Mr C Masaquiza Masaquiza and Other v C. Palace Living Ltd: 3302110/2020 and 3302111/2020
EMPLOYMENT TRIBUNALS
Case No 3302110/2020, 3302111/2020
Between
Mr C Masaquiza Masaquiza and OtherClaimantC. Palace Living LtdRespondent
Before
Employment Judge de Silva QCJoanne Kerr (instructed by Counsel) for respondentDate 28 October 2021
JUDGMENT
[1]The Claimants’ applications to strike out the Response, for the Respondent to be disbarred from proceedings, for the Respondent to be fined for noncompliance with Orders and for costs are refused.[2]The final hearing is adjourned and is re-listed on 1 October 2021.
REASONS
Background Facts
[1]I make the following findings of fact based on the documents in the bundle prepared by the Claimants’ for this final hearing and the submissions of the parties.[2]By Claim Form issued on 30 January 2020, the Claimants made claims for unlawful deductions from wages under section 13 of the Employment Rights Act 1996 and denial of holiday pay under regulation 14 of the Working Time Regulations 1998 (“WTR”). The Response was filed on 22 November 2020.[3]On 19 December 2020, a Notice of Hearing listing a hearing on 30 April 2021 was sent to the Parties, together with Case Management Orders. These made directions for a Schedule of Loss by 4 January 2021, disclosure by 18 January 2021, a bundle of documents by 1 February 2021 and witness statements by 15 February 2021.[4]It is not disputed by the Respondent that it received this. As for the Claimants, the Notice of Hearing was sent to the address for the Claimants’ union given on the Claim Form. However, the union had moved office since the Claim Form was served and it did not notify the Employment Tribunal of the change of address. This only became apparent during the course of the final hearing, the Claimants having originally said in submissions that there was no fault on their part. Ms Worden told me that she believed that mail forwarding was in place but readily and properly accepted that the reason that the Claimants did not receive the Notice of Hearing and Case Management Orders was that the document was not forwarded to the union’s new address (which address had not been given to the Employment Tribunal) and that there was no fault on the part of the Employment Tribunal.[5]In mid-March 2021, the Claimants’ then representative, Claire Marcel, obtained the date of the hearing from ACAS but apparently not the Notice of Hearing or the Case Management Orders themselves. There is no record of her trying to obtain these from the Employment Tribunal or the Respondent at that time.[6]By email dated 23 March 2021, Ms Marcel sought these from Watford Employment Tribunal (for reasons which are unclear, the request was made to the watfordet.settlements@justice.gov.uk email address). The Tribunal provided the document the following day from the main watfordet@justice.gov.uk address.[7]By email dated 24 March 2021, Ms Worden contacted the Respondents’ solicitors in relation to settlement. Ms Worden accepted at the final hearing that there was ‘without prejudice’ correspondence in the hearing bundle which, as Ms Kerr submitted, should not have been put before the Tribunal. I did not consider this correspondence in making my decision.[8]Thereafter, Ms Worden sought to progress the matter so that it could be ready for the final hearing. By email dated 1 April 2021, Ms Worden proposed the date of 9 April 2021 for disclosure. The same day, the Respondent’s solicitors asked Ms Worden to agree 14 April 2021 to which Ms Worden replied “sounds good”.[9]By email dated 6 April 2021, Ms Worden suggested bringing the date for disclosure forward but no reply was received.[10]By email dated 7 April 2021, the Claimants applied to amend the claim to increase the sum claimed for wages and to add a claim in relation to rest breaks under regulation 11 of the WTR. The email further stated that the Respondent would not agree to disclose evidence and exchange statements until 14 April 2020 and requested that the Tribunal order disclosure and exchange of statements “prior to14 April 2020”.[11]In their reply to the Employment Tribunal the same day, the Respondent’s solicitors stated that Ms Worden had agreed that disclosure take place on 14 April 2020 but had changed her mind and required the Tribunal to consider that the Respondent had failed to agree timelines that Ms Worden had set which had not been agreed. The email also said “we are not in a position to proceed at this time, as we are without instructions”.[12]By email dated 14 April 2021, Ms Worden asked whether the Respondent’s solicitors intended to exchange documents that day as agreed. By email of the same date, the Respondent’s solicitors said that that they were without instructions. They said the matter was not ready for final hearing on 30 April 2021 and the Parties had not complied with the ET directions.[13]By email dated 15 April 2021, Ms Worden told the Tribunal that the Claimants were ready for the final hearing on 30 April 2021.[14]By email dated 22 April 2021, Ms Worden told the Tribunal that the Respondents had failed to comply with the Case Management Order and made applications on behalf of the Claimants for the Respondent to be fined for non-compliance. She also asked the Tribunal to bar the Respondent from proceedings and award costs in relation to preparation time.[15]On 22 April 2021, the Respondent’s solicitors stated that Ms Worden’s email was misleading. They stated that the slippage had been initiated by the Claimants who had only provided a Schedule of Loss on 7 April 2021, having been directed in the Case Management Orders to do so by 4 January 2021. The email stated that a proposal had been made by the Respondent’s solicitors to give disclosure by 14 April 2021 “but that proposal was rejected by the Claimants’ representative”. The email asked that the final hearing be dealt with as a preliminary hearing and that no further directions be made before the hearing “despite the enthusiastic but misguided missives of the Claimant’s representative”.[16]By email of 22 April 2021, Ms Worden stated that the Respondent’s solicitors were misleading the Tribunal. The email maintained the earlier applications to disbar the Respondent from proceedings etc. By email dated 27 April 2021, an application was made on behalf of the Claimants to strike out the Response. The Claimants’ Applications[17]The Claimants make the applications to bar the Respondent from proceedings (rule 6 of the Employment Tribunal Rules of Procedure 2013 (“the ET Rules”)), to fine the Respondent for non-compliance (section 4 of the Employment Tribunals Act 1996), to strike out the Response (rule 37 of the ET Rules) and to be awarded preparation time costs (rules 74-84 of the ET Rules) on the following grounds:a. The Respondent has been unreasonable, scandalous or vexatious;b. It has failed to comply with ET Rules and/or Orders;c. It has not actively pursued its case;d. It is no longer possible to have a fair hearing.[18]The Claimants rely on the following conduct by the Respondent: ignoring the Claimants’ settlement offer and attempts at engagement until 30 March 2021; failing to respond to their offer on 7 April 2021; failing to disclose on 14 April 2021 as agreed without explanation; failing to properly engage with the Claimants, failing to comply with Case Management Orders, deliberately failing to disclose any information save what was provided in the Response; failing to take any action to remedy the injustice being caused; deliberately seeing to prolong proceedings by seeking to re-categorise the final hearing as a preliminary hearing, deliberately seeking to mislead the Tribunal.
Relevant Law
[19]Rule 6 of the ET Rules states: “A failure to comply with any provision of these Rules (except rule 8(1), 16(1), 23 or 25) or any order of the Tribunal (except for an order under rules 38 or 39) does not of itself render void the proceedings or any step taken in the proceedings. In the case of such noncompliance, the Tribunal may take such action as it considers just, which may include all or any of the following—(a) waiving or varying the requirement;(b) striking out the claim or the response, in whole or in part, in accordance with rule 37;(c) barring or restricting a party’s participation in the proceedings;(d) awarding costs in accordance with rules 74 to 84”.[20]In Farmah v Birmingham City Council [2017] IRLR 785, the EAT held that the Tribunal has a wide discretion under this rule but it must be exercised judicially. In particular, it should consider the seriousness of the breach and any potential prejudice to the various parties.[21]Rule 37(1) of the ET Rules states: “At any stage of the proceedings, either on its own initiative or on the application of a party, a Tribunal may strike out all or part of a claim or response on any of the following grounds— (a)that it is scandalous or vexatious or has no reasonable prospect of success; (b)that the manner in which the proceedings have been conducted by or on behalf of the claimant or the respondent (as the case may be) has been scandalous, unreasonable or vexatious; (c)for non-compliance with any of these Rules or with an order of the Tribunal; (d)that it has not been actively pursued; (e)that the Tribunal considers that it is no longer possible to have a fair hearing in respect of the claim or response (or the part to be struck out). …”.[22]In Bennett v LB Southwark [2002] ICR 881 CA, one of the meanings of gratuitous was held to be “giving gratuitous insult to the court in the course of legal process”. In AG v Barker [2000] EWHC 453, it was held that vexatiousness involves an abuse of process.[23]In Bolch v Chipman [2004] IRLR 140, the EAT stated that there are four matters to be addressed in a strike out application:a. The Tribunal must conclude not simply that a party has behaved scandalously, unreasonably or vexatiously but that the proceedings have been conducted by or on the party’s behalf in this manner;b. Even if there was such conduct, the Tribunal must reach a conclusion as to whether a fair trial is still possible. In exceptional circumstances (such as where there is wilful disobedience of an order) it may be possible to make a striking out order without such an investigation;c. Even if a fair trial is not possible, the Tribunal must still examine what remedy is appropriate which is proportionate to its conclusion. It may be possible to impose a lesser penalty than one which leads to a party being debarred from the case in its entirety.d. Even if the Tribunal decides to make a striking out order, it must consider the consequences of the debarring order. For example, if the order is to strike out a Response, it is open to the Tribunal to debar the Respondent from taking any further part on the question of liability but to permit him to participate in any hearing on remedy.[24]Rule 76(1) of the ET Rules states: “A Tribunal may make a costs order or a preparation time order, and shall consider whether to do so, where it considers that— (a) a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; …”.[25]Section 7(4) of the Employment Tribunal Rules 1996 states: “(4) A person who without reasonable excuse fails to comply with— (a)any requirement imposed by virtue of subsection (3)(d) or (h), or (b)any requirement with respect to the discovery, recovery or inspection of documents imposed by virtue of subsection (3)(e), or (c)any requirement imposed by virtue of employment tribunal procedure regulations to give written answers for the purpose of facilitating the determination of proceedings as mentioned in subsection (3A), (3B) or (3C), is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale”.[26]Subsection 3(d) referred to above refers to order requiring persons to attend to give evidence and produce documents and for authorising the administration of oaths to witnesses. Subsection 3(h) applies only to claims under the Equality Act 2010.
The Hearing
[27]I heard oral submissions from Ms Worden and Ms Kerr. In addition, Ms Worden submitted a written skeleton argument. The Parties each referred to a bundle of documents prepared for the final hearing by the Claimants.
Conclusions
[28]The Respondent put forward no excuse for non-compliance with directions up to 24 March 2021 when the Claimants’ representatives started to progress the matter. The explanation put forward by the Respondent’s solicitors in relation to at least part of the time after this was that they were without instructions. This is not a good excuse and no real explanation for this was provided. I accept that their conduct was unreasonable for the purposes of rule 37(1) of the ET Rules although it falls short of scandalous or vexatious conduct.[29]The failure of Claimants to comply with directions by the time stated in the Case Management Order can be attributed to them in that it was their representatives who failed to notify the Tribunal of the move of office, whose forwarding system did not ensure that the Case Management Orders reached the correct office and who did not comply with the Case Management Orders in time.[30]Once the Case Management Orders were obtained on 24 March 2021, Ms Worden did everything within her power to get this matter ready for trial and I do not accept the suggestion of the Respondent’s solicitors that she was “enthusiastic but misguided”. However, this was only a matter of 6 weeks before the final hearing and although the Claimants’ were ready for trial, I see the force of Ms Kerr’s point that it is not for a party to seek the strike out based on new deadlines when it has itself been in breach of the original deadlines set by the Employment Tribunal. I note that no ‘unless orders’ were sought or made.[31]Importantly, I accept that a fair trial is still possible. Although the Respondent’s has seen the Claimants’ statements, there are relatively brief and cover the matters that the Respondent is likely to cover in its evidence in its event.[32]I make these conclusions notwithstanding the agreement of the parties to give disclosure by 14 April 2021 which the Respondent did not do. I also accept that the statement from the Respondent’s solicitors in their email of 22 April 2021 that a proposal had been made by the Respondent’s solicitors to give disclosure by 14 April 2021 “but that proposal was rejected by the Claimants’ representative” was misleading. This is regrettable but I do not conclude that the Respondent’s solicitors deliberately misled the Tribunal, as the Claimants assert. I am conscious that the Claimants sought to bring forward the agreed date and even applied for an order that the agreed date be brought forward (which led to the objections in the email dated 14 April 2021 from the Respondent’s solicitors) so there may have been a degree of confusion about the position.[33]As I have said, Ms Worden acted professionally and expeditiously in her clients’ best interests but both Parties had already wholly failed to comply with the directions long after the last deadline had expired.[34]As to the specific ground relied on by the Claimants relation to the alleged failure to address settlement offers, I have not considered the settlement position as this is ‘without prejudice’.[35]Given all these circumstances, striking out the Response or disbarring the Respondent from the proceedings would be disproportionate sanctions. Lesser sanctions are available and are more appropriate in the circumstances, for example making ‘unless orders’ (none previously having been made in these proceedings).[36]Given my conclusions as set out above, including in relation to the Claimants’ own failure to comply with the Case Management Orders, it would not be appropriate to make a preparation time order in the Claimants’ favour. I accept that, when the applications were made on behalf of the Claimants, their representatives believed that there had been no fault on their part. However, it transpired at the final hearing that this was not the case.[37]Fining a party under section 7(4) of the Employment Tribunals Act is a criminal matter and a fine may only be imposed on conviction in the criminal courts. In any event, the Claimants simply assert that the Respondent should be fined on the basis of “non-compliance” (see paragraph 7(b) of the Claimants’ Skeleton) and the matters relied on in relation to rules 37 and 76 of the ET Rules (see paragraph 9 of the Claimants’ Skeleton); however, these matters do not of themselves necessarily justify a fine: it would have to be shown that a provision within section 7(4) of the Employment Tribunals Act is engaged and the Claimants have no sought to do so.[38]So far as the Respondent’s applying to adjourn the final hearing on 30 April 2021, I considered this even though there was no formal written application. I had to justice between the parties. I bore in mind the matters set out above and also the fact that there was likely to be insufficient time to hear the claims on the afternoon of the hearing. It would be around 3pm by time I had given judgment on the Claimants’ applications. Submissions took the whole of the morning which was entirely proper on all sides and the hearing was required to be interpreted. There were also technical issues which were nobody’s fault.[39]Although the Claimants would be delayed in having their claims heard, the delay was a matter of around five months and this was outweighed by the potential injustice to the Respondent in not being able to defend the claims. In all the circumstances, the balance of justice favoured adjourning the final hearing.
Conclusions
[1]Claimant 1 was a limb(b) worker contracted to provide personal service to the Respondent.[2]Claimant 1 suffered unauthorised deductions from wages.[3]Claimant 1 was entitled to a payment in respect of accrued and outstanding holiday allowance at termination.[4]Claimant 2 was a limb(a) employee of the Respondent.[5]Claimant 2 suffered unauthorised deductions from wages.[6]Claimant 2 was entitled to a payment in respect of accrued and outstanding holiday at termination.[7]Claimant 2 was denied a weekly rest break on two occasions between Monday 1 July 2019 and Friday 19 July 2019.[8]Remedy will be decided at a separate hearing at 10am on 3 December 2021 by video - CVP.
Findings
[9]The Respondent is a construction company and primary contractor responsible for a number of building sites using subcontractors and employees to deliver a variety of specialist trades. It has 5 employees according to the response to claim including the respondent’s witness, sales manager Mr Colyer.[10]Mr Colyer has been employed by the Respondent for 4 years. Mr Colyer gave evidence he had seen both Claimants around the Respondent’s building sites in 2019. He had no involvement in their selection, appointment or in fact any other managerial function towards either of them not least because the Respondent asserts Claimant 1 was a sub-contractor and Claimant 2 was employed by a subcontractor. In the circumstances he could only rely on the documents relating to payment of each claimant; documents relating to Claimant 2 were available to the Respondent because of Mr de Silva’s association with the sub-contractor it says employed him. Mr de Silva is a director of the respondent companuy. The Respondent did not address me on the status of either Claimant as ‘worker’.[11]Mr Colyer gave evidence that Mr Carlos de Silva was the managing director of the Respondent company and was also managing director of Beckenham Heating & Plumbing Limited, of which more below. Mr Colyer confirmed Mr de Silva was associated with Beckenham Heating & Plumbing Limited in 2019 but could not be specific as to his role at that time. Claimant 1. Cl1[12]The Respondent accepts it owes Claimant 1 (Cl1) the sum of £1,758.38 in respect of work carried out between July and August 2019. Its’ representative, Ms Letts had no instructions as to why after 2 years this sum remains outstanding.[13]Cl1 gave evidence he worked as a tiler/builder on the Respondent’s building sites from 20 February to 20 September 2019. He stopped working on the sites because the Respondent consistently underpaid him from July 2019 onwards despite repeated attempts to resolve that. I do not accept the Respondent’s suggestion the Claimant’s decision to leave without notice was unreasonable given the issue of payment and the Respondent’s admission the sum of £1,758.38 remains outstanding to date.[14]Cl1 was introduced to the Respondent through the Neto Recruitment Agency and commenced work on the Respondent’s sites on 20 February 2019.[15]Cl1 asserts he was taken on as an ‘employee’ and signed a document when he got the job but he doesn’t know what it said and he wasn’t given a copy. The Respondent did not challenge this evidence nor did it produce a copy of the document. Since Cl1 does not know what the document was, I cannot draw any conclusions about its nature other than to say had it established the Claimant’s status as a sub-contractor I am confident the Respondent would have produced it.[16]The only evidence the Respondent produces in support of its assertion Cl1 had his own company is a number of sub-contractor invoices issued by the Respondent under the Construction Industry Scheme (CIS).[17]Cl1 asserts the day rate of pay was set by the Respondent and there was no negotiation; the Respondent asserts in the response to claim that this was initially £90 amended to £110 in July 2019. I accept the Respondent’s evidence regarding the uplift to the day rate in July 2019. It was not clear when this uplift took effect either 1 July 2019 or some other date in July. In the absence of evidence to the contrary I conclude it was 1 July 2019.[18]Cl1 asserts he received some payment direct into his bank account which corresponds with the CIS invoices and some he received as cash (2 payments of £500, 1 in July 2019 and 1 in August 2019). According to the invoices; of which more later, 20% was deducted from the payment before he received it which he believed was for income tax purposes. He has since discovered the Respondent company made no tax payments for him in respect of PAYE.[19]Mr Colyer stated the day rate was open to negotiation but as sales manager with no involvement in the management of staff and sub-contractors I place this no higher than opinion on his part. I accept the Claimant’s evidence the day rate was set by the Respondent.[20]Cl1 gave evidence his hours were 8-5pm daily; he also worked overtime and weekends. I have seen what appears to be a screen shot of a time sheet (page 53 of the bundle) unchallenged by the Respondent which shows between Saturday 22 June and Tuesday 2 July 2019 he worked 6 days per week; did not work Sunday 23 or 30 June and up to 7pm on 2 days; Wednesday 27 and Thursday 28 June. He raises no issues regarding payment received between February and June 2019.[21]Taking the time sheet at page 53 as a jumping off point together with the schedule of days worked each month (at page 71), also unchallenged by the Respondent, the Claimant ought to have been paid sums significantly in excess of those stated by the CIS invoices (pages 64-70). These show he was paid £1,500 gross (less 20% deducted under the construction industry scheme) every month except February and October which reflects the short months worked due to commencement and termination; the October Invoice shows £2,050 gross this additional £500 does not address the shortfall nor does the sum conceded as outstanding by the Respondent, £1,758.38. If these invoices are to be believed the Claimant was paid for less than 14 days' work each month (£1,500/£110 per day). Even taking into account the 2 occasions when he was paid £500 cash in hand, he was still significantly underpaid what was agreed. If these documents are to be accepted as reliable there should at the very least have been an increase in gross payment between June and July when on the Respondent’s own evidence, the day rate changed from £90 to £110. I am satisfied that these documents are unreliable and reject them. In my opinion the CIS invoices are neither a reliable account of the amounts paid to the claimant, what was due to the claimant or indeed his status as a subcontractor.[22]Cl1 stated Mr Carlos de Silva, managing director of the Respondent company gave him instructions each day either in person or over WhatsApp as to which site he would be working on and what was required of him. He also stated Mr de Silva gave instructions to Claimant 2. Mr Colyer struck me as being at pains to minimise Mr de Silva’s involvement stating he was involved in a great many decisions and may ‘sometimes’ give such instructions. Given his limited knowledge of the management of either claimant on site, I reject his evidence on this point.[23]Cl1 asserted he could not send anyone in his place to carry out his assigned tasks, again not challenged. He received no instructions about arrangements for taking holiday or sick leave but in his statement says he believes he could take time off. This is consistent with the message thread at page 54 of the bundle when someone called ‘Epre’ (and not otherwise identified) asks him when he wants to book vacation.[24]Effective Date of Termination (EDT) 20 September 2019; the Claimant stopped coming into work; after weeks of trying to resolve under payment issues he had lost any confidence the Respondent would pay him as agreed. Claimant 2. Cl2[25]Carlos Mamani Quino commenced employment on 24 June 2019. He too was recruited through the Neto Recruitment Agency.[26]Cl2 was employed laying bricks and gave evidence about how particular Andre and Alex Rodrigues were on how it was done. Cl1 also mentions receiving instructions from Alex but couldn’t identify his role. No further explanation of who Messrs Rodrigues might be is offered by the Respondent. Cl2 states he was told he would receive a day rate of £100 plus overtime although he wasn’t sure of the overtime rate. The Respondent asserts Cl2 was an employee of Beckenham Heating and Plumbing (BH&P) not of the Respondent.[27]Page 56 of the bundle is a screen shot of an appointment for interview with Carlos Silva on 21 June 2019 for a handyman job; Mr Colyer confirmed this was indeed the same Carlos de Silva, director of the Respondent. The contact number for this Mr Silva is the same number as the person identified as ‘Jefe C’ in the exchange of messages at pages 48-53 and translated on pages 54-55. [‘Jefe C’ translates as either ‘Chief C’ or ‘Boss C’ which is consistent with this person being Mr de Silva. The messages also demonstrate the extent to which Mr de Silva was in control].[28]Mr Colyer accepted Mr de Silva did indeed interview Cl2. He also stated Mr de Silva often interviewed prospective tradesman and following interview decided which sub-contractor they ought to be placed with; in this instance with Beckenham Heating and Plumbing. That sub-contractors would simply accept a new member of the team who had been interviewed by the primary contractor without their involvement demonstrates in my view a level of control exercised by that primary contractor that far outstrips the norm.[29]When asked what Cl2 brought to this particular sub-contractor as a general handyman Mr Colyer explained that sub-contractors employ a variety of other trades not just the obvious heating and plumbing engineers BH&P’s name suggested in this instance. Cl2 on his evidence was bricklaying at Mr de Silva’s direction which does beg the question what if any benefit did BH&P gain from his employment at all?[30]Notwithstanding the respondent’s documentation produced to show Cl2 was employed by BH&P Claimant 2 gave evidence he had never seen them before they were included in the bundle and I believe him.[31]It is significant in my view that Mr Colyer accepted Mr de Silva is a director of BH&P although as the evidence progressed, he was at pains to explain that whilst Mr de Silva was ‘involved’ with BH&P in 2019 he was not clear in what capacity; just that he was not a director in 2019. This in my view is significant to the question whether Cl2 was employed by the respondent or BH&P. Since Mr Colyer was so keen to persuade me Mr de Silva was not a director of BH&P in 2019 this points to Cl2 having been hired by the respondent.[32]Beginning at page 72 are pay advices addressed to Cl2. These differ from those issued to Cl1. Those issued to Cl1 are under the CIS scheme for sub-contractors.[33]Those issued to Cl2 were standard PAYE pay advices. The basic pay is £1,500 gross per month with deductions made for both income tax and national insurance. Cl2’s deductions were under £200 per month and consequently on the basis of the pay advices, he was receiving more per month than Cl1. The final pay advice issued on 4 October 2019 was different, it was for £1,850 and this time included a deduction for employee pension contributions which had not featured in the previous 2 pay advices.[34]At page 75-78 of the bundle is an unchallenged schedule of the hours and days worked by Cl2 from commencement to EDT on 20 September.[35]From 1 July Cl2 worked 19 days straight (1-19 July 2019) without a break; the foundation of his claim for denial of rest break; over this period, he worked 5 days standard hours (8-5pm) the remainder included between 1 and 4 hours overtime each day; the Saturdays and Sundays during this period being at least 8 hours overtime on each day, yet no overtime is reflected in any of the pay advices. Clearly the pay advices are inconsistent with the unchallenged schedule of hours. I accept the schedule as evidence of Cl2’s hours, overtime and that he worked all weekends that fell between 1-19 July 2019.[36]The Respondent has provided no rebuttal evidence on this point on the grounds it was not the claimant’s employer. It certainly provided no evidence that there was any agreement that might permit such a working arrangement. In the circumstances I am satisfied Cl2 did work 19 days straight and in excess of the 48- hour weekly limit contrary to the Working Time Regulations; at the very least he was working a 56-hour week and having seen the unchallenged schedule of hours significantly more.[37]I find it significant that both Claimants experienced similar issues with under payment and the documentation entered into evidence by the Respondent suffers similar issues in respect of accuracy namely it records the same payment every month regardless of hours worked; £1,500 gross each claimant. This is evidence that these documents were being produced at the very least under the same instruction if not by the same person. This makes it more likely than not both claimants were employed by the same entity. Since the Respondent accepts it engaged Claimant 1 and given the similarity of issues both claimants experienced with under payment and documentation, I conclude it is more likely than not the Respondent employed both claimants.[38]Finally, the P45 at pages 82-84 issued in Cl2’s name. Cl2 asserts he had never seen this document until it was included in the bundle by the Respondent. Whilst the figures stated correspond with the gross pay and tax stated on the pay advices the P45 records the leaving date at 30 September 2019 and not 20 September 2019 as stated by both Claimants. It is in my view more likely than not the leaving date was indeed 20 September although it is possible 30 September was a simple typing error.[39]The issue of personal service does not apply to this claimant as the Respondent accepts Cl2 was an employee.[40]I accept the claimant’s unchallenged evidence he had accrued an outstanding holiday entitlement for which he ought to have been paid at EDT.
The Law
[41]Employee v Worker Section 230(3) of the Employment Rights Act 1996 (ERA) defines a ‘worker’ as an individual who has entered into or works under (or, where the employment has ceased, worked under):• a contract of employment (‘limb (a)’), or• any other contract, whether express or implied and (if 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 (‘limb (b)’). For the purposes of this definition, a contract of employment is defined as ‘a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing’ — S.230(2) ERA.[42]Uber BV and ors v Aslam and ors 2021 ICR 657, SC, a case concerning claims to ‘worker’ status by drivers working in the ‘gig economy’. Uber’s position on the legal relations between it, the drivers and passengers is that it is a technology platform facilitating the provision of PHV services. Uber insists that it does not provide these services itself; rather, they are provided by the drivers under a contract concluded between driver and passenger for each journey, with UL Ltd acting as agent for the driver using the Uber app. Uber’s characterisation of the legal position is set out in complex contractual documentation describing the drivers as self-employed and Uber as their agent. There is no written agreement between UL Ltd and drivers — any written terms between Uber and its drivers are entered into with UBV. UL Ltd.'s agreement with passengers states that the contract for the transportation service is between the driver and the passenger.[43]A majority of the Court of Appeal agreed with the decisions of an employment tribunal and the EAT that, despite the characterisation of the legal position in the written contractual documentation, the drivers were limb (b) workers employed by Uber. It was not realistic to regard Uber as working ‘for’ the drivers. The reality was the other way round — Uber operated a transportation business and the drivers provided the skilled labour through which that business delivered its services and earned its profits. The Supreme Court has now given its judgment, dismissing Uber’s appeal and confirming the employment tribunal’s finding that the drivers were ‘workers’ of Uber. It held that, given the extent of Uber’s control over the drivers’ terms and conditions and the way in which they provided their services, the drivers were clearly ‘workers’ rather than self-employed contractors.[44]Byrne Brothers (Formwork) Ltd v Baird and ors Mr Recorder Underhill reasoned that the basic effect of limb (b) is to ‘lower the pass mark’, so that cases which failed to reach the mark necessary to qualify for protection as employees might nevertheless reach that necessary to qualify for protection as workers.[45]Redrow Homes (Yorkshire) Ltd v Wright the Court of Appeal considered that the expression ‘lower the pass mark’ does not assist a tribunal in determining whether the necessary obligation of personal service is present. The Court noted that the comments in Byrne Brothers had been addressed to the final clause of limb (b), which focuses on whether the services are being provided to a client or customer of the individual’s professional or business undertaking (considered under ‘Client or customer exception’ below).[46]But subsequently, in Windle and anor v Secretary of State for Justice 2016 ICR 721, CA (which concerned the extended definition of ‘employment’ in S.83(2) EqA), Lord Justice Underhill stated: ‘The factors relevant in assessing whether a Claimant is employed under a contract of service are not essentially different from those relevant in assessing whether he or she is an employee in the extended sense, though (if I may borrow the language of my own judgment in ByrneBros (Formwork) Ltd v Baird), in considering the latter question the boundary is pushed further in the putative employee’s favour — or, to put it another way, the pass mark is lower’.[47]If the concept of a lowered pass mark does indeed extend to the requirement of personal service, then it might follow that, even where there is a wide-ranging right of substitution which would be incompatible with employee status, a contract could nonetheless still give rise to limb (b) worker status if there is an obligation to do at least some of the work personally.[48]In Ferguson v John Dawson and Partners (Contractors) Ltd 1976 3 All ER 817, CA, F was engaged by a firm of building contractors as a general labourer and was told expressly that he was working as part of a ‘lump’ labour force. He was paid an hourly rate without deductions for tax or national insurance. The site agent told the workers what to do and where to do it, and provided tools where necessary. The Court of Appeal held that, despite the express intention of the parties that F was to be a self-employed, labour-only subcontractor, in reality he was employed under a contract of service. However, this was a majority decision, which is indicative of the difficulties courts and tribunals had, and still have, with this category of worker.[49]The Privy Council’s decision in Lee Ting Sang v Chung Chi-Keung and anor 1990 ICR 409, PC, The case concerned the employment status of a mason for the purposes of the Hong Kong Employees’ Compensation Ordinance, an order that was modelled on its English equivalent. It was accepted that the relevant principles were those of the English common law applicable to many statutes under which the same or a similar question arose, including the ERA. At the beginning of his judgment, Lord Griffiths (who delivered the judgment of the Privy Council) stated that the Council ‘fully appreciate that the construction industry in Hong Kong relies upon a large pool of casual labour employed upon a job-by-job basis and… that the present appeal may set a precedent against which the status of many of those employed in the building industry may be judged in the future’. However, this was no reason, Lord Griffiths said, for the relevant common law principles to be departed from. Applying the test of whether he was ‘in business on his own account’ and considering the relevant factors, the Privy Council held that the claimant was clearly an employee: he did not provide his own equipment, he did not hire helpers, he carried no financial risk, and he did not set his own charges but was paid either a piece-work rate or a daily rate according to the nature of the work he was doing.[50]Similarly, in Lane v Shire Roofing Co (Oxford) Ltd 1995 IRLR 493, CA, L was a builder/roofer/carpenter who traded as a one-man firm. He was categorised as ‘self-employed’ for tax purposes. SR Ltd was a roofing contractor that hired men for individual jobs. It hired L to work on a large roofing subcontract, then to re-roof a porch at a private house. While L was working on the porch, he sustained serious injuries. In determining whether L was an employee or self-employed, the Court of Appeal was of the opinion that, while the element of control is important, the question should be broadened to ask whether the worker was carrying on his or her own business or carrying on that of his or her employer. It formulated the question as ‘whose business, was it?’ Answering this question involved considering where the financial risk lay and whether the worker had an opportunity of profiting from sound management in the performance of the work. In the instant case the Court said that these questions must be asked in the context of who was responsible for the overall safety of those doing the work in question. It decided that L was an employee and that SR Ltd was liable for his injuries. Although L had his own one-man business and was self-employed for tax purposes, his relationship with SR Ltd was much closer to the ‘lump’, where workers are engaged only for their labour and are clearly employees whatever their tax status might be, than to a specialist subcontractor engaged to perform some part of a general building contract.
Conclusion
[51]Was the First Claimant a worker for C Palace Living Limited pursuant to Uber BV and others v Aslam [2021] UKSC 5? In this case no written agreement has been produced. That there was a document signed at engagement on the claimant’s evidence is not disputed however the absence of evidence as to its nature means it sits tantalizingly on the periphery and without further information that is where it must stay. A court or tribunal however, has more scope to look beyond the terms of the agreement than it would in a commercial context. The Respondent has approached this case on the basis Cl1 was not an employee and has failed to address the issue of whether he was a worker.[52]Fortunately, the courts have dealt with building sites, their sub-contractors and practices many times. ‘Self-employed’ labourers may contract directly with the main contractor or indirectly through a sub-contractor who then contracts their labour to the main contractor, or workers may have a service contract with a subcontractor who then hires them out to the main contractor.[53]If they are not employees, such labourers may nonetheless be ‘workers’ if their contracts include an undertaking to perform the work personally and they are not in business on their own account.[54]Cl1 is clear in his evidence he believed following interview he was being taken on as an employee of the Respondent. Whilst the Respondent has produced CIS sub-contractor invoices this is not conclusive of his status. I have found these documents are inaccurate and unreliable.[55]In the case of Ferguson v John Dawson and Partners (Contractors) Ltd 1976 3 All ER 817, CA, above the court set down a number of questions to be addressed in identifying the claimant’s status. In that case the claimant was employed as a general labourer and in this case, Cl1 was a tiler/general builder. In the Ferguson case the claimant was paid an hourly rate without deductions for tax or national insurance. In Ferguson the site agent told the workers what to do and where to do it, and provided tools where necessary. The Court of Appeal held that, despite the express intention of the parties that F was to be a self-employed, labour-only subcontractor, in reality he was employed under a contract of service.[56]I can see a number of parallels between the two cases (but note the decision in Ferguson was a majority decision). In this case the claimant was paid a day rate and believed deductions were made for income tax and national insurance; the company director gave him instructions on what to do and where to do it and provided the materials for the job although the claimant did provide his own specialist tools, hard hat and high viz vest.[57]Lee Ting Sang v Chung Chi-Keung and anor 1990 ICR 409, PC, is a 1990 case from Hong Kong heard by the privy council, before the islands were returned to China in 1997. It was accepted that the relevant principles were those of the English common law and at the beginning of the judgment the court acknowledged that the construction industry in Hong Kong relied upon a large pool of casual labour employed upon a job-by-job basis. Applying the test of whether the claimant was ‘in business on his own account’ and considering the relevant factors, the Privy Council held that the claimant was clearly an employee: he did not provide his own equipment, he did not hire helpers, he carried no financial risk, and he did not set his own charges but was paid either a piece-work rate or a daily rate according to the nature of the work he was doing.[58]Again, a number of parallels between that case and this one with the exception this claimant provided his own specialist tools, hard hat and high viz vest.[59]Lane v Shire Roofing Co (Oxford) Ltd 1995 IRLR 493, CA, L was a builder/roofer/carpenter who traded as a one-man business. He was categorised as ‘self-employed’ for tax purposes. The Respondent hired L to work on re-roofing a porch at a private house where he sustained serious injuries. In determining whether L was an employee or self-employed, the Court of Appeal was of the opinion that, while the element of control is important, the question should be broadened to ask whether the worker was carrying on his or her own business or carrying on that of his or her employer.[60]Applying Lane to the facts of this case I think finally answers whether the claimant’s use of his own tools is significant. It isn’t. Notwithstanding Mr Lane’s selfemployed status, he had been employed purely for his labour as was the first claimant who was solely engaged in the Respondent’s business nor did he stand to profit from a well-managed development or carry any of the financial risks associated with it.[61]Drawing all these cases together including Uber I have no difficulty in concluding Claimant 1 was a Limb (b) worker. He worked exclusively for the Respondent between 20 February and 20 September 2019 and whilst he provided his own hard hat, high viz vest and specialist tools he was hired purely for his labour, had no say in what, where or how he worked and was not able to send anyone to perform his assigned tasks for him nor did he have any financial stake in a well-run development or carry any of the financial risks.[62]I am unable to draw a conclusion on whether he might have been a limb (a) worker because whilst Cl1 recalls he was asked to sign a document on engagement he was not given a copy and cannot recall what was in it.[63]Does the Second Claimant have any employer/employee relationship with the Respondent? I have serious doubts about the reliability of the documents provided by the Respondent in support of its assertion that Claimant 2 was employed by BH&P. It is agreed by both parties that he was interviewed by Mr de Silva, engaged by him and received instructions on what tasks to perform. These all point to him being employed by Mr de Silva. Cl2 is adamant he was never employed by BH&P, never saw pay advices from them nor did he see the P45 until exchange of documents took place in preparation for this hearing.[64]One thing is clear he was a limb (a) worker. In fact, the Respondent insists upon it although on the grounds the employer was BH&P. Mr de Silva’s association with BH&P has afforded him access to the company’s records which do not include any kind of contract of employment. Mr Colyer was unclear as to Mr de Silva’s role with BH&P in 2019 initially stating he was the director and then saying he wasn’t sure. The only explanation Mr Colyer offered for Mr de Silva’s absence from this case was that English was not his first language. A perfectly reasonable explanation but for the fact nobody (other than Mr Colyer) in this case speaks English as a first language. It was helpful to hear from Mr Colyer just how much control Mr de Silva exercised over the sites, the hiring, allocation of work and allocation of hired staff to sub-contractors.[65]Applying the same case law above to claimant 2 I have no difficulty concluding Claimant 2 was a limb(a) employee. The Respondent accepts as much but asserts Claimant 2 was employed by a sub-contractor. I am not persuaded of that. I have no faith in the reliability of either the pay advices or the P45 produced not least because Claimant 2 states the first time he saw them was when they were disclosed during pre-hearing preparation; but also, because if they had been generated contemporaneously, they ought to have included information about the overtime worked by Claimant 2 (and set out in his unchallenged schedule). As stated above I find it significant that both Claimants experienced similar issues with under payment and the documentation suffers similar issues in respect of accuracy namely none show variance for overtime and change of day rate. I have concluded this is evidence that points to the documents being produced, at the very least under the same instruction if not by the same person. This makes it more likely than not both claimants were employed by the same entity. Since the Respondent accepts it engaged Claimant 1 and given the similarity of issues both claimants experienced, I conclude both claimants were its ‘workers’. UNAUTHORISED DEDUCTIONS OF WAGES[66]Did the Respondent unlawfully deduct the First Claimant’s wages by failing to pay them the amount owed for the hours worked between July to September 2019? Yes. Not least because the Respondent accepts it is still in debt to Claimant 1 in respect of monies owed for work performed between July and September 2019. But further, based on the sub-contractor invoices there should at least have been an uplift following the change of day rate from £90 to £110 in July 2019. The invoices issued for August (5 September), July (31 July) and June (28 June) are identical; there is no variation at all. In fact, with the exception of the first and last invoices (February and October) every invoice produced shows £1,500 gross per month. The sum acknowledged by the Respondent and the Claimant’s evidence he received 2 payments in cash (£500 each) does not satisfy the sum owed in full. If the invoices were to be relied upon, they should at the very least reflect the Respondent’s version of events and demonstrate the July uplift either in the July or August invoices depending on when the uplift became effective; they don’t.[67]If there was an employer/employee relationship between the Respondent and claimant 2 did the Respondent unlawfully deduct the Second Claimant’s wages by failing to pay them the amount owed for the hours worked between July to September 2019? Yes. Based on the pay advices produced by the Respondent they should demonstrate a substantial amount of overtime for the month of July with variations for the overtime worked in August and September as set out in the unchallenged schedule of hours worked. They don’t. As before these documents (with the exception of the last) show no variation which might reasonably be expected in the circumstances. I have no difficulty in dismissing these documents as wholly unreliable I prefer the claimant’s evidence supported as it is by his schedule of hours worked which details every day, he worked for the respondent together with the hours he worked on each day. DENIAL OF ACCURED HOLIDAY PAY[68]If the answer to 51 is yes, did the Respondent fail to pay the First Claimant their accrued holiday pay upon their resignation? Yes. The Respondent proceeded on the basis the claimant was a sub-contractor and not a worker. It did not dispute that the claimant received no accrued holiday pay at EDT. I accept the claimant’s assertion he was not paid for accrued and outstanding holiday at EDT.[69]If the answer to the question at 63 above is yes, did the Respondent fail to pay the Second Claimant their accrued holiday pay upon their resignation? Yes. The Respondent disputed that it was his employer and offered no rebuttal that he received payment in respect of accrued and outstanding holiday at EDT. I accept the claimant’s assertion he was not paid for accrued and outstanding holiday at EDT. DENIAL OF WEEKLY REST PERIOD[70]If the answer to the question at 63 above is yes, has the Second Claimant been denied a weekly rest break on two occasions between Monday 1 July 2019 and Friday 19 July 2019? Yes. The evidence is clear and unchallenged the claimant worked 19 days without a rest break. No rebuttal evidence was offered by the Respondent other than to say he was employed by BH&P. I accept the claimant’s assertion he was denied a weekly rest break on 2 occasions between 1 and 19 July 2019. RECONSIDERATION JUDGMENT
Conclusion
[1]The application was considered as a preliminary issue at the Remedy hearing on 3 December 2021.[2]The Respondent’s application for reconsideration of judgment filed on 15 November 2021 is refused.[3]The Judgment of the Employment Tribunal is that there is no reasonable prospect of the judgment of 28 October 2021 being varied or revoked. REMEDYJUDGMENT Claimant 1
Conclusion
[1]The respondent made unauthorised deductions from the claimant’s wages contrary to Section 13 Employment Rights Act 1996.[2]The respondent will pay the claimant the sum of £5,588.82 comprised as follows: 2.1. £5,054 in respect of unauthorised deduction from wages; and 2.2. £2,263.20 in respect of accrued holiday pay. Total £7347.20 2.3. The claimant has already received the sum of £1758.38: outstanding £5,588.82 These sums are stated gross - they would have been paid net whilst the claimant was working for the respondent. The respondent will make this calculation and deduction before payment. Claimant 2[3]The respondent made unauthorised deductions from the claimant’s wages contrary to Section 13 Employment Rights Act 1996.[4]The respondent denied the claimant a weekly rest break on 2 occasions between 1 - 19 July 2019 contrary to Regulation 11(1) of the Working Time Regulations 1998.[5]The respondent will pay Claimant 2 £4,697.69 comprised as follows: 5.1. £3,797.69 in respect of unauthorised deduction from wages 5.2. £700 in respect of accrued holiday entitlement. These sums are stated gross - they would have been paid net and the respondent will make this calculation and deduction before payment. 5.3. The respondent will pay in addition £200 in respect of denial of weekly rest period on 2 occasions. This sum is not subject to deductions.[6]I am not persuaded by the respondent’s argument that overtime ought to be calculated based on national minimum wage. It is usual for there to be a small uplift made in respect of overtime payments and for a larger uplift in respect of Sunday working. In the circumstances the sum claimed is reasonable and I agree with the claimant’s argument that it should be calculated in accordance with the hourly rate (drawn from the day rate received by the claimant).