Mr M BennettClaimantMA Prestige Ltd RECORD OF A PRELIMINARY HEARINGRespondent
Before
Employment Judge Bloch KCIn person for claimantNot represented for respondentDate 24 March 2025
JUDGMENT
Between 1 May 2023 and 29 August 2023 the claimant was a worker of the respondent under section 230(3) (a) and (b) of the Employment Rights Act 1996 and Regulation 2(1) Working Time Regulations 1998.
REASONS
[1]The purpose of this hearing was to determine the status of the claimant (“C”) when working for the respondent (“R”), ie, whether he was an employee or worker or else (as R contended) an independent contractor.[2]I heard evidence from C who confirmed the matters set out in his short witness statement. A witness statement was also lodged by C’s grandmother, Carole Bennett, but it was not necessary for me to consider that today since it related to matters at a later stage than the time with which I was concerned.[3]C began providing his services to R on 1 May 2023 as a Vehicle Recovery Driver initially being paid £300 per week. He describes in his witness statement how he was given a “verbal contract” by Mr Andre Christodoulou, a director of R. In his evidence he expanded upon this. The verbal contract was for C to work for R as a vehicle recovery driver. He was to work full time for R which had a recovery truck known as a flatbed truck. R would give C the work. Mr Christodoulou would tell C what he was to do and on what day it was to be done. He would give C a schedule of work which would be conveyed either verbally or by electronic message. He originally agreed that C would work for six days but, in fact, on some weeks he worked for seven days. C would go to Mr 1 ph judgment + cm Nov 2014 wip version Christodoulou’s home to pick up the recovery truck, where it was parked overnight. After the end of each day’s work C would commute to his own home. This process would be repeated every day. There were not many days that C was not working. When required he would work also on a Saturday or Sunday in addition to normal Monday to Friday working. He had no option in this regard: when he wanted time off he had to tell Mr Christodoulou several days in advance. He would start his work at around 8.30 to 9am daily. The exact start time depended on the amount of work that was available that day. Sometimes he worked until very late - as late as 2.30am or even later on some occasions. If things were quiet, he would come in at around 8.30 to 9am so that he could be ready for any jobs that might come in. C worked by himself. He had no option to send a substitute, being the only driver employed or engaged by R.[4]Mr Christodoulou would give C the location of the car that needed towing, telling where the car was and what the state of the car was. Sometimes C would need to take along certain equipment such as rollers or “skates” to enable C to get the damaged vehicle onto the truck.[5]The jobs came to Mr Christodoulou via telephone calls or a group chat message. C went to find the vehicle in question and if something was not right, he would phone Mr Christodoulou who would contact the client for further details, for example, the correct address or postcode if that had been given incorrectly by the customer in the first place.[6]Mr Christodoulou gave C basic training in the job. He took him out on a few jobs and the rest was left to C to learn “on the job.” Mr Christodoulou would organize the job, the pickup points and time, what day and the nature of each job. If there were any changes in the schedule Mr Christodoulou would talk to the customers about this. He also dealt with payment, which came in from the customers. Occasionally C might make a suggestion, for example, as to whether a particular job could safely be done, eg, because of the weight of the vehicle in question. Generally this was rejected by Mr Christodoulou. He would get very annoyed by any such suggestions from C. If C needed to go to the doctor or dentist he would have to tell Mr Christodoulou well in advance. On one occasion when he wanted to go on a family holiday with his parents for a week during the summer, he gave a reasonable notice of his intention, but Mr Christodoulou refused as he wanted C to be available. C discovered that there were no substantial amount of jobs on this occasion but Mr Christodoulou preferred to have C on standby.[7]Mr Christodoulou, in addition to providing the flatbed truck, paid for or the diesel used by C, initially via a “Revolut” account and then later by the use of a bank card. Some of the equipment (Mr Christodoulou insisted) had to be paid for 50/50 between the two - ie rollers, (total cost £250) and straps (£20 in total) and C furthermore had to pay 50% of the insurance (his share amounted to £659 over four months).[8]To the knowledge of Mr Christodoulou, C had no other work, no other business. Mr Christodoulou knew that C had left his previous full-time job to come to work for him. Although Mr Christodoulou had initially promised to pay for overtime, this was apparently not forthcoming. In the Grounds of Resistance R relied upon the fact that after a time C began providing invoices in respect of his £300 per week. This occurred in July 2023 and onwards. C did not understand what an 2 ph judgment + cm Nov 2014 wip version invoice was and assumed it was a receipt but started sending these because Mr Christodoulou made clear that this was necessary for him in order to receive his weekly payment. The invoices which I was shown all contained words “weeks pay” and then the week to which it related (there was one invoice which referred to “Extra owed pay”). This wording was used by C as instructed by Mr Christodoulou. He told him what to fill into the invoice. As to the sum of £300, that was the figure which Mr Christodoulou gave C saying that “this is what you will be getting per week”. Although C raised the question of tax and National Insurance, Mr Christodoulou kept saying “Yes, I am going to sort it out.” Or, on some occasions, he said that that he had sorted it out. C was too distracted by his work to pursue this vigorously. In a similar way Mr Christodoulou kept putting off the question of partnership between them which had been discussed at the outset of the relationship.[9]C did not accept the statement in the Grounds of Resistance that C had chosen to work Monday to Saturday, nor the statement that R had never fixed his work hours as C was free to work when he wanted. This was not the case. The number of hours C worked, and the degree of control exercised over C by Mr Christodoulou in this and the other respects were (he said) as referred to above.[10]These are the facts as related to me in evidence by C and I accepted him as a witness of truth giving his evidence to the best of his recollection and understanding.[11]Turning to the law: Section 230(3) Employment Rights Act (“ERA”) 1996 and contain the same definition of worker as follows: “ 230 Employees, workers etc. … (3) In this Act “worker” … means an individual who has entered into or works under (or, where the employment has ceased, worked under)—(a) a contract of employment, or(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.” Regulation 2(1) Working Time Regulations 1998 is in materially the same terms[12]As is apparent from the above section, the so called “limb (b) worker” contract (ie that referred to in section 230(3) (b)) must contain two elements: 3 ph judgment + cm Nov 2014 wip version(1) C must have entered into a contract whereby he undertook to perform work or services for R;(2) C must have agreed personally to perform some work or service for R. However, C is not a limb(b) worker if:(3) He carried on a “profession or business undertaking” on his own account so as to be “self-employed”: and(4) R was also a client or customer of C by virtue of the contract: Sejpal v Rodericks Dental Ltd [2022] IRLR 752 at [10] [11]and [35]. Cases on personal performance have been applied interchangeably to both limb (a) and (b) workers although the tribunal should not lose sight of the different overarching legal tests for each status.[13]In Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2QB 497 [at 515 C to D], Mackenna J set out the following test for a contract of service: “A contract of service exists if these three conditions are fulfilled:(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master,(ii) He agrees, expressly or impliedly that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master,(iii) The other provisions of the contract are consistent with it being a contract of service.”[14]This statement of the law has been applied uniformly for many years and has recently been approved in Supreme Court Commissioner for HM Revenue and Customs v Professional Game Match Officials Ltd [2024] UKSC 29 handed down on 16 September 2024. In that case some of the key propositions which were made by the unanimous decision of the Supreme Court were:14.1 Mutuality of obligation and control are necessary but not necessarily sufficient, conditions of a contract of employment.14.2 The tribunal must address “The cumulative effect of the totality of the provisions [of the contract] in all the circumstances of the relationship created by it and view “in the round” the relationship between the parties recorded in the agreement in the setting of the surrounding circumstances”.14.3 The tribunal must consider the nature of the mutual obligations and the degree of control exercisable by the putative employer.14.4 The factors relevant in assessing whether the 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, ie, a limb (b) worker. However, in considering the latter question the boundary is pushed further in the putative employees favour or, to put it another 4 ph judgment + cm Nov 2014 wip version way, the pass mark is lower: See Byrne Brothers (Formwork) Ltd v Baird [2002] ICR 667, paragraph 17(5).14.5 The essential element of a contract of employment is that the employee provides his or her personal services for payment by the employer.14.6 Control: The extent of control in any particular case remains a relevant factor in the overall determination of whether there exists an employment relationship. It is not the case that once the preconditions of mutuality of obligation and control are satisfied that they drop out of the picture as relevant factors in the overall assessment of whether a contract of employment exists. There must be considered whether the putative employer exercised: “The power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done”; control is expressed in the most flexible terms: control must exist “In a sufficient degree to make that other master” or there must exist some “sufficient framework” of control that requires the court to test control by reference to the conditions then prevailing as regards work and employment.[15]The Supreme Court also referred the well-known judgment of Autoclenz Ltd v Belcher [2011] UKSC 41. The Supreme Court there said that “The true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part.” The House of Lords in Carmichael v National Power Plc [1999] 1 WLR 2042 (where there was an exchange of correspondence between the parties rather than a formal contract) approved the decision of the employment tribunal when it made a finding of a contract of employment existing based on the language of the correspondence, the way in which the relationship had operated and the evidence of the parties as to their understanding of it.[16]With regard to personal service/performance, the issue of substitution is often important ie whether the putative employee can substitute another worker for himself to provide services to the putative employer (see Pimlico Plumbers Ltd v Smith [2017] EWCA Civ 51).[17]With regard the so called “Other factors” referred to in the Ready Mixed Concrete case, in HM Revenue & Customs v Atholl House Productions Ltd [2022] IRLR 698 Sir David Richards emphasised [at paragraph 122 to 123] that applying the multi-factorial approach included considering whether objectively the parties intended to create an employment relationship and whether the person providing services is carrying on a business on their own account. In Market Investigations Ltd v Minister of Social Security [1968] 2QB 173, Cooke J held (at 184G to 185B) that “… the fundamental test to be applied is this: “Is the person who has engaged himself to perform these services performing them as a person in business on his own account”. If the answer to that question is “YES” then the contract is a contract for services. If the answer is “NO” then the contract is a contract of service.[18]He suggested a non-exhaustive list of relevant factors including: 5 ph judgment + cm Nov 2014 wip version “Whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task”.[19]These comments were approved in Lee Ting Sang v Chung Chi-Keung [1990] IRLR 236 Per Lord Griffiths at [6].[20]As to Limb (b) worker status, the case of Byrne at paragraph 17(4) – to (5) provides further helpful guidance: “… 5. Drawing the distinction in any case will involve all or most of the same considerations as arise in drawing the distinction between a contract of service and contract for services – but with the boundary pushed further in the putative worker’s favour. It may for example be relevant to assess the degree of control exercised by the putative employer, the exclusivity of the engagement and its typical duration, the method of payment, what equipment the putative worker supplies, the level of risk undertaken etc. The basic effect of limb (b) is, so to speak to lower the pass-mark so that cases which fail to reach the mark necessary to qualify for protection as employees might nevertheless do so as workers.”[21]The following factors were emphasised in Byrne:a. Subordination and dependency: the legislation’s purposes is to extend protection to workers who are substantively and economically, in the same subordinate and dependent position as employees”;b. Dominant purpose/Feature test: in James v Redcats (Brands) Ltd [2007] IRLR 296 Elias J noted at [53] that courts previously asked whether the “dominant purpose” “of the contract is the provision of personal services or whether that is an ancillary or incidental feature. Discussion/conclusion[22]In the light of the facts set out above and the legal authorities quoted I have no doubt in concluding that C was not an independent contractor. In my judgment he was an employee and also a limb (b) worker of R.[23]The reasons are:a. that this was a contract for personal service, ie, there was sufficient mutuality of obligation between C and R for the provision by him of his personal services There was no provision made nor was it acceptable under the agreement for C to provide a substitute;b. it was plain on the evidence of C that R exercised considerable control over him both as regards the nature of the work to be caried out, the particular assignments assigned to him, the place where those services were to be provided, ie, namely where the vehicles had been stranded and, furthermore, controlled the times of work;c. Further, R provided the essential “tools” of the job in the form of the flatbed truck and the petrol. R required C to make a contribution towards 6 ph judgment + cm Nov 2014 wip version some expenses but this was insignificant compared to the flatbed truck and the petrol, which were the essential tools of the job;d. C was subordinate to R with no or no real bargaining power and was therefore exactly the kind of person to whom the above employment legislation is intended to extend protection.[24]The provision of invoices by C needs to be considered in the context which he described. Those invoices were in their terms were for “weekly pay”. But, in any event, (if as seems to have been the case) these invoices were an attempt on the part of R to give the relationship the appearance of one between an independent contractor and a client, in my judgment, they failed to achieve this. This was either because of the actual wording of the invoices or because of the circumstances in which they were required from C. Insofar as necessary, I would conclude that analogously with the Autoclenz Ltd v Belcher decision the provision of invoices did not reflect the true terms of the agreement between the parties. (While invoices are not contractual documents nonetheless, they are significant in a normal case in regard to the question of the true relationship of the contract).[25]As to tax and National Insurance it was indicated that C had been seeking to have this dealt with by R who apparently prevaricated in this regard. Again, the non-payment of tax and National Insurance in these circumstances does not take matters any further.[26]It follows from what I have said for the purposes of ERA 1996 section 230(3)(b) that C was not an independent contractor providing services to R as a customer or client. In no real sense could R be described as C’s customer or client. In particular, but not exclusively, R set the rate and exercised control over C in regard to his work in a way which was wholly inconsistent with a customer/independent contractor relationship.[27]For those reasons I conclude that C was a worker under section 230(3) (a) and (b) ERA 1996 and Regulation 2(1) WTR 1998 Employment Judge Bloch KC Signed: 16 December 2024 For the Tribunal: N Gotecha 7 ph judgment + cm Nov 2014 wip version Recording and Transcription Please note that if a Tribunal hearing has been recorded you may request a transcript of the recording, for which a charge may be payable. If a transcript is produced it will not include any oral judgment or reasons given at the hearing. The transcript will not be checked, approved or verified by a judge. There is more information in the joint Presidential Practice Direction on the Recording and Transcription of Hearings, and accompanying Guidance, which can be found here: https://www.judiciary.uk/guidance-and-resources/employment-rules-and-legislation-practice-directions/ 8 ph judgment + cm Nov 2014 wip version
Conclusions
[28]The claimant worked overtime but he has not kept records or been able to provide evidence of the overtime he worked other than for a trip to Scotland on 9 June 2023 which was overtime of 12 hours. I find that he should have been paid £89.88 (gross) for overtime on that day. I do not make an award in respect of further overtime because the claimant is unable to itemise it.[29]The respondent made unauthorized deductions from the claimant’s wages in respect of the car purchased from the respondent in June 2023. The agreement was not made in writing. However the claimant does not include that in his claim and I find that he has not brought a claim for that deduction within the time limit set out in s.23 Employment Rights Act 1996. Moreover I find that he has not provided evidence that it was not reasonably practicable for him to bring a claim within the time limit because his reason was that he was not aware of his right to do so.[30]In total there was an unauthorized deduction of £1401.24 from the claimant’s wages between 1 May 2023 and 29 August 2023 and I order the respondent to pay this sum to the claimant. The respondent will be entitled to deduct any tax and employee’s national insurance contributions due on this amount before payment to the claimant. Notice pay[31]I find that the claimant was entitled to one week’s notice, and I award a gross sum of £359.52 (8 hours x 6 days x £7.49) in respect of that. The respondent will be entitled to deduct any tax and employee’s national insurance contributions due on this amount before payment to the claimant. Holiday pay[32]The claimant worked over a period of 121 days (1 May 2023 to 29 August 2023). I calculate that the claimant was entitled to statutory holiday of 9.3 days. Taking into account a working day of 8 hours (the claimant being unable to evidence overtime) I calculate total hours of 74.4. If the claimant had been paid the minimum wage of £7.49 that would amount to £557.26. I order the respondent to pay that sum to the claimant. The respondent will be entitled to deduct any tax and employee’s national insurance contributions due on this amount before payment to the claimant. Expenses[33]Insurance: The claimant paid insurance for the recovery vehicle in the sum of £659. He was told that he had to pay 50%. He should not have been required to pay that because he was an employee and not a partner. The requirement to pay that sum and failure to reimburse it was a breach of contract. I find that the claim for breach of contract is connected to his employment and I award the sum of £659.[34]Tools: The claimant paid for tools. In his claim he has claimed 50% of the cost (£305) because that was the agreement between him and Mr. Christadoulou. The respondent has retained the tools. The actual cost to the claimant was £610. The requirement to pay that sum and to fail to reimburse it was a breach of contract. I find that the claim for breach of contract is connected to his employment and I award the sum of £610.[35]Registration plate: The agreement to use the number plate on the recovery vehicle was a mutual agreement and the respondent told the claimant that he would retain ownership. I find that it was implied in the contract that the number plate would be returned to the claimant if he no longer worked for the business. I find that the agreement was connected to the claimant’s employment. The failure to return the number plate at the conclusion of the claimant’s employment is a breach of the contract. I award damages of £635.38, that being the cost of the numberplate.[36]In total I award damages of £1904.38 for breach of contract for failing to reimburse expenses. Failure to provide a contract and itemized pay slips.[37]The respondent did not provide a statement of terms and conditions as required under s.1 of the Employment Rights Act 1996. The respondent has not explained to the tribunal why he did not provide the terms and conditions in writing and has failed to attend the tribunal hearings. I have decided that it is just and equitable to make the maximum award of four weeks' earnings for that in the sum of £1,438.08.[38]I make a declaration that the claimant was not provided with itemised payslips. Summary[39]I therefore order the respondent to pay the total sum of £5660.48 to the claimant (subject to deduction of tax and national insurance in respect of the sums at paragraphs 1,2 and 3 of the Judgment). Approved by: