Mr A Stoica v 3D Personnel Ltd and S & S Consulting Services (UK) Ltd: 2223320/2024
EMPLOYMENT TRIBUNALS
Case No 2223320/2024
Between
Mr A StoicaClaimant3D Personnel Ltd and S & S Consulting Services (UK) LtdRespondent
Before
Employment Judge B SmithIn person for claimantDate 28 April 2025
REASONS
[1]These are the Tribunal’s reasons for finding (by Judgment dated 14 February 2025) that the claimant was not an employee or worker of the first respondent at the relevant time, and accordingly the complaints of unauthorised deductions of wages and holiday pay against the first respondent were dismissed. The Tribunal had also found that the claimant was an employee of the second respondent.[2]The claimant brings claims of unauthorised deductions from wages and unpaid holiday pay.[3]The Tribunal confirmed the scope of the preliminary hearing (in public) with the parties at the start of the hearing. This included making findings about who the claimant’s employer was (by order of EJ Forde dated 18 November 2024). The Tribunal considered a documents bundle of 221 pages and witness statements from Ciaran Greene of the first respondent and Joanne Brookefield of the second respondent. After further enquiry, emails dated 27 January 2025 and 13 February 2025 with attachments that the claimant relied on as his witness statement was also obtained and considered by the Tribunal (including the attachments). Although these were served late, the respondents were given time to consider them and no material prejudice arose from this. The respondent also relied on an authorities bundle.[4]In summary, the claimant worked for one of the respondents between 27 June 2024 and 10 July 2024 as a labourer. The first respondent is an employment agency that places temporary workers into assignments. The second respondent is an umbrella company whose primary purpose is to contract with operatives such as the claimant and supply their services to recruitment agencies such as the first respondent who in turn supply services to the end client. Both specialise in the construction industry.[5]All witnesses, including the claimant, gave evidence under oath or affirmation. No adjustments were requested or required by the parties or witnesses.[6]The claimant represented himself. The first respondent was represented by its Director, as above, and the second respondent by a litigation executive.[7]The Tribunal explained matters clearly to the claimant, as a litigant in person, and took that into account when making its decisions. Both sides were given an opportunity to make closing (oral) submissions.[8]The definition of employee is covered by s.230(1) ERA 1996: ‘an individual who has entered into or works under … a contract of employment.’[9]Applying s.230(2), a contract of employment ‘means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing).’[10]Section 230 ERA includes: (3) In this Act “worker” (except in the phrases “shop worker” and “betting worker”) means an individual who has entered into or works under (or, where the employment has ceased, worked under)—(a) a contract of employment, or(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly.[11]The multiple test for determining the presence of a contract of service includes, using the language used in caselaw, that: an agreement exists to provide the ‘servant’s’ own work or skill in the performance of service for the master (‘personal service’) in return for a wage or remuneration; in the performance of that service, the servant agreed expressly or impliedly to be subject to a sufficient degree of control form another to make that other their master, and the other provisions of the contract are consistent with a contract of service: Ready Mixed Concrete (South East) Limited v the Minister of Pensions and National Insurance [1968] 2 QB 497.[12]A contract of employment cannot exist without the irreducible minimum mutuality of obligation and a sufficient degree of control: Ready Mixed Concrete. For a contract of employment to exist there must be an irreducible minimum of obligation on each side: Carmichael and anor v National Power plc [2000] IRLR 43.[13]Generally, if one of the factors of personal service and substitution rights, control, and mutuality of obligation are not met, there is no contract of employment. Even if there is a significant degree of control, if there is no mutuality of obligation there will be no contract of employment: Cheng Yuen v Royal Hong Kong Gold Club [1998] ICR 131. The possibility of future offers of work is not enough; a framework for a series of successive ad hoc contracts of service is not necessarily enough: Carmichael.[14]The documentary position is not necessarily determinative, nor necessarily the starting point, and I must also consider the reality of the situation: Uber BV and others v Aslam and others [2021] UKSC 5. The conduct of the parties and other evidence may show that the written terms were in fact understood and agreed to be a record, possibly an exclusive record, of the parties’ rights and obligations towards each other. However, there is no legal presumption that a contractual document contains the whole of the parties’ agreement and no absolute rule that terms set out in a contractual document represent the parties’ true agreement just because an individual has signed it: Uber at [85].[15]The parties’ intentions may be a relevant factor but it is the substance of the situation that should be given significant consideration. The way in which an individual is taxed is not, on its own, determinative of employment status.[16]In James v Greenwich London Borough Council [2008] ICR 545 it was held that in cases involving an agency worker, the real question was whether it was necessary, in the tripartite setting of worker, employment agency and end-user, to imply a contract of service between the worker and the enduser to explain the provision of work by the worker to the end-user, or the end-users payment of the worker via the agency. This is to be decided in accordance with the common law principles of implied contract. It is open for the Tribunal to make the appropriate findings if sham arrangements are used.[17]It was not necessary to expressly consider every element of the law (above) on employee status in this case. This is because the issue in dispute was whether the claimant was an employee or worker of the first, or second respondent, or potentially both, ie. the identity of the employer, as opposed to the specific status with any particular potential employer. The claimant’s case was that he was employed by the first respondent. The respondents’ case was that the claimant was employed by the second respondent only. I accepted, as a matter of principle, that in some situations an employee can have more than one employer.[18]I make the following findings.[19]I accepted the evidence of Mr Greene and Ms Brookfield on the issues relevant to the determination of who was the claimant’s employer. This is because there was no good reason to doubt their evidence which was broadly consistent with the documentary position. This includes that the claimant was not forced to sign a contract with the second respondent. The Tribunal accepted Ms Brookfield’s supplementary evidence that this was the case and there was always a choice given a choice on telephone calls about this. I did not find the claimant’s evidence particularly helpful in deciding who his employer was. In any event, the documentary position was clear in this case and there was no good reason or evidence to find that the reality of the situation was something other than that which had been documented (save, potentially, for the rate of pay, which is outside of the matters to be determined as a preliminary issue).[20]More specifically, the claimant signed a contract of employment with the second respondent dated 27 June 2024. The signature was dated 7 October 2024 but nothing material arises from this. Standard terms of business between the two respondents were dated 1 April 2021 in their respective roles.[21]The claimant had registered with the first respondent by signature dated 26 June 2024. The documents clearly state that the first respondent was an employment business which would seek to find the claimant work under a contract for services in accordance with attached terms and conditions. The documentation included a ‘Declaration’ ‘[1] I understand that I am employed under the 3D Personnel Ltd Terms of Engagements…[12] Unless I otherwise state in writing below, I confirm my acceptance that if paid via a third party intermediary / umbrella company on a PAYE scheme, that my weekly earnings will be paid at the agreed rates with advance payment of holiday pay that will be clearly shown separately on my payslip. I understand that holiday pay will not be accrued and will be paid in advance.’ The document has the claimant’s name and signature repeated, also dated 26 June 2024.[22]The first respondent’s ‘Key Information Document – PAYE’ states ‘Name of employment business / your employer: 3D Personnel Ltd; Type of contract you will be engaged under: Contract for Service; Who will be responsible for paying you (if different from your employer): 3D Personnel Ltd (bundle page 116). The terms continue to state that at paragraph 2.1: These Terms constitute the entire agreement between the Employment Business and the Agency Worker for the supply of services to the Hirer…[23]Employment Business is separately defined as the first respondent. Further at 2.2: ‘During an Assignment the Agency Worker will be engaged on a contract for services by the Employment Business on these Terms. For the avoidance of doubt, the Agency Worker is not an employee of the Employment Business although the Employment Business is required to make the Deductions from the Agency Worker’s pay. These Terms shall not give rise to a contract of employment between the Employment Business and the Agency Worker, or the Agency Worker and the Hirer. The Agency Worker is supplied as a worker, and is entitled to certain statutory rights as such, but nothing in these Terms shall be construed as giving the Agency Worker rights in addition to those provided by statute except where expressly stated.’[24]Also, at [3.1]: The Employment Business will endeavour to obtain suitable Assignments for the Agency Worker to perform the agreed Type of Work. The Agency Worker shall not be obliged to accept any Assignment offered by the Employment Business.’[25]However, the claimant also signed documentation with the second respondent. This included ‘PAYE Umbrella Contract and Terms of Employment’, and enclosed ‘Contract of Employment’ and a disciplinary procedure, disciplinary rules, and grievance procedure within an Employee Handbook. The cover letter included ‘As your employer, we will employ you and provide work to you. In accordance with the contract of employment, you will be an umbrella employee of SSC. As an umbrella employee of SSC, you have a permanent contract of employment with full statutory employment rights’.[26]The documentation makes it clear that the second respondent would undertake proof of identity and required an eligibility to work in the UK declaration. It also refers to an ‘overarching contract of employment’. It refers again to the claimant being an employee and 27 days annual leave. The full documented Terms and Conditions of Employment name the second respondent as the employer with employment with effect from 27 June 2024 (paragraph 1.1). Holiday pay is defined in section 8 and is for 28 days (including bank holidays) per year, prorated if the employee worked for less than a full year. The holiday year is the calendar year (8.2). It has all the hallmarks of a normal contract of employment. The document was signed by the claimant on a date unclear, and also signed by the respondent. The claimant signed the declaration of eligibility to work on 7 October 2024.[27]There was also an Assignment Schedule which includes 3D Personnel Limited as the client company for an assignment starting 27 June 2024 between the second respondent and the first respondent.[28]By email dated 10 July 2024 the claimant was invited by the second respondent’s payroll email address to sign a document; he replied on the same day asking for the correct contract with his full name, not just his first and last name. A further email that day included ‘Really?? You know what? Fuck this. Stealing my money from me. Rhe contract it’s suspended from this moment.’[29]The first respondents also had a contact log list recording voicemails with the claimant. It also records that as of 9 July 2024 the first respondent had agreed with the second respondent to not charge a company margin, and that he had been credited for the previous week’s company margin payment (9 July 2024). On the same day, the communications evidenced in a contact log include that the first respondent operates as an employment business and that the claimant had been offered terms and conditions for a PAYE contract and that he had already chosen the payroll company to use from an approved list, and that the claimant had received their terms and conditions and agreed to them. Importantly, this also confirms that their terms and conditions supersede the terms and conditions previously offered by the first respondent (such as an earlier message 15:50 stating that the name of the employment business / your employer was 3D Personnel Ltd, and ‘Who will be responsible for paying you (if different from your employer): 3D Personnel ltd’). It also says that the claimant would also receive a new Key Information Document from the payroll company which supersedes the one previously sent by the first respondent (ie. the information above suggesting that 3D Personnel were the employer and responsible for payment). This communication was sent at 15:51 on 26 June 2024. The contact log then confirms the placement dated 26 June 2024 being communicated to the claimant at 14.41 per hour, at 16:00 (p196) and ‘This agreement shall be deemed to have been accepted on the earlier of you: a) Written confirmation by responding to this email; or b) Commencement of your assignment.’[30]The P45 names the second respondent as the employer. The payslips are from the second respondent and names them as the employer and the first respondent as the client.[31]I find that the claimant met the test for employee status set out above with the second respondent. The second respondent did not dispute that position. I accept the second respondent’s submissions that the claimant was under an express contract of employment with the second respondent alone, and that the parties operated on that contract (generally). The payments and invoices were consistent with the contractual arrangements being between the first and second respondent for the supply of labour and the second respondent being the claimant’s employer as opposed to the first respondent.[32]I considered James v Greenwich Borough Council, above. However, I do not find that there is any requirement or need to imply a contract of employment between the claimant and the first respondent. This is because there is no good reason to do so, on the evidence or otherwise. None of the Tribunal’s findings include an implied contract between the claimant and the first respondent. The existing direct and written contracts were sufficient to explain the situation and payments made between the various parties.[33]I also find, specifically, that there was no contract of employment (express or implied) between the claimant and the first respondent. This is because there is no sufficient evidence that this was the case, taking into account what happened and the documentary position above.[34]I also find, specifically, that the claimant was not a worker of the first respondent. There was no contract (express or implied) that the claimant undertakes to do or perform personally any work or services for the first respondent so as to meet the test outlined in section 230 ERA.[35]Also, there was nothing about the reality of the situation that suggested that in fact there was a contract of employment (or similar) or that the arrangements amounted to employee or worker status between the claimant and the first respondent. There is also no evidential basis for making a finding of any kind of sham arrangement such that an implied contract between the claimant and the first respondent was present.[36]I also consider that any relevant contract as might have established employee or worker status between the claimant and the first respondent were clearly superseded by the arrangements entered into with the second respondent. This is clear from the documentary evidence set out above. I am satisfied that this reflected the intention of the parties, given the witness evidence and absence of good reason to find otherwise. Although it is important to the claimant that the (higher) hourly wage he claims was communicated to him by the first respondent (as opposed to the default national minimum wage in the second respondent’s contract), this is insufficient to establish a contract between him and the first respondent. An alternative analysis, namely that the first respondent may have been acting as the second respondent’s agent in communicating the hourly wage for the work, is a better explanation and is more consistent with the documentary evidence and communications between the claimant and respondents.[37]There is also no sufficient reason (as a matter of evidence or logic) to find that the claimant had two employers (or was a worker of both respondents) in the circumstances of this case.[38]Whilst this decision is determinative of the identity of the claimant’s employer, I stress that this decision is not determinative of the exact contractual provisions between the claimant and the second respondent (in particular, the payment rate). That will be a matter for the final hearing. Nothing in this decision precludes a finding at the final hearing that, for example, the first respondent was acting as the second respondent’s agent (in the legal sense) in communicating the pay rate to the claimant.[39]It has been assumed by the Tribunal that the claimant’s request for written reasons is limited to the above issues. If either party wishes to request written reasons for the Tribunal’s decision to refuse the second respondent’s application to strike out the claim, alternatively for a deposit order, they may be requested within 14 days of the date these Reasons were sent to the parties. Approved by
Findings of Fact
[40]Acas early conciliation started on 17 July 2024 and the certificate was issued on 17 July 2024.[41]The claim was presented on 10 July 2024.[42]The Claimant worked for 10 full days for the Respondent, at 8.5 hours per day. I accepted the Respondent’s calculations of the amounts due to the Claimant, if he were to be paid £14.41 per hour, rather than £11.44 per hour.[43]The Claimant confirmed that he had, in fact, received the payments shown in the payslips at pp 141 – 146 of the bundle. Those payments included payment at £11.44 per hour for 8.5 hours a day for 10 days, plus an additional payment of 12.07% for each hour, for holiday pay.[44]Those payments totalled £1,025.12 net.[45]The total the Claimant should have received at a payrate of £14.41 per hour, plus 12.07% holiday pay, was £1218.33 net.[46]The difference between those figures was £193.21 net. Relevant Law - 6 -
Relevant Law
[47]Under Regs 13 & 13A Working Time Regulations 1998 workers are entitled to take paid holidays and to be paid holiday pay. The right under Reg 13 is 4 weeks; the right under Reg 13A is 1.6 weeks, meaning that a worker has a right to 5.6 weeks paid holiday. Under Regulation 14 WTR 1998, an employee is to be entitled to be paid, at termination of employment, the proportion of holiday that he is entitled to in proportion to the holiday year expired but which has not been taken by the employee during that time.[48]Regulation 14(3) provides for calculation of the amount of holiday pay due in these circumstances as follows: (A x B) less C, where A is the period of leave to which the worker is entitled, B is the proportion of the leave year expired and C is the period of leave taken. 49. s13 Employment Rights Act 1996 a worker has the right not to suffer unauthorized deductions from wages. By s27 ERA 1996 “wages” is defined. By s27(1), “In this Part “wages”, in relation to a worker, means any sums payable to the worker in connection with his employment, including: a) any fee, bonus, commission, holiday pay or other emolument referable to his employment whether payable under his contract or otherwise. …” .[50]An agent's actual authority is defined by the terms of any express or implied agreement between principal and agent. The principal is also liable for acts done within the agent's ostensible authority, Freeman & Lockyer v Buckhurst Park Properties [1964] 1 All ER 630.. Discussion and Decision[51]On the facts, I found that the Respondent and 3D Personnel Limited had put in place arrangements between themselves whereby the Respondent impliedly authorised 3D Personnel to set the terms on which the Claimant was engaged to work for the Respondent.[52]On the facts, it was 3D Personnel Limited who agreed with the Claimant that he would work for the end user. It was 3D Personnel who told the Claimant to start work at 07.30 on 27 June 2024, the location he was to work at, what to bring with him and his hours of work.[53]I found that the Respondent must have permitted 3D Personnel to do that on its behalf. The Respondent had had no contact with the Claimant itself, but accepted that he was employed by it from that date. Only 3D Personnel had communicated with the Claimant at that time. 54. 3D Personnel used contractual language to the Claimant. I found that the Respondent allowed it to do so, by permitting it to undertake the engagement process on its behalf.[55]The Claimant received no other contractual terms from the Respondent before starting work for the Respondent. - 7 -[56]Given that 3D Personnel Limited had informed the Claimant of the terms on which he would start work, and the Respondent accepted him as an employee from that date, but had not itself provided the Claimant with any terms of employment, I found that there was an implied agreement between the Respondent and 3D Personnel that 3D Personnel would act on its behalf in agreeing the terms on which the Claimant would start work for the Respondent.[57]That being the case, I found that the contractual rate of pay for the Claimant pursuant to his contract with the Respondent was £14,41 per hour. That was the rate which 3D Personnel repeatedly told the Claimant when setting the terms of his engagement.[58]Even when the Respondent did send further contractual terms, the terms relating to pay did not contradict what 3D Personnel had told the Claimant. The relevant clause said, “Your rates of pay will at all times be no less than the current National Minimum Wage in force in the UK per hour worked. Enhanced rates may be applicable depending on the work you are required to perform. Where enhanced rates or overtime rates are applicable you will be notified of this prior to the commencement of the work.” (clause 3.5). The rate of £14.41 was indeed, “…no less than the current National Minimum Wage…” and the Claimant had been, “…notified of this prior to the commencement of the work.”[59]The Respondent did not pay the Claimant at that hourly rate. It did pay him £11.44 for 8.5 hours for 10 days work, plus 12.07% on top for each hour, for holiday. The Claimant received those sums.[60]I accepted the Respondent’s evidence, shown by calculations, that the total the Claimant should have received at a payrate of £14.41 per hour, plus 12.07% holiday pay, was £1218.33 net.[61]The difference between the pay the Claimant did receive and the pay he should have received was £193.21 net.[62]The Respondent made unlawful deductions from the Claimant’s wages in the sum of £193.21. I order the Respondent to pay that amount to the Claimant on account of unlawful deductions from wages.