Mrs A Dawodu v Hadouken Tricking Academy Ltd: 8000537/2024
EMPLOYMENT TRIBUNALS (SCOTLAND)
Case No 8000537/2024Venue GlasgowHearing 4 & 5 November 2024
Between
Mrs A DawoduClaimantHadouken Tricking Academy LtdRespondent
Before
Employment Judge C McManusMs M Sommerville (instructed by Solicitor) for respondentDate 7 November 2024
JUDGMENT
The claimant was not an employee of the respondent in terms of section 230(1) and (2) of the Employment Rights Act 1996 The claimant was not a worker for the respondent in terms of section 230(3) Employment Rights Act 1996 The Employment Tribunal does not have jurisdiction to determine the complaints of(1) unfair dismissal under the Employment Rights Act 1996;(2) disability discrimination under the Equality Act 2010 or(3) alleged detriment or dismissal as a result of having made an alleged protected disclosure. and the complaints are dismissed.
REASONS
[1]The claims are in respect of Unfair Dismissal, Disability Discrimination and Public Interest Disclosure. The respondent provides acrobatic fitness instruction. The respondent’s sole Director (Mr Kristopher (‘Kris’) Breadie) is the son of the claimant. The respondent disputes the claim and denies that the claimant was an employee or worker of the respondent. The respondent admits that the claimant was registered as the respondent’s Company Secretary. The respondent also denied that the claimant has the protected characteristic of disability and relied on the claims being timebarred.[2]At the Case Management Preliminary Hearing (‘CMPH’) before me on 22 August 2024, I decided that the case should proceed to a Preliminary Hearing on employment status. Issues for Determination[3]It was confirmed during this Preliminary Hearing (‘PH’) that the issue to be determined is whether the claimant had status as an employee or worker with the respondent (or not). Proceedings[4]Following discussions at the start of this PH, it proceeded on the basis of the Joint Bundle being an indexed Bundle with 41 documents, each separately numbered. The numbers in this Decision (JB1/1 – JB41/ 10) relate to the numbering in that Joint Bundle.[5]I explained the procedure which would follow in respect of evidence being heard on oath or affirmation, by questioning in evidence in chief, cross examination and re-examination. At the stage of re-examination, the claimant had the opportunity to write down anything arising in cross examination which she wished to clarify. In recognition of the claimant’s breathlessness, additional time was allowed for lunch. Breaks were taken as required.[6]It was agreed that the respondent’s Director, Mr Kris Breadie, would not be present in the Tribunal room until the claimant had given her evidence. After preliminary discussions, Kris Breadie left the Tribunal room and was not present in proceedings until from when his evidence was heard, on 5 November 2024. On 4 November 2024, evidence was heard from the claimant and from her friend Samantha McInnes.[7]At the end of proceedings on 4 November, Ms Somerville gave the claimant a paper copy of the authorities she intended to rely on and the claimant informed Ms Sommerville of the authority she intended to rely on.[8]At the commencement of the PH on 5 November, I clarified that my determination at this PH would be on the definition of ‘worker’ in section 230(3) of the Employment Rights Act 1996 (‘the ERA’) as well as the definition of ‘employee’ in section 230(1) and (2) ERA. Parties confirmed that that was their understanding of the purpose of this PH. On application of Rule 2 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013 (‘the Procedure Rules’), I gave the claimant the opportunity to give her evidence specifically on the wording in section 230(3) ERA, and allowed the respondent’s representative the opportunity to cross examine on that position (which was declined).[9]Mr Kris Breadie gave his evidence on 5 November. From the outset, it was noted that Kris Breadie’s position had not been put to the claimant or Samantha McInnes. I allowed Kris Breadie’s evidence to be heard, on the basis that the claimant would be re-called to be allowed the opportunity to give her evidence on Kris Breadie’s position. During his evidence, Kris Breadie relied on there being text messages between himself and the claimant, where the claimant’s position was that she would not take any wages for work done by her for the respondent. Following Kris Breadie’s evidence, time was allowed for the respondent to lodge documentary evidence of those messages, so that they could be put to the claimant on her re-call. Copies of text messages were produced by the respondent and included in the Bundle (JB42/1 – JB42/12). The respondent’s representative was content to rely on Kris Breadie’s position in his evidence, without his further evidence on the specific messages then produced. The claimant was re-called to give her position on what appeared to be set out in those text messages.[10]After hearing the evidence, submissions were made by the respondent’s representative and the claimant. Burden of Proof[11]The burden is on the claimant to prove, on the balance of probabilities, that she was(a) an employee or(b) a worker of the respondent. Findings in Fact[12]The following facts were admitted or found to be proven:[13]The respondent business operates a ‘tricking’ gym. The respondent’s sole Director is Kris Breadie. Kris Breadie is the son of the claimant. The claimant has also been known as Allyson Breadie. Prior to the respondent business being set up, Kris Breadie asked the claimant to help him set up the business. He relied on the claimant having had business, legal and accounting experience. The claimant used her experience to help her son realise his ‘dream’. The claimant put money into the set up of the business. There was no written agreement in respect of that money or any work done by the claimant for the respondent.[14]At the time of the respondent business being set up, from 23 November 2012 until 30 November 2023 the claimant was registered at Companies House as the respondent’s ‘secretary’ and had responsibilities as Company Secretary.[15]The claimant carried out ad hoc work for the respondent. There was no agreement on what work the claimant was responsible for or on the hours to be worked. The work done by the claimant for the respondent business included reception work i.e. signing people into classes, taking money, liaising with parents, treating any minor injuries and other administrative work, including liaising with energy suppliers and marketing such as Facebook posts. In addition, the claimant prepared the business’ accounts. There was no requirement on her to attend work or to carry out any particular tasks. Other individuals also carried out reception work for the respondent.[16]The claimant’s position throughout the time that she carried out work for the respondent business was that she did not want to take wages.[17]When carrying out work for the respondent, the claimant worked using her own methods and on her own powers. She set up systems such as a rotas for toilet cleaning and a calendar to record holidays.[18]In the period since November 2012 the claimant has gone to France for some months at a time, (including to care for a sick relative) without seeking or requiring to seek authority for time off from work at the respondent business.[19]During the time of the COVID lockdowns the claimant did not attend the respondent’s business premises. Since that time (2020) the claimant has not carried out any reception work for the respondent. The claimant continued to receive correspondence concerning the respondent’s business at her home address and continued to do work for the respondent in respect of preparing accounts.[20]In January 2022 the respondent has employed an individual in a role whose tasks include some previously done on an ad hoc basis by the claimant.[21]For some months in 2022 and 2023 the claimant was unfit to carry out any work for the respondent. She did not provide any certification to the respondent in respect of her sickness absences. She did not receive or seek to receive any payments in respect of sick pay from the respondent.[22]From 17 November 2023 until 30 November 2023 the claimant was registered at Companies House as a Director of the respondent business.[23]On 7 December 2023 the claimant received notification from Companies House of ‘termination of the appointment of Allyson Breadie as a secretary on 30 November 2023’ (at JB5/4).[24]On 8 December 2023, Clarity Solicitors, on behalf of the respondent, wrote to the claimant (letter at JB5/2 – JB5/3) providing the claimant with notification from Companies House of ‘termination of the appointment of Allyson Breadie as a secretary on 30 November 2023’ (at JB5/4). That letter included confirmation to the claimant that she did not have authority to act for the respondent’s behalf ‘in any manner’. That letter at JB5/2 refers to the ending of the claimant’s position as Company Secretary, with no reference to any employment of the claimant with the respondent.[25]The claimant did not receive any share capital or profit from the respondent business. There was no agreement that the claimant would receive any sums in respect of share capital.[26]In at least one text message sequence between the claimant and Kris Breadie, the claimant agreed to work for the respondent ‘for free’. The claimant was not obliged to undertake any work for the respondent and did not receive remuneration for work. There was no agreement as to what renumeration, if any, the claimant would receive for work done.
Relevant Law
[27]The Employment Rights Act 1996 (‘the ERA’) sets out definitions of 'employee' and 'worker' at section 230:- “(1) In this Act ‘employee’ means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. (2) In this Act, ‘contract of employment’ means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing. (3) In this Act ‘worker’ (except in the phrase ‘shop worker’ and ‘betting worker’)means an individual who has entered into or works under (or, where the employment has ceased, worked under) –(a) a contract of employment, or(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual; and any reference to a worker’s contract shall be construed accordingly.”[28]For the purposes of statutory employment rights, on application of the ERA, all employees will also be workers, but not all workers will be employees. The status of the worker is to be decided by an objective assessment of all the factors, and the label attached by the parties is but one of those factors.[29]An employment contract may be implied, if there is no written contract ( Airfix Footwear Ltd v Cope 1978 ICR 1210, EAT, cited with approval by the Court of Appeal in Nethermere (St Neots) Ltd v Gardiner and anor). Mutuality of obligation may be implied from the course of conduct over many years, although the Court of Appeal emphasised that each case will need to be carefully considered on its facts and that many decisions will be borderline.[30]When determining whether a claimant has employee status, a Tribunal must apply a multi factorial approach, considering all the relevant factors and may look beyond the terms of the contract itself. The main requirements of a contract of employment are control, mutuality of obligation and personal performance. No one test or feature is conclusive, in every case it is necessary to weigh all the factors in the particular case and ask whether it is appropriate to call the individual an 'employee'.[31]Relevant factors to be taken into account in respect of the ‘control test’ are whether the individual was under a duty to obey orders, had control over his or her hours of work and holiday, was supervised as to the mode of working, and provided his or her own equipment. Control is not conclusive of there being a contract of employment, but is an essential part of the ‘multiple test’ approach in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance 1968 1 All ER 433, QBD, and subsequent decisions. In Montgomery v Johnson Underwood Ltd 2001 ICR 819, CA, the Court of Appeal held that control is a separate factor, no less vital to the creation of an employment relationship than mutuality of obligation.[32]The concept of 'mutuality of obligations’ means an obligation on the employer to provide work and an obligation on the employee or worker to do that work. For a contract of employment to exist, there must be an ‘irreducible minimum’ of obligation on each side (Nethermere (St Neots) Ltd v Gardiner and anor 1984 ICR 612, CA, and Carmichael and anor v National Power plc 1999 ICR 1226, HL). This will usually be expressed as an obligation on the employer to provide work and pay a wage or salary, and a corresponding obligation on the employee to accept and perform the work offered.[33]In Hellyer Brothers Ltd v McLeod and ors; Boston Deep Sea Fisheries Ltd v Wilson and anor 1987 ICR 526, CA, the Court of Appeal held that there were no facts from which it could properly be inferred that the men had ever placed themselves under a legally binding obligation to make themselves available for work or to refrain from seeking or accepting other employment. In addition, there was no continuing obligation on the employer to offer employment to any particular individual. There was no ‘continuing overriding arrangement which governed the whole of [the parties’] relationship and itself amounted to a contract of employment’.[34]A contract of service (i.e. a contract of employment) cannot exist without the irreducible minimum mutuality of obligation (including an obligation to perform the work personally) and a sufficient degree of control. In Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance 1968 1 All ER 433, QBD, Mr Justice MacKenna set out that the employee must have agreed to provide his or her own work and skill in exchange for a wage or other remuneration. He noted: ‘Freedom to do a job either by one’s own hands or by another’s, is inconsistent with a contract of service, although a limited or occasional power of delegation may not be.’ He identified three questions to be answered:(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?(3) Were there any other factors inconsistent with the existence of a contract of employment? Comments on evidence[35]Most of the documents in the Bundle were not referred to in evidence and were not relevant to the issues for my determination.[36]There was a dispute on the arrangement between the parties. I required to make findings in fact in respect of matters material to the issues for my determination at this hearing, and apply the relevant law to those facts. In circumstances where there was dispute, I had to decide which version of events was most credible. Both the claimant and Kris Breadie sought to make serious allegations against the other, in relation to matters which were not material to the issues for my determination at this hearing.[37]On application of Rule 2 of Schedule 1 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (‘the Procedure Rules), after allowing the claimant the opportunity to cross examine Kris Breadie, I put the claimant’s position to Kris Breadie. Kris Breadie was open and not evasive in his answering to questions. He made concessions, such as agreeing that some work had been carried out by the claimant and that some of that work was later carried out by an employee. I accepted Kris Breadie’s explanation that he could not rely on his mother to do the work in the way he wanted and so had engaged an employee to do the work on a formal basis. On the evidence before me, I accepted Kris Breadie’s position that the claimant’s position had been that she would not take wages from the respondent business. In his evidence, Kris Breadie sought to rely on text messages which were then produced and which were consistent with his evidence. The claimant’s evidence was not entirely consistent. In particular, the claimant’s initial position was that she had ‘constantly asked for her wages’. On her re-call, the claimant accepted that she had sent messages to her son that she had agreed to ‘work for free’, but that that was because the respondent business could not afford to pay her wages at that time and she did not want the company to ‘go bankrupt’. The evidence does not show that the arrangement between the claimant and the respondent met the irreducible minimum of an agreed obligation that work be done for wages.[38]When I asked the claimant why she continued to do work for the respondent without being paid wages her answer was ‘I had to. There was no one else doing reception. I was invested in the business. And because he’s my son. As a mother.’ That answer was significant and does not point to a contract of service or a contract for service.[39]The clamant presented a version of events which was based on her understanding that a company Director was ‘always an employee’. Her evidence was ‘A director for me is an employee. Every director I’ve worked for is an employee.’ Although there are circumstances where a person who is a Director is an employee, that is not the case for all Directors, particularly those who are a Director in a small business, where they have control. The claimant’s position was that:- From 6 months before the respondent company was set up, the claimant gave Kris Breadie advice on how to set up the business. At the time the respondent business was set up the claimant put a £12,000 financial investment into the business. The respondent business was set up as a ‘not for profit’ business to ‘build the tricking community’ so that ‘both of us had tenure and couldn’t be sacked’. Due to a mistake, the claimant had been registered with Companies House as ‘secretary’ rather than ‘Company Secretary’ and that registration reflected the claimant’s job with the respondent. Both the claimant and Kris Breadie were ‘co-owners’, with ‘everything equal’. ‘The initial investment was a one off’ ‘From the start we were employees – both of us.’ ‘The first year was a test- to get him (Kris Breadie) set up. The first space was tiny. The first priority was to get him (Kris Breadie) something he could do that he wouldn’t get sacked for . It was more about him. I expected to do the job for a year so that he would be set up for life.’ That the financial investment was ‘separate from their jobs’ and that ‘both had to take wages’ There was ‘Equal effort. Equal everything.’ The claimant quantified her wages based on the amount she understood she could earn from ‘permitted work’ without affecting her social security benefits (said to be £167 a week) and with regard to the amount she considered was needed to run her household. She had never received any payment from the respondent for wages. That she was ‘always trying to get the £167 a week’. That she had received a payment of £300 a year for preparing the company accounts. That she had received reimbursement of expenses, including travel expenses of up to £100 a week and food expenses of £20 a week. That she had received a sum in respect of her working at home. That she continued to work for the respondent without getting paid wages from 2012. That she used her own credit card and bank card to buy things for the business. That she was reimbursed expenses from the business. That the claimant ‘had control over how the office was set up’. That for a period of time in 2018 the claimant was ‘making all the decisions’. That no NI or tax deductions were made because the respondent had less than 6 employees. From January 2022 a new employee ‘was in my seat and doing my job’. That she had continued to do work for the respondent in respect of preparing accounts ‘up to a level that the accountant could finish off’. That she was ‘going to lose my home’ because in 2018 she had put £153,250 into the purchase of the building now used by the respondent business and had ‘used equity in the house to buy the building.’ If any of those working for the respondent business wanted holidays they had to ‘come and check with me’. That the Companies House record reflected her employment as ‘secretary’. That she ‘managed staff and made sure they had nothing to take us to court and they were looked after.’ That when she was absent from working for 3 months due to ill health she ‘didn’t need to’ be ‘signed off sick’. ‘Both of us were guaranteed a job for life. We were both tenured and would never be sacked’ ‘Everyone was treated the same. I was insistent on that. We were building the foundations of a good company’. I would only pick up my investment on the exit route if the company ceased trading. That entry at document 41/6 recorded as ‘other loans’ related to expenses due to the claimant.[40]The claimant relied on being qualified, with a BA degree in ‘Accountancy with Law’ and having business financial experience. The claimant stated in her evidence that there was ‘mutuality of obligations’. When asked what the respondent was obliged to do, her response was ‘to give me information’. There was no evidence of any profit share received by the claimant from the respondent. The claimant’s evidence on JB5/4 (print out of information from Companies House) was ‘that was me being sacked’. The claimant could not offer an explanation for her position that Companies House would hold a record of her employment as ‘secretary’ (as distinct from their record of the Company Secretary). There was no documentary evidence before me supporting an employment relationship between the claimant and the respondent business.[41]On the basis of the claimant’s position in her evidence, the relationship between her and the respondent was that she was part -owner of the respondent’s business. That position was disputed by Kris Breadie. It is of note that if I had made findings on fact based entirely on the claimant’s own evidence, then I would have concluded that the claimant was performing work or services for the respondent on the basis of being an individual who was part of the respondent’s business undertaking (in terms of ERA section 230(3)(b)). Even taking the claimant’s evidence at its’ highest, on application of the relevant law, the arrangement between the claimant did not meet the legal definition for her to be either an employee or worker of the respondent.[42]Kris Breadie was open in his answering of questions and his position in his evidence was consistent with the documents produced. In particular, the text messages produced were consistent with his position in evidence that the claimant had refused to take and wages from the business and that the money to buy the building used by the business came from a source other than the claimant (JB42/1; JB42/2; JB42/3; JB42/4; JB24/7; JB24/8). Kris Breadie denied that there was any agreement in relation to any payments being made to the claimant from the respondent business. His evidence was that the claimant as his ‘mentor and someone who helped me with the dream that I had.’ He agreed that the claimant had carried out work for the business. His position was that that had led to dispute, when his mother did not carry out work in the way that he wanted it to be carried out. His evidence was that he had often asked the claimant what amount she wanted for work done but that her position had continually been that the business ‘couldn’t afford’ her and that she did not want to take wages. He denied that there was any agreement that the claimant receive regular payments from the respondent business, whether in respect of preparing accounts, reimbursement of expenses or wages. He accepted that some payments had been made by the respondent business to clear payment of equipment for the business which the claimant had purchased on her own credit card.[43]There was no documentary evidence to support the claimant’s position that she was receiving regular payments from the business in respect of expenses, preparing accounts or otherwise. The entries in the accounts relied on by the claimant (JB41) were not consistent with regular payments being made to the claimant as described by her in her evidence . On the evidence before me and on application of the relevant burden of proof, where there was a conflict in evidence in areas material to the issues for my determination, I found Kris Breadie to be more credible.[44]Samanatha McInnes’ evidence was not material to the issues before me. It was not disputed that Ms McInnes had had some involvement in trying to resolve the dispute between the claimant and the respondent business. It was not put to Samantha McInnes that the claimant had agreed to work ‘for free’ or without being paid wages. However, on her re-call, the claimant accepted that she had agreed that, on the basis that the company could not afford her at that time. Submissions[45]Both parties made oral submissions. I have addressed their positions in submissions in the ‘Decision’ section below.[46]The respondent’s representative relied on the following authorities:- Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 WLR 775 Melhuish v Redbridge Citizens Advice Bureau [2004] UKEAT 0130 Thomson v Fife Council EATS 0064/04 Montgomery v Johnson Underwood Ltd and Another [2001] EWCA Civ 318[47]The claimant relied on the following authority:- Union of Construction, Allied Trades and Technicians v Brain [1981] IRLR 224 (CA)[48]I considered all the circumstances of the case with no one material factor having weight over another. There was no dispute that the claimant has experience in business or that she assisted her son in the business and carried out some work for the respondent business. The evidence did not show that the irreducible minimum requirements of a contract were in place. It was significant that it was not in dispute that at no time had the claimant received wages from the respondent. Since 2012 the claimant provided her own work in return for no remuneration.[49]On the economic reality test, there was no mutuality of obligations of work being done for payment. On considering the factors relevant to the multiple test, on the claimant’s own evidence, the claimant had significant control over how she carried out the work; she had provided the respondent business with capital; she was provided with a laptop and given information on which she prepared the respondent’s accounts.[50]There were no facts from which it could properly be inferred that the claimant was under a legally binding obligation to make herself available for work for the respondent. There was no continuing obligation on the respondent to offer employment to the claimant. The claimant had gone to France for significant periods and had been absent due to ill health for significant periods. There was no continuing overriding arrangement which governed the whole of the parties’ relationship and itself amounted to a contract of employment (applying Hellyer Brothers Ltd v McLeod and ors; Boston Deep Sea Fisheries Ltd v Wilson and anor 1987 ICR 526, CA).[51]There was no obligation on the respondent to provide work and no obligation on the claimant to do that work. I accepted the respondent’s representative’s submission that on the facts there was no ‘irreducible minimum’ of obligation on each side. On the facts, I accepted the respondent’s representative’s submission that the working relationship between the claimant and the respondent did not meet the legal criteria of either an employee or a worker relationship in terms of ERA section 230. I accepted her submission that the minimum criteria of personal service in exchange for wages was not met and that the level of control exercised by the claimant, on her own evidence, was not consistent with a contract of an employee. I accepted her submission that the claimant was not subject to mutual obligation. The claimant undertook tasks to assist her son to establish the business and his ‘dream’. I accepted her submission that the facts are not indicative of an employment relationship.[52]I accepted the respondent’s representative’s reliance on Melhuish v Redbridge Citizens Advice Bureau and her position that, similarly to the circumstances in that case, the claimant was allowed to come and go as she please and did not receive renumeration for any tasks performed. I accepted the respondent’s representative’s submission that the claimant failed to establish the minimum irreducible minimum requirement.[53]I accepted the claimant’s submission that the fact that expenses are paid is not necessarily indicative of there not being an employee relationship and that sometimes expenses are paid to employees. I did not accept the claimants reliance on her obligations as company secretary as being indicative of her having status as either an employee or a worker in terms of section 230 ERA.[54]On consideration of the evidence before me and application of the findings in fact to the applicable law, the claimant was not an employee or worker within the meaning of section 230 ERA. The claimant did work for the respondent company on the basis of her personal relationship with her son and because she had made a financial contribution to the set up of the business. The claimant has not proved that there was an (unwritten) contract, either being a contract for services or an employment contract (a contract for service). The claimant’s complaints are dismissed because the claimant was not an employee or a worker in terms of section 230 ERA and therefore the Employment Tribunal has no jurisdiction to determine the disputes between the parties. C McManus