of autonomy which was afforded to the claimant ( paragraphs 10 -12 of the Preliminary Judgment).[27]The Tribunal has however balanced against such matters :-(a) the findings which it has already made above regarding the personal nature of the relationship(b) the duration and nature of the relationship including that the claimant’s income was limited to the agreed monthly payments of £3,500 which did not vary at any time/ depend on the level of work done and(c) the claimant did not provide services to any other person and did not receive remuneration from any other business.[28]Having given the matter very careful consideration the Tribunal is satisfied that in accordance with Bryne that the claimant has reached the necessary pass mark to qualify for protection as a worker for the purposes of section 230 (3) (b) of the Act in circumstances where he has failed to achieve protection as an employee.[29]In all the circumstances, the Tribunal finds that the claimant was at all relevant times a worker for the purposes of section 230 (3) (b) of the Act. Employment Judge Goraj Date: 6 August 2020 Judgment sent to parties: 12 August 2020 FOR THE OFFICE OF THE TRIBUNALS Online publication of judgments and reasons The Employment Tribunal (ET) is required to maintain a register of all judgments and written reasons. The register must be accessible to the public. It has recently been moved online. All judgments and reasons since February 2017 are now available at: https://www.gov.uk/employmenttribunal-decisions The ET has no power to refuse to place a judgment or reasons on the online register, or to remove a judgment or reasons from the register once they have been placed there. If you consider that these documents should be anonymised in anyway prior to publication, you will need to apply to the ET for an order to that effect under Rule 50 of the ET’s Rules of Procedure. Such an application would need to be copied to all other parties for comment and it would be carefully scrutinised by a judge (where appropriate, with panel members) before deciding whether (and to what extent) anonymity should be granted to a party or a witness