Ms T Robinson v His Highness Skeikh Khalid Ben Saqr Ar Qasimi: 2201027/2017
EMPLOYMENT TRIBUNALS
Case No 2201027/2017
Between
Ms T RobinsonClaimantHis Highness Skeikh Khalid Ben Saqr Ar QasimiRespondent
Before
Employment Judge Mr Paul StewartDate 21 November 2018
JUDGMENT
The Claimant’s application for interim relief is granted and it is ordered that the contract between the parties shall continue until the determination or settlement of the Claimant’s complaint of unfair dismissal, with payment monthly of such net sum as is appropriate after deduction of income tax and national insurance from a gross figure of £3,083.33.
REASONS
[1]The Claimant had brought a claim for unfair dismissal and alleges that the principal reason for her dismissal was because she made a protected disclosure in line with section 43B(1)(b) of the Employment Rights Act 1996. By virtue of section 103A of the Act, should there be a determination that the reason (or, if more than one, the principal reason) for the dismissal is that she made a protected disclosure, then her dismissal shall be regarded as unfair.[2]The Claimant has applied for interim relief pending determination of her complaint. This is an uncommon application and therefore I will set out in full the relevant sections of the Employment Rights Act 1996 to which I have been referred: 128.— Interim relief pending determination of complaint.(1) An employee who presents a complaint to an employment tribunal that he has been unfairly dismissed and— (a) that the reason (or if more than one the principal reason) for the dismissal is one of those specified in— (i) section … … 103A, or (ii) …, or (b) … may apply to the tribunal for interim relief.(2) The tribunal shall not entertain an application for interim relief unless it is presented to the tribunal before the end of the period of seven days immediately following the effective date of termination (whether before, on or after that date).(3) The tribunal shall determine the application for interim relief as soon as practicable after receiving the application.(4) The tribunal shall give to the employer not later than seven days before the date of the hearing a copy of the application together with notice of the date, time and place of the hearing.(5) The tribunal shall not exercise any power it has of postponing the hearing of an application for interim relief except where it is satisfied that special circumstances exist which justify it in doing so. 129.— Procedure on hearing of application and making of order. (1) This section applies where, on hearing an employee's application for interim relief, it appears to the tribunal that it is likely that on determining the complaint to which the application relates the tribunal will find— (a) that the reason (or if more than one the principal reason) for the dismissal is one of those specified in— (i) section … 103A, (2) The tribunal shall announce its findings and explain to both parties (if present)— (a) what powers the tribunal may exercise on the application, and (b) in what circumstances it will exercise them. (3) The tribunal shall ask the employer (if present) whether he is willing, pending the determination or settlement of the complaint— (a) to reinstate the employee (that is, to treat him in all respects as if he had not been dismissed), or (b) if not, to re-engage him in another job on terms and conditions not less favourable than those which would have been applicable to him if he had not been dismissed. (4) … (9) If on the hearing of an application for interim relief the employer— (a) fails to attend before the tribunal, or (b) states that he is unwilling either to reinstate or re-engage the employee as mentioned in subsection (3), the tribunal shall make an order for the continuation of the employee's contract of employment. 130.— Order for continuation of contract of employment. (1) An order under section 129 for the continuation of a contract of employment is an order that the contract of employment continue in force— (a) for the purposes of pay or any other benefit derived from the employment, seniority, pension rights and other similar matters, and (b) for the purposes of determining for any purpose the period for which the employee has been continuously employed, from the date of its termination (whether before or after the making of the order) until the determination or settlement of the complaint. (2) Where the tribunal makes such an order it shall specify in the order the amount which is to be paid by the employer to the employee by way of pay in respect of each normal pay period, or part of any such period, falling between the date of dismissal and the determination or settlement of the complaint. (3) Subject to the following provisions, the amount so specified shall be that which the employee could reasonably have been expected to earn during that period, or part, and shall be paid— (a) in the case of a payment for any such period falling wholly or partly after the making of the order, on the normal pay day for that period, and (b) in the case of a payment for any past period, within such time as may be specified in the order. (4) If an amount is payable in respect only of part of a normal pay period, the amount shall be calculated by reference to the whole period and reduced proportionately. (5) Any payment made to an employee by an employer under his contract of employment, or by way of damages for breach of that contract, in respect of a normal pay period, or part of any such period, goes towards discharging the employer's liability in respect of that period under subsection (2); and, conversely, any payment under that subsection in respect of a period goes towards discharging any liability of the employer under, or in respect of breach of, the contract of employment in respect of that period.(6) If an employee, on or after being dismissed by his employer, receives a lump sum which, or part of which, is in lieu of wages but is not referable to any normal pay period, the tribunal shall take the payment into account in determining the amount of pay to be payable in pursuance of any such order.(7) For the purposes of this section, the amount which an employee could reasonably have been expected to earn, his normal pay period and the normal pay day for each such period shall be determined as if he had not been dismissed.[3]I also was referred to Rule 95 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 which reads: 95. Interim relief proceedings When a Tribunal hears an application for interim relief (or for its variation or revocation) under section 161 or section 165 of the Trade Union and Labour Relations (Consolidation) Act 1992 or under section 128 or section 131 of the Employment Rights Act 1996, rules 53 to 56 apply to the hearing and the Tribunal shall not hear oral evidence unless it directs otherwise. I did not hear oral evidence.[5]The evidence before me came in the form of written statements. There were two statements of the Claimant, the first of which was signed and dated 22 June 2017 and prepared for the hearing on that date. A statement was also prepared on behalf of the Respondent for the 22 June 2017 hearing by Peter Cathcart and it is dated 21 June 2017. As a result of the adjournment of that hearing, two further witness statements were produced: for the Respondent, his son Hamad Al Qasimi produced an unsigned statement dated 28 June 2017 that led to the Claimant providing a second witness statement, dated 29 June 2017, which has been mechanically signed by her.[6]Both parties agreed that the relevant case law in terms of burden of proof and standard of proof to trigger interim relief under section 128 of the Employment Rights Act 1996 is that which is set out in Taplin v Shippam Limited [1978] ICR 1068: the employment tribunal must ask itself whether the application has established that the Claimant has a “pretty good chance of success” in the final application to the employment tribunal. The case of Taplin has been followed and applied in numerous cases including Raja v Secretary of State for Justice UKEAT/0364/09/CEA and Dandpat v University of Bath UKEAT/0408/09/LA and London City Airport Limited v Chacko UKEAT/0013/13/LA.
Background
[7]The Claimant commenced working for the Respondent on 30 March 2007. She had come to hear of the job whilst she was ordinarily resident in Spain. A friend put her in touch with a Mr Scott Fishback who referred her to Mr Peter Cathcart, a solicitor. She met Mr Cathcart and, at their meeting, Mr Cathcart told her briefly what the role would involve and that the remuneration would amount to £34,000 per annum.[8]There was a certain amount of discussion at the time about the remuneration. The Claimant sought more money but Mr Cathcart asserted there to be no chance of her receiving a higher amount. However, according to the Claimant, he told her to remember that this is her net take-home pay. The Claimant also had further discussions with Mr Fishback and with her predecessor (Ms Caroline Driver) ahead of moving from Spain to take up her job with the Respondent on 30 March 2007.[9]On that date, the Claimant received two letters from Mr Cathcart on his law firm’s headed paper. The first specified at page 35 of the bundle: I attach a simple letter of engagement in relation to your work for the family of His Highness Sheikh Khalid Bin Saqr Al Qasimi. Can I ask you please to sign and return one copy of the letter.[10]Both letters were dated 23 March 2007. The attached letter stated that: At our meeting Scott and I outlined to you your essential responsibilities. I also gave you a copy of the job description which is attached to this letter and has been prepared by Caroline Driver who has been performing this role for over two years. You will be expected to perform the various functions set out in the attached job description.[11]The letter continued: You will be paid a management fee for undertaking this work at the rate of £34,000 per year. You will be responsible for your own tax on that payment. There are no set hours nor is there any set place of work.[12]The letter also stated that the Claimant was entitled to recover costs and disbursements and, in respect of travel, she is told to keep a log book of her journeys and that a mileage rate will be agreed.[13]The letter specified that there to be a need for the Claimant to open a bank account from which payments can be made and that there would also be a float of £15,000 - the Claimant was to report expenditure to the Respondent and she would be reimbursed. She was also told that she would receive 4 weeks’ holiday per year and there is a reference to each side terminating the contract with one month’s notice.[14]The Claimant signed the letter, accepting the terms set out above, on 30 March 2007.[15]The attached job description prepared by Ms Driver specified the different duties that the Claimant would be expected to undertake, including dealing with the car and staff, visiting the property once per week, maintaining a log book for mileage, making doctors and dentists appointments, making hair appointments, paying university and college fees, sales and purchase of properties, accounts and then:- …be flexible! Any number of varied issues can arise which need attention either for the comfort of the children or in relation to their properties or those of their guards. Each has to be addressed satisfactorily whether this means disposing of accumulated garbage to sourcing new educational facilities etc.[16]During the period that followed, the Claimant appears to have worked satisfactorily, notwithstanding certain upheavals in the Respondent’s family – the Respondent was detained (in jail or under house arrest) in the UAE in 2010, but was released in late 2010/2011 and came to the UK. The Claimant’s work relationship survived a period when life was traumatic for the Respondent’s family.[17]During that time, the Claimant sent what she describes as grievance letters to Mr Cathcart in October 2012 and March 2013. In January 2014, the Claimant had a meeting with Mr Cathcart against a background whereby she knew the Respondent had appointed the accountants PricewaterhouseCoopers (PwC) to deal with his tax and financial affairs. At this meeting, Mr Cathcart apparently out of the blue asking if the Claimant had any problems with HMRC. She said that she was waiting for His Highness [the Respondent] to regularise the position and this kept being promised.[18]Later in January 2014, Mayed (a member of the Respondent’s family) forwarded to the Claimant an email sent from PwC stating that HMRC would require a list of employees. He asked her to prepare a list of them – there were over thirty – and she sent this to Mayed on 7 February 2014, informing him that she had included herself on the list.[19]On 5 February 2014, the Claimant received an email from Mr Cathcart telling her PWC were expected to advise that she needed to be put on PAYE. Two days later, Mr Cathcart confirmed that PwC had now so advised.[20]On 10 February 2014, the Claimant sent an email directly to Angela Egington at PwC asking to meet to discuss her future tax status and, the Claimant says, that of other employees on the list. That is not quite the wording: the only words about her appearance on the list that are to be found in the email to Angela Egington on 10 February are: I will be on that list I think, maybe we need to discuss the future, would it be possible to speak to you when you are free?[21]The Claimant received a holding reply from Angela Egington, who informed her that she was working through matters with the family and would contact the Claimant as soon as she could, but further contact was never made.[22]A number of events in relation to other employees caused the Claimant on 22 May 2014 to contact a tax specialist in the firm CTM Limited for advice. The tax specialist was a retired accountant, Mr Stefan Kitchen. He prepared a dossier on which he advised about her employment status. She sent this dossier with the advice given to Mr Cathcart on 2 June 2014. In the cover lettering, the Claimant stated:- During the last few months, as you suggested, I have taken advice on my employment status. I have spoken at length with a friend who is a retired accountant and has interviewed me as a tax inspector would. I am extremely upset and very distressed at the outcome of the fact-finding process. The interview process was carried out over the three day period which the taxman would require. The interrogations ranged over my copious diary notes and into every aspect of my life with the family. I feel drained and ragged and put through the mill and on the verge of a nervous breakdown. I understand all the advice given to me. Please find attached the dossier from my advisor with supporting evidence. I do not believe I have ever been self-employed much as you would now have it so, and I do hope there is an easier way through the situation than presently seems possible. I am now seeking your assurance, for my own personal situation, that I will be put on a PAYE scheme with immediate effect, and that the historical position will be made good by my employer as required by law. The situation is not acceptable as it stands and I am asking you to please put it right. Peter, we have a good working relationship and you know how important my role has always been over the years, and the loyalty I have shown towards the family. I am sharing this correspondence with you discreetly in order to give you a chance to sort it out, as a next port of call, as you can see, must be for me to contact my tax lawyer.[23]In his letter, Mr Kitchen recorded the salient events. These did not include the fact that, according to her witness statement, the Claimant had been assured by Mr Cathcart on 30 March 2007 that the £34,000 she was to receive would be a net sum - notwithstanding the wording on the letter she signed that day to the effect she would be responsible for her own tax on the payment.[24]On the basis of the information he had gleaned from the Claimant, Mr Kitchen wrote:- I seek to disabuse Peter Cathcart of the notion that hounding you into a self-employed classification will work, and the notion that it could ever be in his client’s best interests.[25]Mr Kitchen was of the view that the Claimant was an employee and so PAYE should have been deducted at source. The letter continued:- If after studying these examples Peter Cathcart and the family are still not prepared to regularise your tax status and set up the PAYE scheme retrospectively to cover your position, then your next step, after some seven days, as I stated in the recital above, must be to consult a specialist tax lawyer…[26]The letter finished by expressing the hope that:- …the review of the detailed and complex events of the past seven years has been accurate, and that my comments and advice have a voracity that ultimately serves both you and your Arab family well.[27]This letter resulted in solicitors engaged by the Respondent writing to the Claimant on 1 July 2014 indicating that they had been asked to look into her employment status by the Respondent following her 2 June email. The letter set out the arguments that various elements of her contract point to selfemployment status and referred to the discussions that the Claimant had earlier in the year where she had discussed her position with Mr Cathcart: Indeed, I understand that, when Peter discussed the situation with you earlier this year, you said that you were paid “cash”, suggesting that your failure to pay income tax and national insurance contributions was not an oversight or any misunderstanding as to your employment status but a deliberate act. This is supported by the fact that you received 1/12th of the gross annual management fee into your account each month by bank transfer (rather than cash) but, at no time during the period that you worked for the Al Qasimi family, did you query the lack of deductions for tax or national insurance. Peter tells me he was horrified to learn that you had not been accounting for tax in accordance with the agreement. As you say, you have worked for the Al Qasimi family for many years and it came as a disappointment and a shock to them all that you had not been accounting for tax. Clearly, the situation for you is serious and Peter was concerned that you sorted it out as soon as possible. As such, he advised you to regularise the tax position as soon as possible, which you said you would do. I understand that you had a few brief discussions with Peter in the period between the meeting at the end of January and your email of early June but never suggested that you were not addressing the situation. Indeed, we now know that you were seeking advice from your friend, Stefan, a retired accountant, who has applied considerable energy into formulating a case that, during your engagement by the Al Qasimi’s, you were in fact an employee. The intent of such an argument is to transfer the obligation for payment of your employee’s income tax and national insurance contributions to Sheikh Khalid (although he would, of course, have the right to recover such tax from you).[28]The letter was written by Ms Jo Davis, an employment law solicitor at the Respondent’s solicitors. The letter continued:- I have reviewed the arguments put forward on your behalf by Stefan (please excuse my use of his forename but I don’t think I have his surname) and, leaving aside the rather inflammatory rhetoric, note that he concentrates on what you tell him happened in practice rather than what the contract provides for.[29]The letter went on to argue the case that:- …As you quite rightly point out in your schedule, having obtained the facts, we then have to stand back and look at the picture as a whole focussing on the contract rather than anything else. In my view, the conclusion from the contract is that you are self-employed. I believe Stefan reached a similar view as he reluctantly concedes your status may have changed since the inception of your relationship with the Al Qasimi family. By way of example, he states that “any putative notion of self-employment died with the onset of those responsibilities (those responsibilities being the care of five of the family’s children)”. Leaving aside that the fact that the “children” were, in fact, adults and would no doubt baulk at the suggestion that they required you to act in loco parentis, this implicitly acknowledges that, at the outset, the relationship may have been one of self-employment.[30]And it continued:- In the meantime, clearly tax must be paid going forward on your earnings and, until the matter is resolved, further payments will be made less deduction of a sum equivalent to the tax and national insurance contributions that you are liable to pay to HMRC as a selfemployed individual. Those monies will be placed in a separate account for your benefit so that the situation is not compounded and we urge you to account for such monies to HMRC promptly.[31]This prompted CTM Limited on behalf of the Claimant to write to Ms Davis on 9 July 2014 a 17-page letter in which their contentions were summarised thus:- There is no contract that evidences an agreement between HH and Ms Robinson, so we must look at other factors to identify what each party believed the terms of the engagement to be. More importantly, consideration must be given to whether, on the balance of probabilities, those terms were relayed to Ms Robinson. The overwhelming evidence, as detailed above, points to the conclusion that HH and his legal representatives gave Ms Robinson to understand that she was to be engaged as an employee. Indeed, that term is extensively used. Furthermore, discussions regarding her “salary”, the lack of requirement upon her to invoice her services and the provision of sick pay and paid holidays all mitigate any contention that this was anything other than a contract between an employer and his employee. Therefore, we invite you to agree that, when taken as a whole, the evidence is compelling, and it cannot be sensibly argued that Ms Robinson was technically self-employed, or that she was informed, or even believed, that she was.[32]The letter was accompanied by six tabs that covered a number of other pages.[33]Ms Davis on behalf of the Respondent wrote to HMRC on 18 July 2014, setting out that she had been asked to contact HMRC by the Respondent in respect of the Claimant. She set out the position that Mr Cathcart engaged the Claimant as a self-employed person and the contract confirmed that there were no set hours or place of work and that she was paid a management fee. She then set out that earlier in 2014 there had been a conversation, in which there was concern expressed by Mr Cathcart on finding out from the Claimant that she had never accounted for tax on the payments received. The letter went on to state that, from recent correspondence, it appeared that the Claimant did not report the position to HMRC at the time and had now secured professional advice on the matter (see fourth paragraph). It concluded:- We envisage that HMRC will require further information of the payments made to Ms Robinson etc., and both Mr Cathcart and this firm are instructed to assist in the provision of such information.[34]Mr Steve Bootland of the Employment Status Customer Service Team of the HMRC replied on 10 September 2014. He noted that his role was to give advice about whether a worker is engaged as an employee or someone who is selfemployed. He continued:- An engager can ask HMRC for an opinion on the employment status of a worker. How we act on receipt of such a request is covered by the guidance in our Compliance Operational Guidance manual at COG907280. This can be viewed on the HMRC website but I attach a hard copy for your convenience. Your letter does not ask for an opinion, although I infer from the fourth paragraph of your letter that Ms Robinson disputes that she was self-employed. If you would like me to offer an opinion there is some further information I should require, in addition to that supplied in your letter and in Cathcart’s letter of 23 March 2007. 1. Are there any circumstances under which Ms Robinson could have sent a substitute had she been unable or unwilling to perform the duties herself? Did this ever happen and, if so, who paid the substitute worker? 2. Could Ms Robinson have brought in someone to help her do the work which she was engaged to do? Did this ever happen and, if so, who paid the substitute worker? 3. What sorts of journeys were made by Ms Robinson for which your client paid mileage. 4. Did Ms Robinson have to provide major items of equipment which were needed to do the work? If so, what were they?[35]On 23 October 2014, CTM wrote to HMRC stating:- We write with regard to our client, above, the matter of an alleged non-payment of PAYE and NIC by Ms Robinson. There is a dispute between Ms Robinson and her employer regarding her employment status. We enclose correspondence between the parties that clearly demonstrates that Ms Robinson is an employee and her employers are liable for the tax.”[36]They indicated that they have been in correspondence with the Respondent’s solicitor who took a different view. They concluded:- We would like an officer to be assigned so that we are able to remedy the situation as soon as possible.[37]I have been shown a minute from a meeting on 9 January 2015 between the Respondent, two of his sons and Mr Cathcart that reads:- As for the tax position of Tracy, B P Collins have responded to the Revenue and it is now in the hands of the Revenue to decide what to do. Peter explained that it is likely to take some time for this issue to be resolved because the Revenue will want to investigate all of the bank accounts of Tracy. Bearing in mind that Tracy was passing substantial sums of money through her account, the analysis will be very complex and time consuming.[38]Another minute states that:- His Highness confirmed that an account had been set up to transfer the tax payments being retained in relation to Tracy. Peter confirmed that all the payments for the last year should now be put into the account and that going forward, payments should be made into the account on a monthly basis.[39]On 5 January 2015, CTM chased HMRC for a response to its letter of 23 October 2014. On 16 January 2015, HMRC indicated that its specialist complaints team would handle the matter and provide a full response. On 6 March 2015, there was a further chasing letter from CTM providing a chronology highlighting HMRC’s correspondence shortcomings.[40]On 20 March 2015, an apology was proffered by HMRC and further questions were now asked by Mr Steve Bootland who had, of course, previously been in correspondence with the Respondent’s solicitor.[41]This led to CTM responding on 13 April 2015 and providing a copy of the Claimant’s dossier in attempting to answer the questions asked.[42]On 1 May 2015, Mr Bootland wrote on behalf of HMRC to CTM providing his observations on the basis of the information that the Claimant / CTM had provided. He did so under various headings:- personal service, control, financial risk, ability to profit by good management, responsibility for other staff and other status indicators.[43]On the third page, he summarised his conclusions, stating:- It is my view that Ms Roberts is engaged under a contract of service. It is my view that she is an employee of His Highness and not someone engaged in a self-employed capacity.[44]On 13 October 2015, the Claimant wrote to Mr Cathcart and referred back to their meeting in January 2014 when Mr Cathcart had asked her if she had trouble with HMRC. She told him that he had informed her that PwC should definitely put the Claimant on the PAYE scheme. She stated that, after telling her that she should go on the PAYE scheme, he had ordered her to register as self-employed. When the Claimant objected to that suggestion, he had told her to take advice about her tax status. The Claimant informed him that she had her status checked by an old accountant friend and had written with her dossier and her accountant friend’s advice, but Jo Davis’s response was “obfuscation”. She continued:- We have therefore now approached HMRC directly; HMRC have analysed my diaries, emails, accounts, statements and involvement with the family and concluded without reservation that I have always been an employee and continue to have that status; I attach a copy of the HMRC conclusion.[45]Her letter proposed resolutions for Mr Cathcart to put to the Respondent to achieve statutory compliance. These were:- 1. Provide a written statement of particulars of employment, pursuant to section 1 of the Employment Rights Act 1996 (ERA); 2. Send an itemised pay statement pursuant to section 8 of the ERA with each monthly payment of salary from March 2007 to date, showing how that net salary position has been calculated. 3. Include me on PAYE and show the correct income tax and National Insurance contributions deducted in arriving at my net salary each month and ensure that such deductions are promptly paid across to HMRC together with employer contributions. 4. Stop the unlawful deductions of £668.50 from my net salary per month that has been occurring each month since 2 July 2014, contrary to section 13 of the ERA.[46]She continued: I look to you therefore as guide, mentor and support of first call to His Highness to sort this matter out with fines, penalties and further investigations arising. I am sure you will understand that it has been difficult for me to write this grievance letter, as I have no complaints in respect of the work that I undertake. This letter will not impact upon my ability to work for His Highness and the family and I remain as committed as ever to my employment.[47]On 16 February 2016, the Claimant approached ACAS for early conciliation and a certificate was produced by ACAS on 16 March 2016 confirming that the Claimant had complied with the requirements under ETA 1996 section 18A to contact ACAS before instituting proceedings in the Employment Tribunal.[48]On 21 July 2016, the Claimant wrote directly to the Respondent in a two-page letter arguing for the Respondent to get involved and get his solicitors to regularise her contract and put her on a PAYE scheme.[49]This met with a response from one of the Respondent’s sons on 17 November 2016, which stated:- Thank you for your email. I am aware of this email you sent in July but I am unsure why you sent it as it clearly states in your contract you are responsible for your own tax. You have been self-employed throughout your period working with the family. You know that as does everyone else.”[50]The Claimant then instructed new solicitors (Geoffrey Leaver Solicitors), who, on 23 January 2016, wrote arguing that the Claimant was, and always had been, an employee of the Respondent. This letter stated that the Claimant had asserted various statutory rights in her 13 October letter and requested that the Respondent comply with her statutory rights by:- a) Providing a written statement of particulars of employment; b) Providing itemised pay statements; c) Ensuring correct PAYE deductions are made in respect of income tax and national insurance and paid to HMRC; d) Stopping the unlawful deductions from her wages.[51]The writer asked that the letter be acknowledged within seven days and a substantive response received within 28 days.[52]This letter was addressed to Neumans LLP, a firm instructed by the Respondent. Mr Khairie Gedal, a senior co-ordinator for that firm, responded more or less immediately. Mr Gedal acknowledged that they had been brought on board to assist in the construction of a self-employed contract for the Claimant as agreed for her and that they were waiting for the Claimant to send them a list of requirements. The writer stated that: I am not and have never been responsible for any other negotiations or litigious discussions between the parties and so I suggest you direct your original email and the “without prejudice” letter to Mr Peter Cathcart who I am sure you are familiar with.[53]The letter was accordingly forwarded by email to Jo Davis of B P Collins cc Peter Cathcart on 1 February 2017, refuting the allegation that the Claimant had ever agreed to enter into a self-employed contract. The email concluded by confirming that they were looking forward to hearing from Jo Davis.[54]B P Collins responded on 8 February 2017, with their letter making the point that:- … the question of your client’s employment status is hotly disputed between our respective clients and there has been no formal adjudication by HMRC on the subject. Your client’s previous representatives, CTM, made entirely one-sided representations to HMRC on the basis of which HMRC gave an unbalanced and erroneous opinion. Notably, our client’s representations on the matter were not forwarded to HMRC and we note that you repeated that economy of disclosure by only providing Mr Gedal with copies of correspondence that was prepared in support of your client’s case.[55]The letter finished with a reference to the discussion in January 2014 and the assertion that in that discussion from the Claimant that she was paid cash and the fact that she first suggested that she was self-employed months later in June 2014.[56]Jo Davis wrote to Geoffrey Leaver LLP again on 23 March 2017, arguing over a series of points that the Claimant was self-employed. She finished by saying, with reference to the Claimant’s mobile phone bill, the household tasks carried out by someone else, the congestion charges and the Claimant’s mileage, that: It therefore appears that, even if our client were not obliged to terminate your client’s contract on the ground of illegality involved in continuing to engage her, her role is no longer required. Alternatively, it appears that, in addition to your client’s apparent fraud on the Revenue, your client may have been fraudulently claiming petrol expenses over the course of her employment. As such, if she were an employee, she could be fairly dismissed on the grounds of redundancy or misconduct. We note that you have sought to protect your client against any action in relation to her engagement by (re)asserting in your letter of 23 January 2017 the statutory rights originally made over 18 months ago (following which no action was taken against her). However, it is clear that the evaluation of your client’s role was initiated prior to your letter. Further, it is ridiculous to suggest that our client would terminate her contract because she asserted a statutory right to (for example) an itemised pay statement.[57]There was further communication between the solicitors but, on 19 May 2017, the Respondent himself wrote a letter to the Claimant in which he said: As you will be aware, on 23 March 2017, our solicitors responded to a letter from your (then) solicitors, Geoffrey Leaver LLP, explaining that I felt that I had little option but to terminate your contract unless you agreed to account for the tax due on the payments made to you. Shortly after receipt of that letter, our solicitor received an email from a new solicitor instructed by you, indicating that her “provisional view” was that you were either an employee or a worker but that she had not yet read all the relevant documents and that she would send a comprehensive reply within 14 days. I therefore held off taking action. That email was received on 28 March 2017 and since then we have heard no further from her, save an email promising a response by 28 April. However, that too has not been forthcoming. As set out in my solicitors’ letter of 23 March 2017, I cannot continue to allow you to work for me while you are failing to account for the tax due on your earnings. I have delayed taking action for some 3 years in the hope that you would sort out the situation, but you have failed to do so. Further, it has become clear over the last few months that your responsibilities have diminished since the children have grown up such that we no longer require someone to carry out your role. In addition, you have now disparaged Mayed [one of the Respondent’s sons] to one of our tenants in an entirely unacceptable and unjustified way. As to your expense claims, I prefer not to investigate these given the other circumstances but I would point out that, if you felt that they were some form of extra salary (an assertion I do not accept), they too are liable for tax. In the circumstances, I have no alternative but to terminate your employment with immediate effect. Please could you arrange to return any belongings or personal information that you have relating to the family and details of any contracts remaining in your name? We will then arrange for them to be assumed by me or Mayed. Finally, we do, of course, hold funds in an account in relation to the tax payable on your earnings since July 2014. We will release these to HMRC when we receive your instructions to do so. However, given your reluctance to accept your liability for the tax and national insurance contributions on your earnings, we are not prepared to release them to you personally.[58]This triggered a response two days later from TMP Solicitors on behalf of the Claimant, with the letter addressed to Jo Davis. This letter rehearsed the dispute / contentious issues and explained why TMP asserted that the Claimant was an employee / worker and then asserted that the Claimant had made a whistleblowing disclosure, which prefaced the making of this interim application by the Claimant in her ET1. The ET1 was received by the Employment Tribunal on 25 May 2017.[59]In the ET1, it was asserted that the Claimant made many verbal and written disclosures. The occasions of disclosure were set out in paragraph 26 of the ET1. Paragraph 27 stated that the disclosure of information related to the Respondent’s breaches of legal obligation to comply with the Employment Rights Act 1996, to treat the Claimant as an employee or worker, to deduct tax and NICs at source, to pay these deductions to HMRC, to send her an itemised pay statement and to deduct monies from her wages unlawfully.
Conclusion
[60]I have to be satisfied that the worker has made a qualifying disclosure and that, in the reasonable belief of the worker making the disclosure, it was made in the public interest and tends to show that the employer has failed/is likely to fail to comply with the legal obligation to which they are subject.[61]This case originally came before me on 22 June 2016. As a result of discussions, the matter was adjourned in order that further instructions could be obtained by the Respondent’s legal advisers, which they had not been able to do because of the shortness of time.[62]As a result, the matter has come before me again and I have read the new material handed in today.[63]At 11.15am or thereabouts, I started to hear submissions from Mr Stephenson on behalf of the Claimant. We had a shortened adjournment for lunch over which Mr Sendall on behalf of the Respondent thought of a point that he had not previously taken.[64]The point relates to sections 128 and 129 of the ERA 1996: Mr Sendall submitted: a) section 128 provides the right to interim relief only to employees who have presented a complaint to the Employment Tribunal that they have been unfairly dismissed for one of the reasons specified and b) the fact that: i) section 129(3) carries with it a requirement that the employment tribunal will ask employer if they are willing to reinstate the employee and treat them as though they are not dismissed and, if not ii) the employment tribunal should ask the employer if they are willing to re-engage the employee in another job on no less favourable terms than if they had not been dismissed and, if the employer does not attend or reinstatement/ re-engagement is not possible (here, Mr Sendall confirmed that he did not have instructions but had no doubt that reinstatement/re-engagement would not be possible) iii) in such circumstances, the tribunal shall make an order for the continuation of the employee’s contract of employment, means there is an issue in the case as to whether the Claimant was an employee at all or was self-employed. If she was the latter, that fact precluded the Claimant from obtaining interim relief. And Mr Sendall argued for the latter.[65]After a short consideration, I rejected that argument. It seemed on the basis of Taplin that I was entitled to look at the allegations made in the application for interim relief pending determination of the complaint (that is, the complaint made to the Employment Tribunal). If one of the matters in issue is whether the Claimant is an employee, I could take a view as to the likelihood of the Claimant being able to show that she was an employee. That view would be within the overall assessment as to whether or not the applicant has shown she had a pretty good chance of succeeding in her claim.[66]Mr Sendall in the course of his submissions used the metaphor of something jumping out of the page to indicate how obvious a point should be for the purposes of his argument on interim relief pending determination of the complaint. However, for the summary assessment I am conducting, employment status jumps out at me out of the page.[67]I take the view that the Claimant has pretty good prospects in the final determination in showing that she was an employee, notwithstanding that she signed a document specifically stating that she was to be paid a management fee and notwithstanding that the document provided that she would be accountable to her own income tax.[68]It appears to me also to be the case that there have been disclosures on numerous occasions by the Claimant of material which alleges that the Respondent has been in breach of/ has failed to comply with a legal obligation.[69]Mr Sendall has taken the point that the Claimant faces a hurdle in that, when making the disclosure, she has to make it in the public interest. The wording of section 43B(1) states that a protected disclosure is “an disclosure which, in the reasonable belief of the worker making the disclosure is in the public interest and tends to show one or more of the following…. That a person has failed or is likely to fail to comply with any legal obligation to which he is subject.”[70]The Respondent’s breach of obligation to deduct tax at source and pay it to HMRC is one of the three allegations of breach of legal obligation that the Claimant has put forward. It does seem that I am entitled to take the view on the face of the evidence before me that she has a view that there has been a failure to pay National Insurance and tax deducted at source and this is in fact in the public interest.[71]I do not rule that disclosure of information showing someone is failing to deduct tax or National Insurance at source is a disclosure in the public interest. However, it seems to me that it can be said that in the reasonable belief of the Claimant, this was in the public interest.[72]I take the view that the Claimant, on establishing that she has made protected disclosures, stands a pretty good chance of succeeding in the final application to the employment tribunal.[73]As to whether the protected disclosure has resulted in dismissal, Mr Sendall makes the point that the dispute had in effect been grumbling along for three years or thereabouts when the dismissal came about and that it cannot properly be said that the whistleblowing has given rise to the dismissal. However, the terms of the letter of dismissal refer to holding off of taking action upon receipt of the letter from the Claimant’s solicitors of 28 March 2017 and that this letter was not followed up despite the fact that the Claimant’s solicitor stated that she would reply in fourteen days. It states that the Respondent cannot continue to allow the Claimant to work for him while she continues to fail to account for tax.[74]Since July 2014, the Claimant’s money has been diverted into two lots. One was paid to her and the other was put in a special account awaiting her instructions as to whether she was prepared to authorise its transfer to HMRC. It is difficult to understand why, come March and then May 2017, the continuation of that position becomes intolerable. It seems likely that the terms of that letter will be interpreted as the consequence of individual acts of disclosure and the cumulative acts of disclosure.[75]I have not said anything about the fact that the Claimant does have a problem should she win her argument that she is an employee and that her employer should have been deducting tax at source.[76]It seems that an argument that the Claimant has espoused latterly in correspondence is that in the sequence of events at the start of her employment she was assured that the sum of £34,000.00 would be paid net. I do not express any view on that assertion – I am in the position of being able to give an indication of the prospects of success of the claim (the dismissal being because of the protected disclosures) without doing so. However, if in due course the sum paid annually to her - £34,000.00 - is held to be the gross salary, necessarily some thought will have to be given as to whose responsibility it is given the amount that the Claimant has received over the years.[77]In conclusion, I think the Claimant stands a pretty good chance of success in showing that the reason for her dismissal was because she made a protected disclosure and therefore she is entitled to interim relief.[78]Section 129 of the Employment Rights Act 1996 requires me to explain to both parties what powers the Employment Tribunal may exercise and the circumstances in which it may exercise them. With both parties represented by counsel instructed by solicitors, that exercise seems somewhat unnecessary. With Mr Sendall for the Respondent indicating the Respondent to be unwilling to reinstate or re-engage the Claimant, I must make an order for the continuation of the Claimant’s contract.[79]Mr Sendall reminded me that section 130(2) Employment Rights Act 1996 requires the tribunal to identify the contract that is to be continued and the amount to be paid by the Respondent. Both advocates made submissions on the amount which should be paid to the Claimant monthly during the continuation of the contract. Mr Sendall explained that the amount currently being held to the Claimant’s order has been calculated on the basis of the tax that she should be paying as a self-employed person. Mr Stephenson contended that the status quo should be maintained in terms of payments to the Claimant (i.e. that her salary – now £37,000 per annum - should be paid to her gross).[80]In terms of section 130(2) Employment Right Act 1996, if the Claimant’s annual salary now is £37,000 per annum, it seems to me that, pending determination of the issue about whether the amount was net or gross, it should be treated as gross and the Respondent should deduct through the PAYE system such sums for tax and N.I. as appropriate to the Claimant’s tax coding. My view already expressed is that the Claimant stands a pretty good chance of establishing that the contract between the parties is a contract of employment. For the purposes of specifying the monthly payment, the payment should be based on £37,000 per annum from which the Respondent should deduct tax and N.I. as appropriate to the Claimant’s tax coding.
Findings of Fact
[81]Having heard no more following the dismissal warning on 23 March if the claimant did not agree to account for tax due on the respondent’s payments to her, on 19 May 2017 the respondent dismissed the claimant by letter.[82]It said she had been warned on 23 March that there was no option but to terminate the contract unless she agreed to account for the tax due. Action had been delayed pending a response from her new solicitor, but he had not heard anything. “As set out in my solicitor’s letter of 23 March 2017, I cannot continue to allow you to work for me while you are failing to account for the tax due on earnings. I have delayed taking action for some 3 years in the hope that you will sort out the situation, but you have failed to do so”. He went on to say it had become clearer the last few months that her responsibilities had diminished since the children had grown up so that they no longer required someone to carry out her role. She had also disparaged Mayed to one of the tenants in an entirely unacceptable way. They were not investigating expense claims but: “if you felt that they were some form of extra salary (an assertion I do not accept) they too are liable to tax”. In the circumstances he had no alternative but to terminate the contract with immediate effect and she was asked to return the belongings and personal information. As for money deducted in relation to tax payable “we will release these to HMRC we receive your instructions to do so”, but not to her personally given her reluctance to accept liability for tax and national insurance.[83]Disparaging Mayed is a reference to an email the claimant had recently sent sent to a tenant who had been expecting a curtain to be repaired. She told him it had all been set up, but “unbeknown to me Mayed (landlord’s son) decided to handle it himself and countermanded at short notice the arrangements made”, and she had not known that. She was deeply embarrassed. He should take it up with Mayed. We understood how any employer might take badly the disloyalty of exposing internal disagreement to a client or customer.[84]The respondent was questioned on his real reasons for dismissal. He said it was not really about her duties diminishing, or about travel expenses being overclaimed, or about the comment about Mayed. He said it was about her trying to pass her tax bill on to him, and sidestep it, perhaps for ever: “she is after us to pay her tax”. He referred to being met by the claimant at Heathrow when she tried to raise her status and tax, and his wife took her aside and said if she just sorted out her tax she could come back and work for them. This episode is undated and features in neither side’s witness statements. We are satisfied the claimant wanting him to pay her tax bill from 2007, whether on a grossed-up salary for the whole ten years, or on the actual salary, paid gross, for seven years, is the real reason for dismissal. Through his lawyers, he understood he was in cleft stick as regards taking action himself on tax deductions.[85]A reason is a set of facts or beliefs known to the respondent. Section 103A of the Employment Rights Act provides for automatically unfair dismissal if the reason or if more than one the sole or principal reason, was a protected disclosure. Was any of the protected disclosures the sole or principal reason for the dismissal?[86]The disclosures, taken as a group, covered two topics: firstly, putting her on PAYE, and secondly suggesting deliberate avoidance of PAYE responsibilities by manipulating lists of employees and altering their duties to make it appear that they were employed rather than self-employed. The first area is close to the reason for dismissal, her failure to pay tax whether selfemployed or employed for 2007-2014. Can they be distinguished? We reviewed the discussion in the caselaw about taking care not to diminish statutory protection for whistleblowers by accepting arguments about there being a different reason, such as Aziz v Trinity Street Taxis, (1988) ICR 534, Bolton School,v Evans (2017) IRLR 140, Martiin v Devonshires (2011) ICR 352 (approved though itself a victimisation case) , Panyiotou v Hampshire Police (2014) IRLR 500, Woodhouse v North West Homes Ltd (2013) IRLR 773 and Parsons v Airplus International Ltd (2017) UKEAT/0111/17. We noted that the disclosures went back to 2014, three years before dismissal. There had been long intervals - months, nearly years, when she carried on as normal and without comeback, when if the respondent objected to suggestions from someone in a position of trust that he was deliberately manipulating evidence of status, he might be expected to have acted earlier. Matters may have intensified when she approached him direct, in writing and then face to face, but any difficulty however about lack of deference, or being suspicious of her (and everyone else) not being careful of his money, was well in evidence before any disclosure. We also noted that in raising PAYE at all, she was following on something the respondent or his advisers had already initiated from 2011. Her disclosures were nothing new and do not appear to have changed anything with respect to investigation or the risk HMRC would find he should make PAYE deductions. It was the respondent who approached HMRC, not the claimant.[87]On the face of it she was dismissed because the respondent did not want to agree she was an employee and that PAYE applied. In reality we think the dispute, and the reason for dismissal, was not about whether she should be on PAYE currently, but about who should pay her tax for 2007-2014, which was really a dispute whether her agreed term was for £34,000 gross or net. If an employee back to 2007, the respondent might have to pay the tax, and though he could then recover from her, it might take some time and be very difficult. They had retained sums from 2014 to cover the bulk of the liability. To that extent, the only disclosures causing dismissal was either her telling the respondent through Peter Cathcart in January 2014 she had not paid tax, for which she does not claim protection, or the assertion that in reality, (whatever the contract said) she was entitled to believe the respondent was paying her net. The essential dispute was not whether she was an employee, but whether her gross pay was £34,000 or around £45,000. That particular point was not, in our view, a matter of public interest. She was not dismissed because of any protected disclosure.[88]For the same reasoning we do not find she was dismissed for asserting a statutory right to payslips, statutory particulars of employment, or being on PAYE, where the test under section 104 is whether it was the reason, or if more than one, principal reason. She was dismissed for asserting the respondent should pay tax over and above £34,000 (later £37,000) per annum. Detriment for Protected Disclosures[89]We must consider the detriments pleaded as occurring because she had made protected disclosures. The test – NHS Manchester v Fecitt (2012) ICR 372 -is whether they were materially influenced by disclosures, rather than sole or principal reason.[90]The detriments are:(1) On 14 February 2014 Mayed told the claimant his parents they thought she was a thief because she had not paid her tax. This followed the first disclosure, but on our finding it had disclosed no information. In any case it seems to have been prompted by Pater Cathcart reporting she had paid no tax, rather than her asking to see PWC about her position.(2) On 23 March 2017, the respondent’s solicitor asserting she committed fraud on the Revenue. This is the letter warning her of dismissal, which speaks of an apparent fraud on the Revenue. In our view, this is a reference to the claimant saying in January 2014 she had not paid tax from 2007 onward. It is not a detriment but a statement of the respondent’s view, on advice. It was about what the claimant said on 30 January to Peter Cathcart. Even if it was a detriment, it was not materially influenced by the claimant making disclosures, but by the earlier discovery that she had not paid tax on any basis.(3) It is said her duties were removed, by removing authority for petty cash, sending all expenses to Mayed instead, by passing responsibility for cars to Mayed or a company, by ceasing to meet the family in the Heathrow VIP suite when they arrived, and by handing accommodation duties to an agency or Mayed. We have combed the witness statements for detail of when or why these occurred. We can find the email of 8 May 2014 to the claimant requiring her to get prior approval for all contracts before payment, but this predated the first disclosure we have found to be protected, and there is no further mention of accounts. The claimant says her last VIP duty was in September 2016 when she approached the respondent direct about her position. We know that preceded a hospital stay, we do not know for how long. The respondent’s solicitor mentioned Mayed being asked to take over duties in November/December 2016, in connection with the duties changing because the children were growing up. Was this detriment? It is an employer’s right to decide what an employee does. She was still paid. She must however have felt mistrusted and excluded. Was it materially influenced by making protected disclosures? Part was, we accept, that the sons were now in their thirties and were being asked to assume responsibility, while the youngest child had left school some years before. Part was however that the respondent was unhappy (his wife’s comment at the airport that she just had to pay her tax) that he was expected by the claimant to pay her substantial tax bill on the basis that she was to be paid net, which in our view was not a matter of public interest. The detriment was not because of protected disclosures.(4) The claimant says she was sidelined by being cut out of normal communication with contractors “since the disclosures”. We do not otherwise know when this occurred, and we know she was still dealing with a tenant in May 2017. Otherwise, we know that in October 2014, four months after the third disclosure and a year before the next one, she was told to speak to Hamad rather than his parents direct. It is hard to see this on its own as detriment when she continued to meet them on VIP duties, and an employer is in our view entitled to alter reporting lines, which is all it appears to be.(5) The final detriment alleged is that the respondent made unlawful deductions from salary from 1 July 2014. This is a detriment if she is not an employee (though at the time the claimant said she was). It can also be a detriment if the money is not paid to HMRC but retained for the employer’s own purpose; it was held in a special account dedicated to the tax equivalent deductions from her salary; the bank statements show around £28,000 in total. As tax had to be paid on £34,000, whether employed or self-employed, it is hard to see this as detriment. It is only so if the term was to pay £34,000 net, and we have found this was not the case. As to causation, the prompt for action was the claimant’s disclosure of Mr. Kitching’s opinion, but the reason for it was not to appear to be colluding in her failure to declare any tax, going back to 2007, not because she raised a matter of public interest. Unfair Dismissal[91]We consider the claim for unfair dismissal. Under section 98 of the Employment Rights Act, there are potentially fair reasons for dismissal. They include at (2) (d): “the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of a duty or restriction imposed by or under an enactment”. We understand the respondent’s reason to fall into this category, the duty imposed under an enactment being that of paying tax on earnings, whether as an employed or as a self-employed person, and if employed under a contract of service, under PAYE. If we are wrong, we would find this was some other substantial reason justifying dismissal, that the respondent was at risk of participating in a fraud on the Revenue if he did not deduct her tax when she said she was an employee. Was this a sufficient reason to dismiss? We have found she was an employee. He did not agree and would deduct tax under PAYE for that reason, though from 2014 when he learned she was not paying tax he made deductions. Ig that was the reason it would have been unfair, because she was an employee and should have been on PAYE. However, the reason was not being on PAYE, but the term as to remuneration (£37,000 plus tax, not before tax, a substantial difference), and that the respondent should pay that going back to 2007. It was not unfair to dismiss because there was deadlock over that, so that in her view he could not make lawful deductions from £37,000.[92]Under section 98(4) the tribunal must consider whether the respondent acted fairly or unfairly in treating this as sufficient reason to dismiss, having regard to size and administrative resources of the employer’s undertaking, and to equity and the substantial merits of the case. A body of case law indicates that fair employers warn employees, so they have an opportunity to put matters right, investigate wrongdoing, give the employee a chance to be heard, usually at a meeting, and then consider whether any other course of action can be taken. On the face of it, the respondent had sufficient resources to hold a meeting, for example with Mayed, or Hamad, or Peter Cathcart, for example. The claimant had a warning, but after so many months and years of exchange of letters between advisers, it is possible she may not have appreciated she really had reached the end of the road, from the respondent’s point of view. Nor was she offered an appeal, to put right any errors, there having been no meeting by 19 May. To that extent, the dismissal was unfair.[93]However, we can see no reason to think claimant would have said anything at that meeting that would have made any difference to the decision. The issue had been gone over with different advisers for a long time, and she had not reviewed her stance even after a warning some weeks earlier. She would not have agreed to pay her tax or register with HMRC. She would have continued to maintain that it was a term of the contract that her remuneration was £34,000 (now £37,000) per annum plus tax and national insurance, not before deductions. At best she may have remained in employment another month or so while there was a meeting. Illegality[94]At this point, having made decisions on the claims in any event, we must consider the illegality argument. If there was illegality she cannot claim in contract, which will include the claims of unfair dismissal, wrongful dismissal, and unlawful deductions from wages. If there is illegality, they must fail.[95]The respondent has defended the claim on grounds of illegality – stated as “no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act” - Lord Mansfield in Holman v Johnson 1775. As a matter of public policy, the court will not assist him. As this has developed in contract claims: “a contract may be prohibited by a statute, or it may be entered into for an illegal or immoral purpose, which may be that of one or both parties, or performance according to its terms may involve the commission of an offence, or it may be intended by one or both parties to be performed in a way which will involve the commission of an offence” - Patel v Mirza (2017) AC 467, though that is not a case about contract.[96]In employment cases, illegality in making or performing the contract usually arises through not paying tax, or a worker lacking immigration status. In Newland v Simons and Willer (Hairdressers) Ltd (1981) IRLR 359 an employee was paid net, without being given the annual P60 certificate of tax deductions, and the issue was whether the employee knew or should have known that the Revenue was being defrauded. If she did not, she could enforce the contract of employment. In Hall v Woolston Hall Leisure Ltd (2000) IRLR 578 a claimant had knowingly turned a blind eye to tax not being deducted from her earnings. Her claim of sex discrimination succeeded however because it was based not in contract but (statutory) tort, to be read to conform with the EU Equal Treatment Directive, and she did not need to rely on the contract to claim, but the judgment doubted that the strict approach outlined in Hall was right – it was said there must be some “active participation” in the deception to bar an employee from enforcing the contract. Enfield Technical Services Ltd v Payne (2008) RLR 500 was a case where the illegality was that the claimant was treated by both as a self-employed subcontractor, though later the Tribunal held him to be an employee; a related case (Grace) involved a change in status and how that affected continuity of employment. While self-employed they paid tax on that basis. The Court of Appeal noted that “a decision as to whether a relationship is one of employment or the person performing the services is selfemployed will often be very difficult...Predictions as to the side of the line on which a particular relationship will be held to fall are notoriously difficult to make”. A genuine claim (to be self-employed) “unaccompanied by false representations as to the work being done or the basis on which payment is being made” does not necessarily amount to illegal performance of a contract of employment.[97]In Quashie v Stringfellows UKEAT/0289/11 the EAT considered findings that a claimant who had declared earnings as self-employed, and then brought a claim on the basis that she was in fact employed, was not barred by illegality in performance of the contract, and observed that “the battleground over which this allegation was fought was the claimant’s relationship with the Revenue” - she had reported that taxable salary was non-taxable expenses. The EAT rejected an argument that how the claimant declared her earnings to the Revenue had nothing to do with the respondent or performance of the contract. It was held that this case fitted the public policy considerations of Lord Mansfield’s dictum: “The claimant who seeks the protection of the Employment Tribunal in the enforcement of her rights against the Respondent should pay the taxes properly due upon the earnings which themselves support the administration of the tribunal system. If she is not paying her way, why should she be entitled to free access to the administration of justice?” She had knowingly made false returns (understating her income and overstating her expenses), it was not a small error, and they were capable of making the contract illegal in performance and so not to be enforced (with this guidance, the issue was remitted back to the Tribunal, along with employment status).[98]Applying this law to the circumstances of this case, while the claimant submits that the illegality is the initial arrangement to treat her as self-employed and require her to pay the tax, our view is that the illegality is that she did not declare and pay any tax at all, whether as employed or self-employed. This is not a contract illegal from its inception, but in performance. It is not a case where the parties sought to avoid paying tax altogether by arranging a net payment, or representing deductions were being made when they were not. The contract states plainly that it was for the claimant to pay tax on the “management fee”. Autoclenz discusses where a tribunal can go behind the contract as written, but this was not a case of a worker facing a large employer with “armies of lawyers”, but a small employer (looking at the number of people working for him and his family in the UK, though his resources were not small) ) with one lawyer, and a lawyer whom the claimant found sufficiently approachable to be able to ask for a pay rise, and to raise difficulties in the relationship with the respondent. She could have had no difficulty asking why she was to pay the tax, not have it withheld, as employers do, or how she should go about it. There is no reason to find that the written contract did not accurately state the agreement as to pay, that it was, as is usual in employment, stated gross.[99]For seven years she did not declare any tax at all. It is argued on her behalf that she did not misrepresent the position to HMRC, but there were no representations to misrepresent. Even if it could be argued she was in doubt from 2011, when the employment status of the respondent’s staff was coming under scrutiny, there was still four years when she did nothing, and another three when she did not query her own position. We do not accept she was told the tax would be sorted out when the respondent came to live in the UK. There is no evidence from Scott Fishbeck, who ceased to work for the respondent in 2011 and with whom the claimant is still in touch, and Mr. Cathcart denies it. It is hard to see how this could have been said in 2007, when the respondent did not anticipate coming to live in the UK. When there was a conversation about tax in 2014, restated to her in writing that year and later, she did not assert there had been an agreement to pay net with a promise to set up PAYE deductions later, and despite the issue running from then on, did not say so until much later, and even then said only that she assumed pay was net of deductions, not that she was told so, contrary to the written agreement. The assertion that the £34,000 was to be a net payment is based on the claimant understanding that there would be a gross figure from which deductions would be made. (On our calculation, that would have been about £46,000, allowing personal allowance in 2007/8 of around £5,000, basic rate tax at 22% and 8% NI, though a small proportion would have put her in a higher rate band for a small slice of this income). We have already given reasons why someone who had been employed all her life could not have believed for so long that tax was being paid for her.[100]We concluded that the contract was illegal in performance, because the claimant was paying no tax, and this was not because the respondent had represented to her that they were making deductions for tax, nor because they colluded to avoid tax being paid. If it is argued that the respondent misled her as to her employment status, we would be inclined to follow Enfield v Payne as to such cases being hard to call with accuracy, given that her predecessor had operated the same arrangement, (and is said by Mr Cathcart to have had other clients), but in any case, it was not the case that Mr. Payne failed to pay tax at all when “self-employed”, only that he and Mr Grace paid tax on a selfemployed basis. The respondent having said the claimant was to pay the tax, the claimant should have known someone had to be paying tax, and if she genuinely believed the respondent should pay, she should have said so when she got the letter of engagement, or she should have queried it when she never received a pay slip showing deductions, or any annual P60 certificate.[101]We considered whether the position was altered by the respondent’s actions when the tax position came to light in 2014, or in 2015, when HMRC stated she was an employee. They began to make deductions equivalent to tax, but did not pay anything to HMRC, instead holding the money to order to pay HMRC, as they did, for a much shorter period, for Robert Ambersky. The claimant has submitted that the respondent “has committed and sustained employment law breaches”, by paying cash to staff not paid from UAE, and displaying a “stubborn to regularize the tax position for the staff that worked for him locally”.[102]We do not have the benefit of expert guidance on the tax position, but our understanding of it is this. Income from employment or self-employment must be declared for income tax. The self-employed benefit from a more generous treatment of the expenses of earning income, and those who set up service companies can also benefit by drawing salary to the limit of the tax-free personal allowance and taking the rest as dividend income, taxed at a lower rate. The liability to declare and pay is that of the taxpayer. Those who are employed under a contract of service (ITEPA 2003, section 4) are also subject to the PAYE scheme, set up during the Second World War to ensure more efficient collection of taxes, which requires employers to withhold tax and national insurance, and pay it direct to HMRC. Our understanding is that the money remains the employee’s, as if too much is deducted in any tax year, the employee can claim a refund, and if too little, he must pay the extra himself (There are provisions to adjust tax codes to collect or pay the over or underpayments from ongoing salary, but the responsibility for paying is the employee’s).[103]The position is complicated by the fact that worker status (with the accompanying rights to claim unlawful deductions in employment tribunals rather than the courts, and holiday pay) does not feature in tax law, and the tax regime and employment rights are not always aligned. If the Tribunal had held the claimant was a worker, under a contract for services, rather than an employee, under a contract of service, our understanding is that the respondent would not have been required to make deductions under PAYE, and the claimant would have had to complete a self-assessment tax return and pay tax to HMRC direct. Since the recent lead cases on worker status, the government Office of Tax Simplification has suggested there should be a facility for PAYE to save workers the administrative burden of filing a tax return, (and no doubt there might be a benefit to the state in the increase in tax receipts) but it is not (yet) law.[104]We had some concern that the respondent, when advised the claimant was an employee, did not set up a PAYE scheme for her or other local staff, nor pay the money to HMRC. We do not know whether this was because of genuine legal uncertainty, or fear the respondent may become liable for tax payments for 2007-2014 when they believed the claimant was accounting for tax; we have no evidence on the point. We recognise that the reluctance may have been a reluctance to pay tax, and with it employer national insurance contributions, now 12% of income, so a considerable payment over the gross salary, at all. This might make it unattractive to bar the claimant from claiming, but does not restore the claimant’s access to the tribunal to enforce her employment contract, when she never declared her earnings, even on a self-employed basis. Any illegality there may have been in arrangements for deduction of tax from staff wages on the part of the respondent does not cure the claimant’s own failure to pay tax on any basis.[105]We conclude she cannot succeed in unfair dismissal as it relies on the contract. Wrongful Dismissal[106]For the same reason the claim for notice pay fails. But for illegality, the respondent should have given her 10 weeks’ notice, rather than dismissing with immediate effect. If they could not continue to employ her lawfully, they need not perhaps give her notice, but they had put up with this for a long time now, there was no reason why the position was suddenly worse, and notice would have right. Neither side submitted that the letter of 23 March was itself notice subject to a condition. Statutory Particulars of Employment[107]The letter of 23 March 2007 contained all the matters required under sections 1 and 2 of the 1996 Act save that it did not state the respondent’s address, and it did not say there was no pension scheme, nor whether there was any provision for sick pay. In all other respects it was compliant. A reference under section 11 does not include any award. Under section 30 of the Employment Act 2002 if there is a finding in the employee’s favour on other relevant claims we must make an order of 2 week’s pay. We have not found in her favour because of illegality, so there is no award. If we had,(1) this claim would be void for illegality as it relates to the contract of which the particulars of claim are evidence of terms, or(2) we would not have made an award because of section 30(5) – it would be inequitable to make an order when there had been substantial compliance by the respondent, and she failed to declare and pay tax on her earnings throughout the ten years she worked for the respondent. Unlawful Deductions[108]Finally, the unlawful deductions claim. Under sections 13-23 of the Employment Rights Act 1996, if the claimant was a worker (under a contract for services) or self-employed, an employer could not lawfully make deductions without the claimant’s prior written authority, which he did not have. If an employee -which the respondent did not accept, but acknowledged was possible - he was obliged to make deductions under PAYE and pay them to HMRC, which he did not, as he did not accept she was employed. The money is hers, though it may be due to HMRC. It should be returned to the claimant. By reason of illegality this claim too must fail.[109]In the courts, the claimant could bring a claim of quantum meruit or unjustified enrichment, for return of this money. The Tribunal cannot so order, our jurisdiction being statutory and limited to claims in contract under the Extension of Jurisdiction Order, or the wages provisions of the Employment Rights Act 1996. We have considered whether to make an order relying on the definition of wages in section 27 of the 1996 Act, on unlawful deductions, as “emolument referable to his employment, whether payable under his contract or otherwise”, and whether we could make an order for the money to be paid to her as payable “otherwise”. We have little guidance on this. The money was due under the contract, whether it was of employment or for services, and it appears artificial to determine it was due “otherwise”, unless that is for unjust enrichment. Counsel for the respondent has offered the Tribunal an alternative solution, by giving an undertaking, during final submissions, that the respondent would pay the retained sum to HMRC so that the respondent should not profit from any illegality. As we have held the claimant was an employee, rather than a worker, the money is due to HMRC for tax and national insurance. If we had not so held, it was still clear, given our finding on the term of remuneration, that she owed more than £28,000 in tax.[110]Consequently, we accept counsel’s undertaking. He did not specify when this would be done. We hold it was implicit this would be done in a reasonable time, which is 28 days from this judgment being sent to the parties.
Findings of Fact
[1]On 21 November 2018 the employment tribunal (Employment Judge Goodman, Mrs D Olulode, Ms M Jaffe) found that the claimant had not been subjected to detriment because she had made protected disclosures, but that she had been unfairly and wrongfully dismissed, although those claims failed for illegality in performance of the contract.[2]On the claim for unlawful deduction from wages, the deductions having been made by the respondent in respect of tax on her wages, no order was made upon the respondent undertaking to pay the full amount to HMRC on the claimant’s account. For completeness, I add that on a subsequent costs hearing in June 2019, the tribunal was told that this payment had been made to HMRC, but it appeared that the money had not allocated to the claimant’s account, because the claimant had not, despite request, told the respondent her national insurance number.[3]On appeal against the decision to the Employment Appeal Tribunal, it was held by Lewis J. (judgment 4 February 2020) that the contract had been illegal in performance from 2008 to 2014, but not thereafter, when the respondent began to withhold tax from wage payments, such that, as at dismissal in 2017, the contract could be enforced. Consequently, the tribunal was required to make an assessment of remedy for the unfair and wrongful dismissal claims.[4]The respondent appealed further on the illegality point. The Court of Appeal upheld the decision of the EAT (Judgement 10 June 2021).[5]The claimant’s solicitor then wrote to the Regional Employment Judge for London Central employment tribunal on 22June 2021, an email headed “urgent… Remission to freshly constituted tribunal”, requesting a case management hearing to discuss: “next steps in the remission as set out in Paragraph 100-103 of Lewis J judgment”.[6]Paragraphs 100 to 103 of the EAT judgment follow the decision on the points appealed, and are headed: “the consequences of these conclusions”. Paragraph 100 identifies 10 weeks’ notice due for wrongful dismissal, an additional month’s pay for the compensatory award for unfair dismissal. Paragraph 101 notes that the basic award related to length of service might be subject to reduction as just and equitable because of the claimant’s conduct, and that the tribunal would have been entitled to make such reduction for the years 2007-2014, but should hear argument about the basic award related to other periods. In paragraph 103 Mr Justice Lewis said that he would now hear submissions as to appropriate order to make.[7]The reasons, but no separate order, were sent to the tribunal by the claimant’s solicitor.[8]Neither the regional employment judge nor I could find any mention in the judgements of the Employment Appeal Tribunal or the Court of Appeal of remission to a freshly constituted tribunal, as suggested in the claimant’s solicitor’s email of 22 June 2021. In case we had missed something, especially given the administrative discontinuities of lockdown, the matter was listed before me to hear the parties on the point.[9]On 22 November 2021 the parties were sent a notice of listing for today. On 21 December 2021 the claimant’s solicitor wrote to the employment judge make an application for the case to be remitted to a new tribunal. If remedy was decided by the original tribunal, there was a risk of justice not been seen to be done when the original tribunal had formed an adverse view on the issue of illegality, and could not be expected to clear their minds entirely of the views and conclusions reached first time round. Remission to the same tribunal would allow it to have a second bite of the cherry to make good deficient reasoning on the illegality point; the judgement was “totally flawed”. There was a risk of partiality.[10]Regional employment Judge Wade responded (31 December) that the application should be made to Employment Judge Goodman at the case management hearing, and that in the absence of any direction by the Employment Appeal Tribunal it would be inappropriate for her to intervene. The claimant’s solicitor then wrote at length on 3 January. Among other things, she said the question of remission had not been addressed by the appeal tribunal, and should be considered by this tribunal; it would not be appropriate for the original tribunal to decide remedy because their finding of illegality followed from their doubting of her credibility arising from the 2007 mortgage application. The illegality finding had been overturned, and she would not get a fair hearing in contravention of article 6.[11]This prompted the respondent to point out the same afternoon that Lewis J. had made an order on 4 February 2020 (the same date as the reasons) , which states at paragraph 2: “the claims for wrongful and unfair dismissal succeed and are remitted to the same employment tribunal for determination of remedy, unless in the view of the learned Regional Employment Judge factors emerge which render such an arrangement impractical or impossible in which case the matter be remitted to be heard by a differently constituted tribunal as directed by the Regional Employment Judge”. (Emphasis added)[12]The first issue then to be determined today was whether the Employment Appeal Tribunal had made a remission direction. Mr Stevenson, for the claimant, submitted that he had no recall of any submissions being made, as invited in paragraph 103. The order must have been made without submissions, and should be considered now. Ms Davis, for the respondent, had no recollection of the hearing, had assumed submissions had been made, as there was an order, and had not researched the point.[13]There being no direct evidence of whether submissions were made, orally, or in writing, I consider what can be inferred from other circumstances. I consider it very unlikely that the Employment Appeal Tribunal, having first invited submissions, should go on to make an order, on the very same day, without submissions. Further, had this been the case, I would have expected one or other party, but particularly the claimant, who considered the original tribunal to be partial, to have written asking for an opportunity to make submissions and for the direction to be reconsidered. Against that, I know that usually the Employment Appeal Tribunal gives reasons, if only in half a sentence, why a remission decision is being made. It may of course be that the point was not contested, so reasons were not needed. Taking these circumstances in the round, there is no reason to think the order was made without hearing the parties first. In any case, even if it was, it is not for this tribunal to reconsider an order made by the Employment Appeal Tribunal.[14]I do not understand Employment Appeal Tribunal’s order for remission back to include an opportunity to argue that it is impracticable (because of partiality) to have remedy heard by the original tribunal, when that tribunal is available. The reference to the Regional Employment Judge varying the decision is merely making provision to appoint a new tribunal when there is difficulty reconstituting the original tribunal, whether because of illness or death or retirement, and is an entirely usual order on remission back to the original tribunal. Therefore remedy should be decided by the original tribunal, as directed.[15]Nevertheless, I have, as requested by the claimant, as a point delegated by the Regional Employment Judge to me, considered whether remission for determination of remedy should be to the original tribunal, or to a freshly constituted tribunal.[16]The factors to be considered on remission decisions were set out in Sinclair and Roche v Temperley (2004) IRLR 763, at paragraph 46. They were:(1) the proportionality of the additional cost of a fresh tribunal measured against the likely award; distress at having the matter heard by the original panel was to be discounted as it would inevitably arise from reopening the matter.(2) the passage of time may be relevant, although knowledge could be refreshed if not retained;(3) bias or partiality were relevant, and not necessarily limited to where the appeal finding had depended on a finding of bias or misconduct;(4) where the decision was totally flawed, the appellate tribunal must have confidence that, with guidance, the tribunal could get it right second time;(5) whether it is right to give the original tribunal a second bite if it had already made up its mind, when it “may be difficult to change it”. Finally(6) tribunal professionalism: where a tribunal “is corrected on an honest misunderstanding or misapplication of the legally required approach”, it could be presumed that it would follow appellate guidance.[17]Mr Stevenson makes clear that it is not suggested that the original panel was biased, and I am told that bias played no part in the notice of appeal. He advocates however that the tribunal was partial. The finding as to the claimant’s credibility, arising from the mortgage application, had followed through in series of findings (paragraphs 8, 18.2, 42, 45, 46, and 94 to 105 of the November 2018 judgement) to arrive at the finding of illegality through illegal performance of the contract throughout. Having made that finding, with the best will in the world, the tribunal would find it “impossible” to put to one side its original finding.[18]The respondent argues that none of the tribunal’s findings of fact were doubted, in particular, as to the reason for any detriment and dismissal, nor was the tribunal’s finding about how long it would have taken to conduct a fair process subjected to criticism; importantly, the finding that there was illegality from failure to declare income for tax was upheld for the period 2007-2014, at both appeal stages. The error had been in what weight should have been given to the respondent making deductions for tax (not paying the money to HMRC, but retaining it in a separate account) from 2014 to 2017, because the tribunal had not paid adequate heed to the decision in Patel v Mirza. This was an error about how to apply the law to the facts, but it was not suggested that the tribunal has been wrong in its findings of credibility and illegality to 2014.[19]Proportionality: the likely scope of remedy - there is not yet a schedule of loss – consists of contractual notice, a basic award for unfair dismissal, and a compensatory award of one month’s pay, which I was told is in the order of £7,500 at most. It may be less, because the respondent will argue there should be just and equitable reductions for conduct. If a freshly constituted panel is to hear remedy, on the claimant’s case that panel should not be invited to rely on the findings made in the original judgement, because of the taint of the finding of dishonesty on the claimant’s part, but will have to reconsider the conduct issues afresh. It is hard to see how this will not require the calling further evidence from the claimant, and from two witnesses for the respondent. That means at least a two-day hearing, so additional cost, which should be weighed together with other factors.[20]It is relevant that both sides have outstanding costs applications. The claimant’s application relates to interlocutory matters, not involving the current panel, but the respondent’s applications, whether for costs to be paid because of unreasonable conduct, or because misconceived, or for costs wasted by representatives (if that is still pursued), are better dealt with by the tribunal that heard the original proceedings than by a fresh tribunal which must rely entirely on the written findings of the original panel. If that is right, even if remedy was remitted to a fresh tribunal, there would have to be a hearing before the original panel on costs. That adds to the costs to be weighed against the value of the claim.[21]On second bite of the cherry point, it is clear that the temporal scope of illegality has been determined by the Employment Appeal Tribunal, and upheld by the Court of Appeal. There is no opportunity for the employment tribunal to improve on its reasoning on illegality; that has been decided, and only remedy is remitted back. It is not an issue for the remedy hearing. The tribunal at the remedy hearing does have to consider any point on just and equitable reduction argued by the respondent, but it has not yet heard argument from the parties on the point. The credibility findings, and the finding of illegality for a period of seven years, were not touched by the appeals.[22]As for recollection, the findings of fact were detailed and recorded in writing, if there is doubt, the original witness statements and notes of evidence are available. In any case there were several unusual features of this hearing which made it memorable.[23]Taking these factors together, and weighing them up, there will be disproportionate delay and expense in remitting remedy to a freshly constituted tribunal, which is not justified by any other factor. The findings of fact have not been disturbed by either appeal court. It is a case where the tribunal can make an assessment of remedy, in full knowledge of the facts of the case, on the claims it had found would have succeeded but for illegality. None of these suggests it is not possible or practicable to have remedy decided by the original panel.[24]Remedy will be listed before the original panel as directed by Lewis J.
Relevant Law
[1]Under the Employment Tribunal Rules of Procedure 2013 a request for reconsideration may be made within 14 days of the judgment being sent to the parties. By rule 70 a Tribunal “may reconsider any judgment where it is necessary in the interest of justice to do so”, and upon reconsideration the decision may be confirmed, varied or revoked.[2]Rule 72 provides that an Employment Judge should consider the request to reconsider, and if the judge considers there is no reasonable prospect of the decision being varied or revoked, the application shall be refused. Otherwise it is to be decided, with or without a hearing, by the Tribunal that heard it.[3]Under the 2004 rules prescribed grounds were set out, plus a generic “interests of justice” provision, which was to be construed as being of the same type as the other grounds, which were that a party did not receive notice of the hearing, or the decision was made in the absence of a party, or that new evidence had become available since the hearing provided that its existence could not have been reasonably known of or foreseen at the time. Ladd v Marshall (1954) EWCA Civ 1 set out the principles on which evidence could be admitted after the judgment: it could not have been obtained with reasonable diligence before the hearing; it would have an important influence on the outcome; the evidence was apparently credible. The Employment Appeal Tribunal confirmed in Outasight VB Ltd v Brown UKEAT/0253/14/LA that the 2013 rules did not broaden the scope of the grounds for reconsideration (formerly called a review); the ET will generally apply the Ladd v Marshall criteria, although there is a residual discretion to permit further evidence not strictly meeting those criteria to be adduced if for a particular reason it is in the interests of justice to do so.[4]When making decisions about claims the tribunal must have regard to the overriding objective in rule 2 of the 2013 regulations, to deal with cases fairly and justly, which includes ensuring that the parties are on an equal footing, dealing with cases in ways which are proportionate to the complexity and importance of the issues, avoiding unnecessary formality and seeking flexibility in the proceedings, avoiding delay, and seeking expense. The Claimant’s Application to Reconsider[5]On 14 and 15 June 2022 there was a hearing to decide(1) remedy for unfair dismissal(2) costs applications made by each party against the other, and(3) an application by the respondent that the claimant’s solicitor and counsel pay wasted costs. Judgment was reserved, and[6]On 7 December the claimant’s solicitor, Jacqueline McGuigan, wrote asking for an amendment to the judgment to reflect(1) that when counsel (David Stephenson) broke down on 14 June she had sent a message that it was inappropriate to continue with the wasted costs hearing and(2) that she had been asked in the hearing whether she had replied to a particular email, and could not answer because of privilege.[7]On 13 December the respondent’s solicitor wrote querying whether this was an application to reconsider. At the same time they made their own application to reconsider the amount awarded to be paid in wasted costs by the claimant’s solicitor. They asked for a finding on their argument that the claimant’s solicitor’s conduct was improper in relation to disclosure during the hearing of the 2007 mortgage application. They also wanted clarification whether the £20,000 award was in addition to or inclusive of £6,750 plus VAT.[8]On 14 December the claimant’s solicitor clarified that she would send an application to reconsider later, and on 20 December she sent her 30 page application, which is summarised below[9]Later on 20 December counsel for the claimant (D. Stephenson) wrote dissociating himself from the claimant’s solicitor’s account of events on the afternoon of 14 June 2022.[10]On 23 December the claimant’s solicitor wrote adding to her representations.[11]There has been no response to the respondent’s application to reconsider.[12]The 20 December application covers the following: Bias[13]The application, which is addressed to the regional employment judge, begins with a request that the judgment is reconsidered by another judge or by the regional employment judge. It was put more forcefully in the letter of 14 June which said: the way in which Judge Goodman has conducted proceedings from start to finish is below any reasonable or rational international standard on human rights. There was a pattern of refusing adjournments on no reasonable basis...causing significant injustice and unfairness the claimant and the claimant solicitor right to a fair trial under article 6”. This goes on to discuss the day of the liability trail when the claimant produced her 2007 mortgage application, the refusal to postpone the costs hearing on 25 June 2019, and the refusal to adjourn (the word used, not postpone) 14 June 2022.[14]Rule 72(3) provides: “Where practicable, the consideration under paragraph (1) shall be by the Employment Judge who made the original decision or, as the case may be, chaired the full tribunal which made it”. “Practicable” suggests practical reasons, such as the unavailability, short or long term, of the relevant judge or tribunal panel. If there is an allegation of bias, that is properly dealt by the tribunal itself, or on appeal. Parties cannot choose their tribunals.[15]I understand that bias did not form part of the grounds of appeal against the November 2018 liability judgment. This was made clear by Mr Stephenson at the January 2022 case management hearing, which was held to clarify why the claimant’s solicitor asserted that the EAT had remitted the case to a different tribunal (it became clear it had been remitted to the same tribunal) when the counsel for the claimant argued that the tribunal would be partial (but not biased) because of their November 2018 finding that the claimant could not always be taken at her word. It is not clear why it is raised now.[16]Reasons were given in June 2019 not to postpone the costs hearing. It is not clear why those reasons are not challenged. The claimant was not represented at that hearing because the claimant’s solicitor had emailed the day before saying she was no longer on the record.[17]Reasons were given in the December 2022 judgment why the postponement application was refused, and this reconsideration application does not lay out any matter to show why this should be reconsidered. As for adjournment on 14 June, when Mr Stephenson was overcome and unable to continue, my note shows that everyone was invited to turn off their cameras and for Mr Stephenson to turn his on again if he felt able to continue. Mr Stephenson’s email of 20 December 2022 gives his account of this episode. The claimant’s solicitor argues that she was not given a fair hearing on the wasted costs application against her “when it was clear (he)..was not fit”. The claimant’s solicitor would be expected to have arranged a means of communicating with counsel during the hearing had she wished him to seek a longer adjournment, or could have switched on her microphone to speak herself.[18]The hearing note shows that once we moved past the point about misleading the tribunal, Mr Stephenson made other submissions calmly, including, by reference to Ridehalgh, that the claimant’s solicitor should have the benefit of the doubt because of possible conflict. After making a number of points, counsel was asked if there was to be any evidence of the claimant’s means. Then Ms McGuigan spoke (from 4.46 pm) about production of the 2007 mortgage application. As she had made this point, she was asked if she also wanted to comment on the respondent’s submission that she was not asking the claimant about disclosure points, while specifically told she did not have to answer, and was not giving evidence. She then said the claimant was aware of all correspondence from the respondent, she had acted always on instructions, there was no intention to mislead (this must have been a reference to the mortgage application, and that she did not let the client control the process. I have reproduced this because it shows that if Ms McGuigan considered counsel unfit, or was for some reason unable to communicate with him, she had the opportunity to seek an adjournment so she could communicate with him, or to adjourn to the following day (which the panel had set aside for decision making), or to a later date to be fixed, or to add submissions herself.[19]Ms MsGuigan suggests she could not speak because muted. Participants are always asked to mute themselves unless speaking, to reduce the risk of extraneous noise, but they are only muted by the tribunal exceptionally, as where there are large numbers of observers coming and going. This is because it can be laborious to mute all participants and then unmute those who may wish to speak at some point, while asking them to mute themselves.[20]If bias is a ground for overturning any part of the costs and remedy judgment, it should have been raised at the costs and remedy hearing, or should now be addressed on appeal. Witness Statements and Hearing Bundles[21]The application complains the tribunal did not hear evidence at the remedy and costs hearing. Directions for filing witness statements were made in the January 2022 case management orders, but nether side did, so the tribunal relied on its 2018 findings and inferences made from those. As for a complaint that the respondent had selected and omitted relevant documents from the bundle, we had the original trial bundle as well as the bundles filed for the costs and remedy hearing and it was open to the claimant to point out relevant omissions. The claimant did attach to her written submissions of 1 June 2022 hearing a letter from the respondent’s solicitor of 9 July, and later emails (e.g.16 July) but not the 9 July emails which she says were omitted. The tribunal does not know what these emails say. Remedy[22]There are short points on remedy. These include a protest that it was “absurd” to find conduct a reason to reduce the award when the appeals had concluded the contract was not illegal at the time of dismissal. In the context of an application to reconsider, whether there was misconduct is an appeal point. This appears to be an appeal point. It is suggested that illegality in 2014-2017 (found not to bar enforcement of the contract after 2014), rather than misconduct or dishonesty, was the reason for the reduction. Illegality is not the same as misconduct. Otherwise, this is an appeal issue. The arguments were made at the June hearing.[23]On the ACAS uplift award, it is pointed out that the claimant had asked for an appeal and did not get a reply. There was no mention at the hearing that this was the case. The submission (both in writing and oral) for the claimant was that she was not invited to a meeting or to an appeal meeting, asking for a 20% award. We knew she was not invited to appeal, as well as not being offered a dismissal meeting, and we decided in the round to award 10%, for the reasons given. It is not clear how not offering an appeal when it was requested, the point now being made, was worse than not offering one to begin with. Costs[24]There is a complaint that the tribunal ordered wasted costs against Ms McGuigan because of the 2007 mortgage application. In paragraph 95 the suggestion that there was pressure on counsel to apply to redact the document in a misleading way was explicitly discounted as speculative, and paragraph 104 says the 2007 mortgage application was not taken into account.[25]There is an argument that the wasted costs order is wrong because the claimant’s solicitor cannot breach privilege. This is matter for appeal, rather than reconsideration. The arguments was made at the hearing and considered by the tribunal and if we were wrong, that is for an appeal.[26]There is an argument that the tribunal held it against the claimant that she had “improved” the staff list document while ignoring that she was being asked to prove her status. The dispute here was not whether she was employed, but what the term of the contract was as to remuneration, and in our (2018) finding she had (dishonestly) “improved” the document after the event in order to boost her case that the agreed term was net of tax. We found that the claimant’s solicitor had had drawn to her attention that the document had been altered and asked to show when and how this occurred, and we inferred that the claimant’s solicitor had failed to supervise disclosure properly by not dealing with this.[27]There is an argument that the reasoning for making a wasted costs order fell short of the standard required, by reference to the decision in Wentworth-Wood v Maritime Transport (2018) UKEAT/0184/17. It for an appeal tribunal to decide whether the reasons are adequate to explain the order made.[28]There is an argument, having regard to SW v UK 87/18 that the wasted costs order relied on findings arising outside the original judgment and was therefore unfair. In SW damage was done by a judge’s direction to inform local authorities and professional bodies of a finding that had not been alleged in the hearing so that the social worker, who was not a party but a professional witness had no opportunity to be heard. Dealing with the points made in the reconsideration application (57), the respondent raised the disclosure point about Mr Kitching and the claimant’s diaries or notes produced to him; this was part of their disclosure application, the claimant’s solicitor cannot have been taken unawares by this; the notes of cross examination are in the supplemental bundle for the costs hearing, the relevant passage is on page 269. The claimant’s solicitor, unlike SW, was aware there was an application against her and was represented and present. On HMRC, the claimant’s tax adviser’s letter about giving her national insurance number was before the tribunal at the costs hearing, and we had heard what she said at the June 2019 hearing, mentioned in the written reasons prepared at the request of the claimant’s solicitor. In the bundle is the respondent’s December 2018/January 2019 correspondence with HMRC. The argument that the tribunal should have made a finding of its own initiative that disclosure had not been properly supervised is not understood, the respondent made the point in the December 2018 costs application. The claimant could have made this argument at the costs hearing. Finally, there is a complaint the tribunal made new findings of illegality, but it is not clear what these are said to have been.[29]The point about witness statements about Peter Cathcart was made in the liability hearing, and we made a finding on that – see paragraph 18 point 3. We were not referred to anything on this at the June 2022 costs hearing.[30]On what costs were caused by any failings, we were aware of the guidance in McPherson and Yerrakalva; if the reasons are inadequate this is probably better addressed on appeal.[31]In the letter of 23 December it is said the June 2022 hearing should not have been postponed on grounds of potential delay because the judge knew she was about to take a 3 month sabbatical. I comment on this that there was no sabbatical, nor was I away for 3 months. Insofar as I was absent it was by reason of ordinary annual leave, and the difficulty in completing the written judgment was the listing of several multi-day hearings from September. Instructions were given to the administrative staff on 26 August that a judgment could be expected by the end of September, and on 9 November to write to say two writing days had been allocated for 24/25 November and a decision could be expected thereafter.[32]I conclude there is no reasonable prospect of showing it is in the interest of justice to reconsider the judgment. Some of the points made were or could have been made at the hearing, and there must be finality. Others are more appropriate for an appeal. Respondent’s Application to Reconsider[33]The respondent’s brief application concerns the brief fee of Mr Laddie QC for half a day when the 2007 mortgage application was unexpectedly produced and an application was made to redact it prior to production. The amount is found in paragraph 92 of the costs judgment. The tribunal decided not to make a wasted order for this against Mr Stephenson. The respondent seems to ask whether this amount should be ordered against Ms McGuigan in addition to the £20,000 ordered. Our finding on failings in disclosure was to leave the mortgage application on one side (paragraph 104), and we had discarded as speculative the question of whether there was pressure on or from the solicitor to make the redaction application, or to make it for reasons other than the risk of selfincrimination. There is no reason to later that in the interests of justice.