Ms P Macaulay v J Holmes and Government of Jersey: 2301747/2022 and 2302032/2022
EMPLOYMENT TRIBUNALS
Case No 2301747/2022, 2302032/2022
Between
Ms P MacaulayClaimantJ Holmes and Government of JerseyRespondent
Before
Employment Judge A M SnelsonDate 5 August 2024
JUDGMENT
On hearing Mr S Brochwicz-Lewinski, counsel, on behalf of the Claimant, Mr A Roberts, counsel, on behalf of the First Respondent, and Ms D van den Berg, counsel, on behalf of the Second Respondent, the Tribunal determines that:(1) The Claimant fails to establish that she was at any material time a contract worker for the purposes of the Equality Act 2010, s41.(2) The Tribunal does not have territorial jurisdiction to consider the Claimant’s claims.(3) Accordingly, all claims in both sets of proceedings are dismissed.
REASONS
FOR THE JUDGMENT ON PRELIMINARY HEARING
Introduction
[1]The Claimant, Ms Phopy Macaulay, provided change management consultancy services to the Second Respondent (‘GOJ’) between 11 October 2021 and 1 February 2022. By proceedings commenced in 2022 in the London South Region she brought complaints under the Equality Act 2010 (‘the 2010 Act’) of direct discrimination and harassment against GOJ as ‘end user’ and the First Respondent, Mrs Holmes, as its agent.[2]The claims were resisted on substantive and jurisdictional grounds.[3]There was a lengthy case management process, which I do not need to summarise. The upshot was that, by an order issued following a preliminary hearing for case management on 25 April this year, EJ Woodhead directed that a public preliminary hearing be held to determine four issues, namely:(1) Between 11 October 2021 and 4 February 20221, was the Claimant a contract worker for GOJ under the 2010 Act, s41?(2) Does the [Employment] Tribunal of England and Wales have international jurisdiction to hear the claim?(3) Does the territorial scope of the 2010 Act extend to the claims?(4) Does the Tribunal have jurisdiction to hear a claim against Ms Holmes if it does not have jurisdiction to hear the claim against GOJ?[4]That preliminary hearing came before me on 26 July this year with two sitting days allocated. The parties were represented by counsel: Ms Macaulay by Mr Stefan Brochwicz-Lewinski, Mrs Holmes by Mr Allan Roberts and GOJ by Ms 1 Nothing turns on the small difference between the latter date and the date of 1 February 2022 given in the statement of agreed facts. Daisy van den Berg. I am grateful to all three for the industry which they prepared their submissions.[5]In the event, I was able to hear evidence from Ms Macaulay and Mrs Holmes and the closing arguments of counsel on the first of the two sitting days allocated, and I elected to reserve judgment at that point in order to spare the parties the cost and trouble of attending on the second day. Owing to pressure of work, I was not in a position to issue a decision with reasons shortly after the hearing as I had hoped, and since a final hearing was listed for a date in September and, in light of my decision, it was necessary to vacate that hearing, I caused a judgment in short form to be sent to the parties (which was promulgated on 8 August), dismissing all claims. These are my reasons for that judgment. I regret that there had been some delay in producing them, which has resulted from a combination of work pressure and my absence on a period of leave.
The facts
[6]At my request, the parties submitted a statement of agreed facts (‘Agreed Facts’) following the hearing. A copy is appended. I Adopt in these reasons the abbreviations used in that document.[7]A key point on which the parties did not agree was whether Ms Macaulay was at any material time ‘employed’ by her service company, MCL, for the purposes of the 2010 Act, s83(2), which defines ‘employment’ as ‘employment under a contract of employment, a contract of apprenticeship or a contract personally to do work’. She incorporated MCL in 2019. She is its sole director and has a 75% shareholding. She is the guiding hand of the company. She gave evidence on the subject of her relationship with MCL which was, in my view, most unimpressive, amounting to little more than mere assertion. Under crossexamination she presented as a confused and unreliable witness. She accepted that there was no written contract of employment (or indeed any other kind of contract in writing) between MCL and her. Since, on her own case, it was a oneperson company, her logic would appear to be that she was employed under an oral contract of employment with herself (acting on behalf of the company). She did not claim to have entered into any such oral agreement. She produced no document evidencing any oral contract. She produced no tax documentation. She said that she was the sole employee of MCL and drew a salary and dividends but she produced no document evidencing either form of payment or otherwise tending to substantiate an employment relationship between the company and her. She did not identify the level of the ‘salary’ which she claimed to have received, the period over which it was paid or the work in respect of which it was paid and eventually accepted that what was paid into her bank account over the relevant period varied from time to time according (seemingly) to income received by MCL and that company’s outgoings. (Of course, she being the single, guiding hand of the company, it was she who determined when and in what sums those payments would be made.) Issue (1)[8]The 2010 Act, s41 includes: (5) A ‘principal’ is a person who makes work available for an individual who is –(a) employed by another person, and(b) supplied by that other person in furtherance of a contract to which the principal is a party (whether or not that other person is a party to it). (6) ‘Contract work’ is work such as is mentioned in subsection (5). (7) A ‘contract worker’ is an individual supplied to a principle in furtherance of a contract such as is mentioned in subsection (5)(b).[9]In my view, the practical reality disclosed by the evidence is that Ms Macaulay provided consultancy services to GOJ. The contractual architecture of the GOJ-Comma contract (and ultimately the GOJ-Odgers contract) necessitated an arrangement by which she was supplied to GOJ by Comma. And it was in keeping with the ‘consultancy’ model agreed between Comma and GOJ that she should operate through a service company. It also suited her to do so. This explains the chain of contracts referred to in the Agreed Facts. I accept that each contract was proper and bona fide. Comma agreed with GOJ, explicitly in the capacity of an independent contractor, to deliver the required services to GOJ directly or through subcontractors. By the Comma-MCL contract, Comma exercised the right to subcontract its obligations to MCL. There can be no basis for suggesting that MCL thereby became subject to obligations to Comma any weightier than those which Comma owed to GOJ. MCL simply came under a duty to perform Comma’s (independent contractor) obligations to GOJ. MCL could have entered into a contract with Ms Macaulay for the provision of the services, but I find that it did not do so. Had that course been taken, it would have fallen to the Tribunal to analyse the terms of the contract in order to determine its legal character. But, on my factual findings, I am satisfied that no contract (express or implied) for the provision of services was entered into between MCL and Ms Macaulay. It follows that she did not come under any obligation to MCL to perform work. At most, the sole obligation was the other way, requiring MCL to pay her appropriately in respect of such work as she undertook for GOJ.[10]If this is wrong, I would hold in the alternative, in agreement with Ms van den Berg and Mr Roberts, that if any contract to do work came into existence between Ms Macaulay and MCL it was one under which she had the status of an independent contractor. In the preceding paragraph I stated that I could see no basis for supposing that MCL’s obligations to Comma were any greater than Comma’s obligations to GOJ. By the same token, there seems to me to be no arguable basis for saying that Ms Macaulay’s obligations to MCL could have been any greater than MCL’s obligations to Comma. I did not understand Mr BrochwiczLewinski to advance such a submission.[11]It is clear that the ‘contract’ required by s41(5)(b) need not be between the principal and the contract worker. An unbroken chain of bona fide contracts between the person who supplies the worker and the person who agrees to provide the services to the principal is no obstacle to the worker having the status of a contract worker: MHC Consulting Services Ltd v Tansell [2000] ICR 789 CA. But it is rightly common ground between the parties that an employment relationship (within the meaning of the 2010 Act) must exist between MCL and Ms Macaulay. On my primary and secondary findings above, that essential requirement is not satisfied and I therefore conclude that Ms Macaulay cannot bring herself within the definition of a contract worker under s41. Her case that she was ‘employed’ by MCL is one for her to prove. I find that she signally fails to do so. That being so, her claim necessarily falls at the first hurdle.[12]Finally, I should add that I was not taken to the authorities which deal with the legal feasibility of an employment relationship existing between a company and its sole shareholder, particularly Secretary of State for Trade & Industry v Bottrill [1999] ICR 592 CA and the line of cases which followed it. These show that a sole shareholder may be an employee but there needs to be a sound evidential basis for such a conclusion. The tribunal of fact must start with the question whether a genuine contract is demonstrated. This is likely to turn on sub-questions concerning the process by which the alleged contract is said to have come into existence, the purpose for which it is said to have been created and what each party is said to have done pursuant to its terms. Even if the tribunal of fact is persuaded of the existence of some sort of contract, it is a large step from there to the conclusion that the individual is an employee or ‘worker’ of the company. The analysis will then need to address, among other things, the matter of control. Where is the real control? Is the director/shareholder answerable only to herself? Is there any means by which she can be dismissed? Having found on the facts that no relevant contract is established, I hold back from ruling that Ms Macaulay’s case on Issue(1) is in any event impossible as a matter of law, but the host of legal obstacles in her path speak for themselves. Issue(2)[13]EJ Woodhead specified that, in order to address Issue (2), the Tribunal must enquire whether it is the applicable forum under the Civil Jurisdiction and Judgments Act 1982 (‘the 1982 Act’), s15C(1) and in particular(i) whether Ms Macaulay was employed under an individual contract of employment (s15C(1)); and(ii) if so, whether she habitually carried out work from the United Kingdom (s15(2)(b)). There was, rightly, no contest between the parties on sub-question (ii): Ms Macaulay certainly did habitually carry out her work from the United Kingdom. The parties disagreed, however, on sub-question (i). Moreover, Mr BrochwiczLewinski submitted that even if Ms Macaulay failed on that sub-question there were other routes by which the Tribunal could, and should, find that it had international jurisdiction.[14]So far as material, the 1982 Act, s15C provides(1) This section applies in relation to proceedings whose subject-matter is a matter relating to an individual contract of employment.(2) The employer may be sued by the employee – (a) [not applicable], (b) in the courts for the place in the United Kingdom where or from where the employee habitually carries out the employees work …[15]In Alfa Laval Tumba AB v Separator Spares International Ltd [2013] ICR 455, the Court of Appeal considered the concept of an ‘individual contract of employment’ under s15C(1). Longmore LJ remarked (para 24) that the question was whether the claims (by or against the employee) relate to the individual’s contract of employment and that the subsection proposed a ‘broad test’ which should be ‘comparatively easy to apply’. Davis LJ agreed (para 43), observing that the ‘relating to’ formulation involved ‘broad and unqualified words of nexus and do not require artificial limitation, even though it may be accepted that the nexus must be material’.[16]In Stena Drilling PTE Ltd v Smith [2024] EAT 57 the EAT held that an Employment Tribunal had erred in finding that, in a case arising out of an individual contract of employment, routes to international jurisdiction could be found outside the 1982 Act. The sole route to international jurisdiction lay in that Act. In explaining its reasoning, the EAT drew attention to the fundamental importance of differentiating between, and giving separate consideration to, ‘(a) the territorial scope of a domestic statute; (b) the applicable law relating to a contract or tort; and (c) the place (forum) where a case is determined’ (see Simpson v Intralinks Ltd [2012] ICR 1343 EAT).[17]In my judgment, Ms Macaulay’s position on Issue (2) is unsustainable. In fairness to Mr Brochwicz-Lewinski, I should record that he began with the proposition that s15C probably does not apply at all ‘as it is not a case by which [Ms Macaulay] seeks to sue an employer pursuant to rights deriving from an employment contract between the parties’ (skeleton argument, para 18). With that, I heartily agree. Making every allowance for the need to read the legislation broadly, I can find nothing in it to assist him. It is elementary that the relationship between a principal and a contract worker is not an employer/employee relationship. There is no contract of employment or indeed any other form of contract (see James v London Borough of Greenwich [2008] EWCA Civ 35 CA). And the language of s15C (specifically, subsections (1) and (2) taken together) could not be clearer. It is concerned with proceedings between an ‘employee’ and an ‘employer’. In these circumstances, I am entirely satisfied that, even if she had succeeded on Issue (1), Ms Macaulay would not have been able to characterise her claims as claims against her ‘employer’ within the terms of s15C.[18]For completeness, I place on record that, in support of his alternative argument, that s15C did apply, Mr Brochwicz-Lewinski submitted that the Tribunal should adopt a ‘purposive’ approach to the legislation, but did not ask me to read it as though any of its content were excluded or modified, much less propose any reason why I might have power to do such a thing.[19]I have already found that there was no employment relationship between Ms Macaulay and her service company, MCL. But, had I found otherwise, her position on s15C would not have been improved. Application of that section does not turn on her relationship with MCL. It turns on her relationship (if any) with GOJ. The reasoning in my last paragraph applies.[20]For the reasons given, the contention that s15C provides international jurisdiction in relation to Ms Macaulay’s claims must be rejected.[21]Mr Brochwicz-Lewinski’s primary argument was that it would be absurd and grossly unjust if Ms Macaulay could not pursue her remedy in the Employment Tribunal merely by virtue of falling outside the scope of the 1982 Act, s15C, and that there are ample alternative routes to international jurisdiction. I cannot accept that submission. I have four main reasons. In the first place, the argument presupposes that Ms Macaulay was a contract worker entitled to the protection of the 2010 Act. I have found that she was not. Secondly, I have been shown no legally coherent argument justifying the view that some alternative route to jurisdiction is available on the facts of this case. The Tribunal is a statutory forum: unlike the High Court, it has jurisdiction only in so far as Parliament has invested it with jurisdiction. Thirdly, I agree with Ms van den Berg and Mr Roberts that, to a large extent, Mr Brochwicz-Lewinski’s submissions fall into the error cautioned against in the Intralinks case. It is elementary that points on territorial reach cannot make good an argument about territorial jurisdiction. Fourthly, given that Ms Macaulay is not within the scope of the protection of contract workers under the 2010 Act, I fail to see why it should be seen as an affront to one’s sense of justice that she does not enjoy the special protection afforded to employees (in the broader sense) by virtue of the 1982 Act, s15C. The Brussels recast regime, largely replicated in the 1982 Act (in its current form), provided a choice of forum for employees which was more generous than the international jurisdiction rules for non-employee litigants, who were largely constrained to pursue claims in the member state where the defendant was domiciled. Post-Brexit, the UK can only guarantee that choice only under the 1982 Act (as amended). My function is to apply the law but, for what it is worth, I am aware of no policy ground for treating an independent contractor operating through her own service company as meriting the special protection which s15C offers.[22]For all of these reasons, I am satisfied that Ms Macaulay fails to establish international jurisdiction.[23]I would add that, in a case of an individual found to be a contract worker under the 2010 Act, s41, there might (or might not) be an interesting debate to be had as to whether, on established principles, domestic legislation would need to be treated as modified or ‘read down’ in order to safeguard the full width of protection which the 2010 Act exists to provide. But, given(a) my decision on Issue (1) and(b) the nature and scope of the arguments advanced here, this is not such a case. Issue (3)[24]I have not found Issue (3) difficult. Counsel have reminded me of the familiar authorities commencing with Lawson v Serco Ltd [2006] ICR 250 HL. I have the well-known principles very much in mind. As Lord Hoffmann observed in that case, the employee working in Great Britain is a ‘paradigm’ case. Rarely will such a person seeking to enforce employment rights in Great Britain fail on the ground that the legislation invoked does not extend to him or her.[25]I attach limited weight to the fact that Ms Macaulay’s services were provided for the benefit of a foreign entity. I agree with Mr Brochwicz-Lewinski that, for the purposes of territorial reach, the place where the work is being done is more important. I also attach little weight to the fact that the law of the GOJ-Comma contract was GOJ law. That says very little about the connection between the parties to these proceedings and domestic, statutory employment law. I am mindful that the law of the Comma-MCL contract was the law of England and Wales. I have noted all the other points made by Ms van den Berg (supported by Mr Roberts) but I see very limited force in them. She made the best of the poor materials she had.[26]In my judgment this is a plain case. Ms Macaulay was resident in Great Britain throughout. She worked almost entirely within Great Britain. To the extent that she was managed, she experienced management in Great Britain. If, contrary to my view, she was a contract worker at all, she was employed to function as a contract worker in Great Britain and there was nothing about such employment which argued against domestic statutory employment protection rights extending to her. She was paid in Great Britain and liable to account for her earnings to the British tax authorities. In so far as she suffered unlawful treatment with consequential damage, it occurred very largely in Great Britain. Her association with Mrs Holmes (significant on any view, regardless of the differences between the parties as to what precisely it entailed) must be seen as having run its course wholly or largely in Great Britain. Having weighed up the main factors I am satisfied to a high standard that they argue overwhelmingly for the conclusion that the 2010 Act extends to Ms Macaulay’s claims. Issue (4)[27]I have also not found Issue (4) difficult. The question posed by EJ Woodhead requires consideration of the material parts of the 2010 Act, ss 109 and 110. By s109(2) it is provided that: ‘Anything done by an agent for a principal, with the authority of the principal, must be treated as also done by the principal’. This is subject to the employer’s ‘reasonable steps’ defence under s109(4).[28]By s110 it is provided that:(1) A person (A) contravenes this section if – (a) A is an employee or agent, (b) A does something which, by virtue of section 109(1) or (2), is treated as having been done by A’s employer or principal (as the case may be), and (c) the doing of that thing by A amounts to a contravention of this Act by the employer or principal (as the case may be).(2) It does not matter whether, in any proceedings, the employer is found not to have contravened this Act by virtue of s109(4)[29]In my view the key to Issue (4) lies in the proper application of the 2010 Act, s110(1)(c). Given my conclusion on Issue (1), the treatment by GOJ of which Ms Macaulay complains could not amount to a contravention of the Act: the protection of s41 did not attach to her. Accordingly, she not having enjoyed the status of a contract worker, her claim against GOJ fails for want of jurisdiction. If, on this ground, the Tribunal has no jurisdiction to consider the claim against GOJ, it inevitably follows that it also has no jurisdiction to consider the claim against Mrs Holmes.[30]This reasoning makes it unnecessary to consider whether my holding on Issue (2) is, separately and of itself, also fatal to Ms Macaulay’s claim against Mrs Holmes. On this point I could see some force in Mr Brochwicz-Lewinski’s arguments but my analysis at para 29 renders them entirely academic.
Disposal
[31]Given my conclusions on the four issues listed by EJ Woodhead, the claims fell outside the Tribunal’s jurisdiction and the only proper course was to dismiss them.