Employment Judge StreetMs Greenley (instructed by counsel) for claimantDate 30 May 2022
JUDGMENT
Mr Hallsworth is an employee of NAM Global Ltd within the meaning of section 230 of the Employment Rights Act 1996 and section 83 of the Equality Act 2010
REASONS
Conclusion
[1]Evidence 1.1. The Tribunal heard from the claimant and from Mr Fitzgerald, and read the documents referred to in the agreed bundle. The Tribunal read the witness statements of Mr Mansourian, Mr Barter and Mr Logan who did not attend.[2]Issues 2.1. The issue to be determined at this Preliminary Hearing was whether the claimant was an employee, a worker or self-employed, specifically,1.1 Was there a contract between Mr Hallsworth and the company? If so, what were its terms?1.2 Was the Claimant an employee of the Respondent within the meaning of section 230 of the Employment Rights Act 1996?1.3 Was the Claimant an employee of the Respondent within the meaning of section 83 of the Equality Act 2010?1.4 Was the Claimant a worker of the Respondent within the meaning of section 230 of the Employment Rights Act 1996?[3]Findings of Fact 3.1. Mr Hallsworth is a van driver. 3.2. He was employed previously by Panic Link, who had him on the payroll and gave him a P45 when he left. 3.3. He moved from Panic Link to Courier Freight Services International, when Panic Link were closing. Mr Logan was a director of that company and the two men discussed and agreed terms, in 2001. No written statement of terms and conditions of employment was issued and there is no documentary evidence of the contract agreed between the two men. 3.4. Mr Hallsworth continued to work for Courier Freight Services until 2018. 3.5. The business of Courier Freight Services was bought and continued by NAM Global Ltd in 2018. Contract Terms 3.6. The terms agreed between Mr Hallsworth and Mr Logan were based on his previous employed contract with Panic Link. Mr Hallsworth expressly wanted the same terms. Knowing Panic Link was closing, Mr Logan offered to take Mr Hallsworth on and they talked through the terms he had been on with Panic Link. The discussion covered rate of pay, payment for annual holidays and use of the vehicle Mr Hallsworth would be driving. The only thing that differed from the arrangement with Panic Link was that Mr Logan asked him to present an invoice reflecting the agreed daily rate, rather than offering to pay him through PAYE. The daily rate was fixed at the rate which reflected Mr Hallsworth’s previous salary. 3.7. It was an oral conversation, not recorded in writing at any time. 3.8. The terms that then operated throughout, based on that initial agreement, were these: o Mr Hallsworth worked for a daily rate, fixed by the company and increased by the company a couple of times over the 17 years of employment prior to the transfer of the business. It did not vary with the hours or number of deliveries. He invoiced once a month for four or for five weeks. o He used the company van. The company provided fuel, insurance for the vehicle and the scanner. He did not provide his own tools and equipment. o The company allocated work on a daily basis, including determining the area for deliveries, supplying the items to be delivered based on its contracts with clients, and the route. Mr Hallsworth worked under the control of the company, taking no managerial responsibility and making no investment. He was required to follow the designated route and to meet the estimated delivery times. He was given a run sheet and a tracker which tracked his route. He did not refuse work on the run sheet, although he was entitled to refuse extra packages if there wouldn’t be time to do them. o Some jobs – flowers, medicines, for example – would have priority. There were times when packages were returned undelivered. o He worked co-operated with the other drivers. If there were additional parcels for delivery he might take them on, or finish other rounds, or others might take work off him, to see the jobs completed. o He did not work for others. He had no customers of his own paying him for deliveries. o He attended every day as required, from Monday to Friday, taking no sick leave. He attended punctually, at 7.30 am, returning to the depot in the evening. Mr Logan stipulated the working hours – for a time, Mr Logan supplied Mr Hallsworth’s services to another company who started work at 7.00 am, so Mr Hallsworth did too. o He took the van home in the evenings and at weekends, and for any short periods of annual leave. o He was expected to perform the contract personally. There was no discussion of any power of substitution and he never failed to attend in person – as he said, “At no time was it even suggested that I could substitute myself for someone else. No such suggestion. Never came up.” o He was the named driver and sole regular user of the vehicle provided. o He was paid for annual leave, taken at times arranged with the consent of the employer, for 20 days per year and was paid for Bank Holidays. he did not work them. Agreed leave dates were written up on a calendar. o He was paid £30 per month in respect of the expense of his mobile phone. o He was told at the outset by Mr Logan to provide monthly invoices. He provided regular invoices for his services and was responsible for his own tax and national insurance. The invoices were at the rates the company determined as his daily rate. o He wore an APC polo shirt. He understood it was part of the contract with the company’s major client, that drivers were required to wear them. Others did not wear them regularly, but he did. o Work was provided every working day for Mr Hallsworth. He was not sent home or asked not to come in because there was no work for him until May 2020. 3.9. He had not chosen to be self-employed. When Mr Logan told him he would have to provide invoices, Mr Hallsworth rang HMRC for advice – “I was left in a quandry as to how to keep the tax record straight. They said you are self-employed. I disputed that. I said I am getting a wage but my employer hasn’t set me up on PAYE. I wanted to make sure my pension was covered and to keep clean with the tax office. So all is straight with my tax, and my NI is up to date. So from the tax angle, they are happy with me. But I wasn’t left with an option of PAYE.” 3.10. He was told by HMRC that he should provide the invoices as requested. He did so, using his own name. (He was not himself a director of a limited company). His concern was to keep matters straight with HMRC and ensure his pension was covered by payment of his national insurance contributions. 3.11. He did not do Saturday work. He was not offered Saturday work or asked to do it. 3.12. He was not in a pension scheme with either company. 3.13. There were other drivers working for both companies. Mr Hallsworth was paid a set rate. Others were paid by delivery. One other used a company vehicle, others provided their own and met the costs. 3.14. Mr Hallsworth continued to work for NAM Global Ltd on the same basis from 1/12/98. On being told of the transfer, he wanted to be clear that his terms and conditions would remain the same. He pressed on the matter. He was assured by Mr Logan that there would be no change in his terms on the transfer of the business to NAM Global Ltd and there was no change. There was no re-negotiation of his contract on the transfer of the business or any discussion of his contract terms. He continued to work under the direction of the new management. He submitted invoices to NAM Global Ltd instead of to Courier Freight Services. 3.15. His annual leave and bank holidays continued to be paid until March 2020. That was the first change in the arrangements since 2001, save for the two previous pay rises he had had. 3.16. In March 2020, Mr Hallsworth had his holiday approved in the usual way by Mr Mansourian. Mr Fitzgerald, company director of the Respondent, called him in during his annual leave and told him that this was an “unauthorised absence” and that he would not be paid for it. He told him that he was dismissed with one week’s notice. He later changed that to a “verbal warning”. 3.17. Mr Hallsworth at that point tried to consult the company disciplinary process but was unable to. Mr Fitzgerald challenged why he was trying to look at it. 3.18. On 5 May 2020, Mr Fitzgerald told Mr Hallsworth that the company would not be paying annual leave or public holidays, and that would be applied retrospectively to the Easter period 2020. That decision was then applied for future leave, but the Easter holiday period was paid. 3.19. The company then stopped offering him work on the previous consistent basis, so he had no work on 11 and 18 May, or 8 June and none from 16 June. That was the first time he had not been given work. 3.20. Mr Hallsworth wrote to the Respondent three times to try to resolve his status. He had no response. 3.21. The van is now insured for another driver to use.[4]Law 4.1. Section 230(1) of the Employment Rights Act 1996 (“ERA 1996”) defines an employee as “an individual who has entered into or works under (or where the employment has ceased, worked under) a contract of employment.” 4.2. Section 230(2) provides that “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’. That is by distinction from a contract for services, which is a contract for a self-employed arrangement. 4.3. Section 230(3) provides that “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 of a client or customer of any profession or business undertaking carried on by the individual. 4.4. The section 230 definition of “employee” is adopted for a range of provisions including breach of contract (s42 Employment Tribunals Act 1996). The section 230 definition of “Worker” is adopted elsewhere, including for the Working Time Regulations. 4.5. By section 83(2) of the Equality Act 2010, “Employment” is defined as “employment under a contract of employment, a contract of apprenticeship or a contract personally to do work”. 4.6. The Equality Act definition therefore includes workers in the ERA 1996 definition and those concepts have been held to be the same (Pimlico Plumbers [2018] UKSC 29). 4.7. Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”), regulation 2, “employee” means any individual who works for another person whether under a contract of service or apprenticeship or otherwise but does not include anyone who provides services under a contract for services. There must be a contractual relationship between the individual and the transferor. Employees and apprentices are clearly covered, together with a wider and ill-defined group (those identified by the words “or otherwise”). There is no appellate authority on whether workers who are not employees are covered by that, but in Dewhurst and ors v Revisecatch Ltd t/a Ecourier and anor ET Case no 2201909/2019, the Judge identified workers who are not employees but who fall within the definition in section 230(3)(b) of the ERA 1996 as included within the TUPE definition. If so, such workers can enforce the same rights against the transferee as against the transferor but not any enhanced rights. 4.8. Both relationships, that is, employee and worker, depend on the formation of a contract between the parties (Windle v S of S for Justice 2015 ICR 156 (para 12)). 4.9. A contract is a promise, or set of promises, that the law will enforce. In employment context, the employee promises to perform work in exchange for the payment of wages and the commitment to provide work. Other terms may also apply, covering holidays, payment for holidays, sickness absence, the use of equipment, satisfactory performance standards. Typically, an employment contract will be made up of a variety of terms and conditions setting out the respective obligations of the parties. 4.10. For there to be a contract, there must be the intention to enter into legal relations and those legal relations must be intended to be created by way of a contract not by some other legal mechanism (Sharpe v Bishop of Worcester 2015 CA IRLR 663). There must be, expressly or impliedly, an offer, acceptance and consideration – that is, each party gives something of benefit to the other. 4.11. It is not necessary for a contract to be in writing. It is an important protection for each party that it is in writing, so that the terms can be clearly identified, but an oral contract of employment or for services is binding on both parties. Contracts may be partly written and partly oral and they can also be constituted or evidenced by conduct. (Protectacoat Firthglow Ltd v Szilagyi [2009] EWCA Civ 98, [2009] IRLR 365 ) 4.12. Once a contract does exist, 'employment' tends to reflect mutual obligations, whereas the 'worker' definition tends to concentrate on the element of personal service by the individual (not on the obligation of the employer to provide work). 4.13. If the contract is not one of employment, those who carry on a business on their own account and enter into contracts with clients or customers to provide work or services for them are self-employed and excluded from statutory employment rights. Those who provide their services as part of a business carried on by someone else rather than on their own account are likely to be workers, with a range of statutory employment rights, even though more limited than those for employees. 4.14. Someone who pays their own tax and national insurance may do so because they are properly self-employed, or it may be that they are employees whose status has been mis-categorised so that the “employer” can reduce tax and national insurance liabilities or to escape other consequences of employing staff. 4.15. The question is always what the true legal relationship between the parties is. That may or may not be accurately reflected in contractual documents. All the relevant evidence, oral, written and ongoing conduct, must be examined to determine the “true agreement” (Carmichael v National Power Plc [1999] ICR 226 HL). 4.16. Taperer v South London and Maudsley NHS Trust 2009 ICR 1563 EAT, a TUPE case, reminds us that the contract terms are to be identified at the time at the time the contract is entered into, describing that as an elementary premise in the construction of contracts. 4.17. The Supreme Court in Uber Bv and ors v Aslam and ors 2021 ICR 657 held that by reason of the purpose of the statutory protections conferred on workers and employees the terms of a written contract are not even the starting point in determining whether an individual falls within those definitions. The focus must be on the practical reality of the working relationship. The key questions relate to subordination and dependence, having regard to the legislative purposes of statutory rights. These are not ordinary commercial contracts. 4.18. A number of tests have been applied in distinguishing employees from workers and workers from those in genuine self-employment. 4.19. In relation to employee status, the traditional three questions, derived from Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance 1968 1 All ER 433 QBD are: 1. Did the worker undertake to provide his own work and skill in return for remuneration? 2. Was there a sufficient degree of control to enable the worker fairly to be called an employee? That is, has the worker expressly or impliedly agreed to be subject to the other’s control in the performance of his duties? 3. Were other provisions consistent or inconsistent with the existence of a contract of employment? 4.20. Mutuality of obligation – that is, each party to the contract offering something to the other, perhaps one committing to offer work and pay, the other promising to carry out the work - is a central issue in determining whether an individual is an employee or genuinely in business on his or her own account. 4.21. Without mutuality of obligation and a sufficient degree of control, there cannot be a contract of employment (Carmichael above, and Montgomery v Johnson Underwood Ltd [2001] ICR 819) 4.22. In Stephenson v Dephi Diesel Systems Ltd EAT [2003] ICR 471, Elias J said this, “The significance of mutuality is that it determines whether there is a contract in existence at all. The significance of control is that it determines whether, if there is a contract in place, it can properly be classified as a contract of service, rather than some other kind of contract.” 4.23. The question of control is not to be determined solely by whether the worker has day-to-day control over their own work but by addressing the cumulative effect of the provisions in the agreement and all the circumstances (White and anor v Troutbeck SA , CA 2013] IRLR 949. 4.24. Can a worker or employee engage a substitute to carry out the work for them? Personal performance is an explicit component of the ERA 1996 definition of worker and is also a necessary constituent of a contract of employment. A limited or occasional power of delegation is not inconsistent with that requirement (Ready Mixed Concrete, MacKenna, above) An unfettered right to substitute another person to do the work or perform the services is inconsistent with an undertaking to do the work personally. A conditional right to provide a substitute may not be inconsistent with the obligation to provide personal service (Pimlico Plumbers Ltd v Smith [2018] UKSC 29). but the presence of a substitution clause in written documentation is unlikely to prevent a finding of “worker” status if there is no evidence of such a clause being operated or intended to operate in practice (Uber, above). 4.25. The requirement for personal service for employees has been seen as higher than for workers. So, if there is no requirement for personal service, the contract cannot be one of employment (Express & Echo Publications Ltd v Tanton [1999] ICR 693 HL). That now has to be approached in the light of the judgement of the Supreme Court in Uber, bearing in mind the purpose of the legislation. 4.26. Relevant to the analysis as to whether an individual is self-employed, a worker or an employee, therefore, will be the extent of control of the worker and the way he does the work held by the organisation, the extent of mutual obligation to provide and to perform work, the extent of integration into the organisation, that is whether the worker was part and parcel of the organisation or truly independent of it, whether there is an obligation on the worker to perform the work personally or whether he is entitled to employ a substitute. It is a multi-factorial assessment: consideration of all the circumstances is required, the terms of the contract and between whom and when it was made. 4.27. The following questions are helpful in creating the overall picture. ● What was the amount of the remuneration and how was it paid?—a regular wage or salary tends towards a contract of service; profit sharing or the submission of invoices for set amounts of work done, towards independence. ● How far, if at all, did the worker invest in his own future: who provided the capital and who risked the loss? ● Who provided the tools and equipment? ● Was the worker tied to one employer, or was he free to work for others (especially rival enterprises)? Conversely, how strong or otherwise is the obligation on the worker to work for that particular employer, if and when called on to do so? ● Was there a 'traditional structure' of employment in the trade? ● How did the parties themselves see the relationship? ● What were the arrangements for the payment of income tax and national insurance? ● How was the arrangement terminable?—a power of dismissal smacks of employment. 4.28. In Cotswold Developments Construction Ltd v Williams [2006] IRLR 181, a four-fold approach was suggested: (1) was there one contract, or a succession of shorter ones? (2) If one contract, did the claimant agree to undertake some minimum (or, at least, reasonable) amount of work for the company in return for pay? (3) If so, was there such control to make it a contract of employment? (4) If there was insufficient control (or some other factor negativing employment) was the claimant nevertheless obliged to do some minimum (or reasonable) amount of work personally, this qualifying him as a worker? 4.29. Relevant factors in assessing control include whether the individual is under a duty to obey orders, has control over his or her hours of work and holiday, is supervised as to the mode of working, whether he or she provides their own equipment. 4.30. An alternative approach considers integration, that is the integration of a worker into the organisation – is there any disciplinary or grievance procedure, is the individual included in any occupational benefit scheme? Is he in business on his own account? Does he provide his own equipment, hire his own helpers, take a financial risk, take any role in investment and management of his own business and can he profit from his own success? 4.31. Where someone works on an assignment-by-assignment basis, that may indicate a degree of independence, or lack of subordination in the relationship while at work which is incompatible with employee status or extended employee/ worker status (Secretary of State for Justice v Windle and Arada [2016] EWCA Civ 459. Where there is continuity and regularity of work and performance, that points to at least worker status (Pimlico Plumbers Ltd and anor v Smith 2018, ICR 1511, SC). Two additional criteria are identified in that case, based on Cotswold Developments Construction Ltd above and Hashwani v Jivraj [2011] UKSC 40: o whether the purported worker actively markets his services as an independent person to the world in general, or is instead recruited to work as an integral part of the principal’s operations, and/ or o whether the person performs services for and under the direction of someone else in return for which he receives remuneration, or whether he or she is an independent provider of services who is not in a relationship of subordination with the person who receives the services. 4.32. Express contract terms are important but not necessarily decisive. An express contract term stating that there is no contractual obligation to offer and/or to do work does not inevitably preclude a finding of worker, or even employee status, where the individual works regularly and consistently for the master (using the old-fashioned term as being more neutral than “employer). 4.33. The effect of the judgment of the Supreme Court in Uber is that in assessing status, the facts must be looked at in the round, bearing in mind the purpose of the statutory protections provided to those who are in a situation of economic dependence, subordinate and vulnerable to exploitation.[1]The claimant was not dismissed by the respondent, so the following claims fail:a. Constructive unfairly dismissal pursuant to section 95(1)(c) Employment Rights Act 1996.b. Unfair dismissal, pursuant to s94 Employment Rights Act 1996.c. Automatic unfair dismissal, pursuant to s101A Employment Rights Act 1996.d. Wrongful dismissal, i.e. dismissal in breach of contract.[2]The claimant was subjected to detriment for asserting his statutory rights to be paid his annual leave entitlements in breach of s45A Employment Rights Act 1996.[3]The claimant was not discriminated by the respondent on the grounds of his age, in breach of s13 Equality Act 2010. 10.2 Judgment - rule 61 Case No: 3310912/2020[4]The claimant was not paid his full annual leave entitlement in breach of regulations 13 of the Working Time Regulations 1998.[5]The claimant suffered an unlawful deduction of wages contrary to s13 Employment Rights Act 1996.[6]The respondent failed to provide the claimant with written particulars of his employment, in breach of s1 Employment Rights Act 1996.[7]The claimant is awarded total compensation as follows:a. 6 days accrued and untaken holiday pay - £480.00*b. Detriment for asserting statutory rights and non-payment of wages (also includes notice pay) - £40,160.00*c. 2 weeks wages for s1 ERA breach £800.00 Total £41,440.00[8]The respondent’s contract claim for damages caused to a company vehicle, under the Extension of Jurisdiction Order 1994, fails.[9]The claimant’s application for reimbursement of some of his legal costs, made under rules 76(1)(a) and 76(1)(b) Employment Tribunal Rules of Procedure succeeds, and the Tribunal awards the claimant £2,375.00.[10]There being no further matters outstanding, proceedings are now concluded. *As these figures are awarded gross, they may be subject to deduction for tax and national insurance as appropriate.