ITV Services Ltd v Revenue And Customs [2013] EWCA Civ 867

[2013] EWCA Civ 867Case No A3/2012/0741
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
Mr Justice Sales
[2012] UKUT 47 (TCC)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday 23 rd July 2013
Before
THE PRESIDENT OF THE FAMILY DIVISIONLORD JUSTICE RIMERSIR STANLEY BURNTON
Between
ITV SERVICES LIMITEDAppellantTHE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMSRespondents
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Jonathan Peacock QC and Mr Michael Ripley (instructed by Berwin Leighton Paisner LLP) for AppellantMr Malcolm Gammie QC and Mr Gideon Cohen (instructed by the General Counsel and Solicitor to HM Revenue and Customs) for Respondents
Judgment

Introduction

[1]By a decision released on 23 November 2010, but subject to the qualification mentioned below, the First-tier Tribunal (Tax) (John Clark and Tym Marsh, ‘the FTT’) dismissed appeals by ITV Services Limited (‘ITV’) against three determinations dated 7 April 2009 made by The Commissioners for Her Majesty’s Revenue and Customs (‘HMRC’). The determinations were made on the basis that actors engaged by ITV under certain types of contract were to be treated as ‘employed earners’ for National Insurance purposes and that, in consequence, ITV was liable to secondary Class 1 National Insurance Contributions (‘NICs’) in respect of the payments it made to the actors. The determinations related to(i) a period from 1 December 2006 to 5 April 2007;(ii) the year 6 April 2007 to 5 April 2008; and(iii) the year 6 April 2008 to 5 April 2009. The qualification relates to actors engaged under the ‘All Rights Contract’, whom the FTT held (nor had HMRC argued otherwise) were not to be treated as ‘employed earners’, which may or may not have required an adjustment to the determinations, as to which counsel were not agreed.[2]ITV appealed against the FTT’s decision to the Upper Tribunal (Tax and Chancery Chamber) (Sales J, ‘the UT’). By a decision released on 7 February 2012, the UT dismissed ITV’s appeal. HMRC did not cross-appeal as regards actors engaged under the All Rights Contract. On 25 May 2012, I gave ITV permission for a second appeal to this court. Jonathan Peacock QC and Michael Ripley represented ITV; and Malcolm Gammie QC and Gideon Cohen represented HMRC.[3]The question whether the actors were to be treated as ‘employed earners’ turns on the provisions of paragraph 5A in column (B) of Schedule 1 to certain regulations. In particular, the question is whether the payments made to the actors by ITV included ‘any payment by way of salary’ within the meaning of ‘salary’ in paragraph 5A. Both tribunals answered that question in the affirmative. ITV’s challenge to the correctness of that answer requires a consideration of the interpretation of paragraph 5A and of its application to the several types of contract under which the actors were engaged, being variants of industry standard contracts. We were told that the issues are important for the television industry. I must first summarise the legislative background. I need refer only to the secondary legislation.

The Social Security (Categorisation of Earners) Regulations 1978

[4]Actors are typically self-employed for income tax purposes, and for some time were also so regarded for NI purposes. Such self-employed status meant that, absent special legislative provision, they were not liable to Class 1 employee NICs, which in turn meant that they were not eligible for certain state benefits the right to which is dependent upon the making of such contributions. Parliament decided in 1998 that some, if not all, entertainers (including actors) should become so eligible. It implemented its intention by an amendment to the applicable regulations, which took effect from 17 July 1998.[5]The change was made by the Social Security (Categorisation of Earners) (Amendment) Regulations 1998 (SI 1998/1728), which inserted a new paragraph 5A into Schedule 1 to the Social Security (Categorisation of Earners) Regulations 1978 (SI 1978/1689) (‘the Categorisation Regulations’). Those regulations were originally made under provisions of the Social Security Act 1975. Regulation 1(1) defined an ‘entertainer’ as meaning ‘a person who is employed as an actor, singer or musician, or in any similar performing capacity’. The appeal is concerned only with actors.[6]Regulation 2(2) of the Categorisation Regulations provided:
‘… every earner shall, in respect of any employment described in any paragraph in column (A) of Part 1 of Schedule 1 to these regulations, be treated as falling within the category of an employed earner in so far as he is gainfully employed in such employment and is not a person specified in the corresponding paragraph of column (B) of that Part, notwithstanding that the employment is not under a contract of service, or in an office (including elective office) with emoluments chargeable to income tax under Schedule E.’
[7]Paragraph 5A in column (A) provided:
‘5A. Employment as an entertainer, not being employment under a contract of service or in an office with emoluments chargeable to income tax under Schedule E.’
Its corresponding provision in column (B) provided: ‘5A. Any person in employment described in paragraph 5A in column (A) whose remuneration in respect of that employment does not consist wholly or mainly of salary.’ (My emphasis)[8]The effect of the amendments was that an entertainer retained by a production company under a contract for services would, subject to column (B), fall within column (A), and so be treated as liable to Class 1 employee NICs. He would, however, be excepted from column (A), and so from such liability, if he fell within column (B); and he would be so excepted if his remuneration did not consist ‘wholly or mainly of salary’.[9]Experience under the amended regulations showed that the change did not bring into Class 1 as many entertainers as it had been intended to bring in. That was because many entertainers were paid by way of lump sums that both rewarded them for their services and also bought out the intellectual property rights in their performances, which were proportionately materially in excess of anything they were paid that could be characterised as ‘salary’. Entertainers so paid would satisfy the column (B) exception and so escape inclusion within column (A).[10]That led to a further amendment to the Categorisation Regulations. Paragraph 5A of column (A) remained effectively the same, subject only to the following slight amendment made to it made with effect from 6 April 2003:
‘5A. Employment as an entertainer, not being employment under a contract of service or in an office with general earnings.’
That mirrored this change to regulation 2(2) of the Categorisation Regulations:
‘(2) Subject to the provisions of paragraph (4) of this regulation, every earner shall, in respect of any employment described in any paragraph in column (A) of Part 1 of Schedule 1 to these regulations, be treated as falling within the category of an employed earner in so far as he is gainfully employed in such employment and is not a person specified in the corresponding paragraph in column (B) of that Part, notwithstanding that the employment is not under a contract of service, or in an office (including elective office) with general earnings.’
[11]More significantly, also with effect from 6 April 2003, paragraph 5A of column (B) was replaced with the following:
‘5A. Any person in employment described in paragraph 5A in column (A) whose remuneration in respect of that employment does not include any payment by way of salary. For the purposes of this paragraph “salary” means payments – (a) made for services rendered; (b) paid under a contract for services; (c) where there is more than one payment, payable at a specific period or interval; and (d) computed by reference to the amount of time for which work has been performed.’
The purpose behind that change was to bring more entertainers into Class 1 employee status than had been achieved by the prior amendment: it was, by inference, perceived that its effect would be to reduce the categories of entertainers whose remuneration would fall within the column (B) exception. It is that provision that is at the heart of the appeal.[12]I come finally to the provisions in the Categorisation Regulations by which the liability for secondary Class 1 NICs in respect of payments made to actors by ITV falls on ITV. Regulation 5(1), made under section 7(2) of the Social Security Contributions and Benefits Act 1992, provides:
‘(1) For the purposes of section 4 of the Act [section 4 of the Social Security Act 1975, now re-enacted in sections 7 and 9 of the 1992 Act] (Class 1 contributions), in relation to any payment of earnings to or for the benefit of an employed earner in any employment described in any paragraph in column (A) of Schedule 3 to these regulations, the person specified in the corresponding paragraph in column (B) of that Schedule shall be treated as the secondary Class 1 contributor in relation to that employed earner.’
[13]Paragraph 10 of column (A) of schedule 3 provides:
‘Employment as an entertainer (not being employment under a contract of service or in an office with general earnings) except where the earner is a person to whom paragraph 5A in column (B) of Schedule 1 to these Regulations applies.’
The corresponding paragraph of column (B) of Schedule 3 lists, as the person treated as the secondary Class 1 contributor:
‘The producer of the entertainment in respect of which the payments of salary are made to the person mentioned in paragraph 5A of Column (B) of Schedule 1.’
Thus the liability for any secondary Class 1 NICs in respect of payments of earnings made by ITV to the actors it engages falls upon ITV.

The 2003 legislative changes

[14]The amendment to the Categorisation Regulations referred to in paragraph 11 above was, as I have said, directed at increasing the category of entertainers, including actors, for whom engagement in a production would result in their having employee rather than self-employed status for NIC purposes. HMRC explained the reason for the amendment in their June 2003 Tax Bulletin (Issue 65), which reads, so far as material, as follows:
‘Interpretation Revised Special NIC Rules For Entertainers Background The NIC treatment of entertainers is different from that which applies for tax. Following the Special Commissioner’s case for McCowen and West the Revenue accepted that most performers/artistes in the entertainment sector were engaged under contracts for services and would generally be assessable to tax under Schedule D. However, it was acknowledged that to follow this line for NIC purposes would mean that the majority of entertainers who had previously paid Class 1 NICs would only be liable for Class 2 and Class 4 NICs which would not provide them with universal title to contributory benefits. DSS Ministers decided to introduce regulations in 1998 which would treat the majority of entertainers as employed earners for NIC purposes. This would enable entertainers to build up entitlement to contribution based Jobseeker’s Allowance and ensure that, in a precarious industry, new talent could be encouraged to weather long periods without work whilst they established themselves. Prior to 1998, the main category of performer in the entertainment industry not paying Class 1 contributions were certain “key talent” stars who were generally regarded as having been engaged on productions because of their celebrity status. To try and ensure this practice continued The Social Security (Categorisation of Earners) (Amendment) Regulations 1998 were introduced from 17 July 1998 which created a liability for Class 1 NICs for entertainers whose earnings consisted “wholly or mainly of salary”. Those who negotiated a fee or received rights and additional use payments higher than the salary element were not liable to pay Class 1 NICs but were regarded as self-employed as such payments did not come within the accepted description of “salary”. However, in all but a few exceptional cases it has become the usual practice for the majority of entertainers to receive as part of their remuneration package pre-purchase payments as compensation for the loss of future repeat fees and rights and royalties worth many times the salary element. Very few actors were, therefore, paid “wholly or mainly” by salary and the regulations did not achieve the object of bringing most entertainers into Class 1. The Revenue, therefore, accepted that the 1998 regulations were not sustainable and new regulations were introduced from 6 April 2003. These are the Social Security (Categorisation of Earners) (Amendment Regulations 2003 [SI 2003 No. 736]. Equivalent regulations SI 2003 No. 733 apply to Northern Ireland. What do the new regulations mean? The new regulations reflect the fact that instead of a “wholly or mainly” salary test, those entertainers whose remuneration includes any element of salary would be treated as employed earners. Once subject to the regulations there will be liability for Class 1 NICs on all earnings from the engagement (including rights payments). Where the payment is a fee for the production, not a salary, and this would have to be made clear in the contract, the entertainer would remain self-employed and would be liable to Class 2 and Class 4 NICs. The legislative definition of Salary requires that the remuneration satisfies the following four conditions: - made for services rendered; - paid under a contract for services; - where there is more than one payment, payable at a specified period or interval; and - computed by reference to the amount of time for which work has been performed. The third bullet point includes those entertainers engaged on a single day or two day engagement. This means that the policy intention of ensuring that the regulations apply to film extras and walk-on parts is achieved. The last bullet point ensures that key talent artistes are excluded as they will be contracted to appear in productions for which their remuneration is not directly calculated according to the period of weeks or months they are assigned to the production.’

The appeal

[15]Neither Mr Peacock nor Mr Ripley appeared before either tribunal below. It is clear that ITV’s case below differed materially from its case presented to us. In particular, ITV argued below that:(a) whether or not an actor is within the column (B), paragraph 5A, exception is not a question that has to be answered at the outset of his engagement, i.e. when his contract is signed;(b) whether or not any part of his remuneration is ‘salary’ within the meaning of paragraph 5A is determined only when it is paid; and(c) whether or not it is ‘salary’ also depends on how it was originally negotiated. Mr Peacock advanced no such submissions to us; and those he did advance involved their rejection.[16]Mr Peacock accepted that the purpose of the 2003 amendment was to bring many, although not all, entertainers, including actors, into Class 1. The divide between those who were, and were not, so brought turned on whether the entertainer was remunerated, at least in part, by ‘salary’ as defined in paragraph 5A. Whilst there are no Parliamentary statements as to the scope of such purpose, Mr Peacock referred us to the quoted Tax Bulletin, the last paragraph of which recognised that at least ‘walk-ons’ were intended to have employed status, whereas paragraph 5A(d) was regarded as ensuring that the remuneration of ‘key talent artistes’ would not include any element of salary. That would, however, only follow, said the bulletin, if such artists’ remuneration ‘is not directly calculated according to the period of weeks or months that they are assigned to the production’.[17]Whilst Mr Peacock referred to the Bulletin as both relevant and admissible (and Mr Gammie did not say otherwise), he rightly disclaimed any suggestion that it provides conclusive guidance as to the sense of paragraph 5A(d). The quoted words reflect the Bulletin’s interpretation of paragraph 5A(d), but they purport to be nothing more than a paraphrase, in noticeably different terms, of its actual language; and its authors may have misunderstood that language. The question for this court is whether the remuneration under the various types of contract in question includes ‘any payment by way of salary’ within the meaning of paragraph 5A, and it is the language of paragraph 5A that we have to interpret. To that end, I derive no assistance from the Bulletin.[18]Paragraph 5A is not straightforward. The arguments advanced to us illustrated that it was perhaps not drafted as well as it might have been. Mr Peacock accepted that an actor need only earn £1 ‘by way of salary’ to fall outside the paragraph 5A exception and so remain within column (A): and he also eschewed any suggestion that £1 so earned could be dismissed as de minimis. ‘Salary’ as defined does not bear whatever meaning might be attached to such word in other contexts or employment relationships, in particular contracts of service. It has the special meaning given to it by paragraph 5A in relation to entertainers retained under contracts for services. Whilst NI contributions are liable to be made only in respect of payments actually made to a person who is in (or treated as in) employment, Mr Peacock accepted that paragraph 5A is ‘forward looking’ in the sense that it is necessary to identify at the outset of an actor’s engagement under his contract whether his remuneration includes ‘any payment by way of salary’; and that question can only be answered by looking at his contract. Any payment to be made under it will only qualify as a ‘payment by way of salary’ if it can be seen at the outset that it will satisfy conditions (a) to (d).[19]As to condition (a), Mr Peacock observed that any such payment had to be ‘for services rendered’ (his emphasis), which he said means that under the contract the payment would have to post-date the rendering of the services. I do not accept that that can be derived from the language. It would be odd if a contractual provision for the making of a given payment immediately before the rendering of the services for which it is the reward could take the payment out of paragraph 5A, whereas a provision for its making immediately afterwards would not. In my judgment, condition (a) is not focusing on the time of the making of a payment for any services for which it is the reward. It is simply providing that for any payment under the contract to qualify as ‘salary’, it must be made in consideration of services that the actor is to or does perform.[20]As for condition (b), I regard it as adding nothing material: the contract is, I consider, almost invariably going to be a ‘contract for services’.[21]Condition (c) is more difficult. Both Mr Peacock and Mr Gammie struggled somewhat to derive clear, comprehensive sense from its language. Mr Peacock submitted, however, that the statutory intention is that, in a case where more than one payment is made, the condition will be satisfied only if the payments are to be made at regular intervals, for example, weekly or monthly. If, for example, the contract provides for four payments to be paid at the end of January, February, April and May, with no payment in March, the required regularity will be lacking and so none of the payments will be ‘salary’.[22]Whilst I find the clarity of condition (c) less than crystal, I do not accept that submission either. First, if it were so, it would be easy for the parties to draft themselves out of condition (c) without making any material change to their commercial arrangements and I would not willingly attribute so extreme an optional character to its operation. Second, and more importantly, I anyway do not regard it as the ordinary sense of the words ‘specific period or interval’ in the context. I prefer the view(i) that ‘specific’ means ‘specified’ or ‘defined’;(ii) that the draftsman used the word ‘period’ to cover the case in which the contract provides for the payment to be made at a recognised periodic interval, say weekly, or monthly; and(iii) that as for ‘interval’, he used it as intending to convey that payments would also satisfy condition (c) if paid at pre-defined irregular times. In my January to April example, the contract would provide for the payments to be made at specified, or defined, intervals and so satisfy condition (c). This was the view of the FTT in the penultimate sentence of paragraph 117 of their judgment, with which the UT agreed. So do I.[23]The real problem is paragraph (d). The statutory language is not straightforward. The payment, if it is to qualify as ‘salary’, must be ‘computed by reference to the amount of time for which work has been performed’. That raises various questions canvassed on the appeal. The first, critical question is what ‘work’ means in condition (d). I must first provide some background to illustrate how that question arises in the present context.[24]Mr Peacock showed us a range of contracts across what he called a spectrum. The spectrum ranged from contracts whose terms, he said, were such that actors engaged under them fall within the column (B) exception towards contracts whose terms he recognised as arguably bringing the actors engaged under them closer to falling outside it (and so remaining within column (A)), although he submitted that, save for one type of contract at the far end of his spectrum, none of the contracts actually did so. The contract at that far end is a contract entered into by ITV with ‘walk ons’, who make up the majority of the acting community and are engaged at a daily rate for the particular day or days they are required to attend on location. It is agreed by both sides that walk-ons so rewarded are paid a ‘salary’ that satisfies the conditions of paragraph 5A, including therefore condition (d). They do not therefore fall within the column (B) exception and so are liable to Class 1 employee NICs. They probably also include those members of the acting community most likely to be in need of the state benefits for which Class 1 contributions are a qualification.[25]Mr Peacock also accepted that a walk-on who may spend a material part of a relevant day on the set, or on location, waiting to make his perhaps quite short dramatic contribution, is at ‘work’ for the purposes of condition (d) whilst so waiting just as he is when performing. Nor did I understand him to suggest that if, by happenstance, the walk-on’s performance is successfully concluded by 12 noon on the relevant day, so that he is able to go home early, it could be said that his day’s pay would not, for the purposes of condition (d), have been computed by reference ‘to the amount of time for which work has been performed’. A literal interpretation of the quoted language would enable such an argument to be advanced, whereas in relation to walk-ons it was not. I shall return to this.[26]As regards walk-ons paid at a daily rate, there is, therefore, no dispute that they are paid a ‘salary’ within the meaning of paragraph 5A and are not excepted from column (A). At the other end of Mr Peacock’s spectrum is the type of contract under which so-called ‘key talent’ or ‘marquee’ actors are engaged for a particular production for a defined ‘period of engagement’, which may last several months or up to a year or so. They are not of course required to be on the set every day during such a period of engagement. Their contractual obligations will, however, include a commitment to answer the producer’s ‘first call’ for their attendance on a particular day or days in order to perform. When they attend the set in response to such a call, Mr Peacock did not question that, like walk-ons, they will be performing ‘work’ within the meaning of condition (d) both whilst waiting to perform and whilst performing.[27]The question of principle that arises in relation to actors at this end of the spectrum, as to actors retained under contracts with like features, is this. They will commonly be paid substantial, all-inclusive remuneration in exchange for their commitment to all the services they agree to provide under their contract, which will be both to make themselves available on ‘first call’ as described, and also to perform on set when called. Their remuneration will also usually buy out their intellectual property rights in the production. In a case in which it can be seen from the contract that the remuneration is in material part being paid to secure the actor’s availability on ‘first call’, the question that arises is whether, whilst on such call, the actor is ‘performing work’ within the meaning of condition (d).[28]Mr Peacock submitted that the answer is no; an actor on ‘first call’ is not‘working’ in any ordinary sense of the word. It follows, he said, that an inclusive fee by way of remuneration for all the contractual services the actor agrees to provide will not be ‘salary’ as defined by paragraph 5A. It is no doubt paid ‘for services rendered’, within condition (a), and is paid under ‘a contract for services’ within condition (b). Since it is computed by reference to the length of the period of engagement, it will also be computed by reference to time. But as it will include remuneration for services moving from the actor in addition to that part of his services represented by his performance of ‘work’, it will not satisfy condition (d), because it will have been computed by reference to the time over which the actor has rendered services other than services by way of the performance of ‘work’. The central divide between ITV and HMRC on this appeal is as to the correctness of this submission.[29]Mr Gammie submitted otherwise. He said that condition (d) is not focusing on reward for ‘work’ in the narrow sense submitted by Mr Peacock. It must be read in the context of paragraph 5A as a whole, and that of course is correct. That requires condition (d) to be read as defining the genus of the payments provided for under the contract. The focus must therefore be on the payments due to the actor for the provision of his entertainment services. Condition (d) will be satisfied if the payments are computed by reference to the amount of time that the actor has agreed to work; and in such a case, ‘work’ for the purposes of condition (d) is performed under the contract not only when the actor is on the set (whether waiting or performing) but also when honouring his contractual obligation by making himself available on first call for such work. Mr Gammie’s submission came down to the proposition that ‘work’ in condition (d) simply means the contractual commitments that the actor assumes under the contract, which include making himself available to perform on first call: the relevant ‘work’ under his contract is the commitment of his time for the contractual period of engagement to the production company and to no one else.[30]Mr Gammie referred us to two authorities from which he said the inspiration for paragraph 5A had been derived. The first was In re Shine [1892] 1 QB 522. I need quote only what Fry LJ said, at 531:
‘Whenever a sum of money has these four characteristics – first that it is paid for services rendered; secondly, that it is paid under some contract or appointment; thirdly, that it is computed by time; and fourthly, that it is payable at a fixed time – I am inclined to think that it is salary, and not the less so because it is liable to determination at the will of the payer, or that it is liable to deductions’
. The second was Greater London Council v. Minister of Social Security [1971] 1 WLR 641. After quoting the same passage, MacKenna J continued, at 646H: ‘The requirement that the payment should be computed by time means, I think, that the payment should be on a time and not a piece-work basis. Piece-work payments would fluctuate with the amount of work done and for this reason would not be fixed payments. This requirement is satisfied in the present case where the payments were on a time rate, so much for each session worked. … Where, as here, the unit of time is a short period of three hours actually worked, there must, I think, be added to the Lord Justice’s four characteristics, a fifth, that the contract should provide, as here, for the recurrence of the sessions of work throughout the contract period, whether that period be fixed or indefinite. A salary is, as the dictionary definition states, a payment made for “regular work.” If the contract provided only for a single session of three hours’ work, the payment though computed with reference to time, would not be described as “salary.” It would be more aptly described as a “fee.” That is my second observation, and it concludes what I wish to say upon the case’.[31]Mr Gammie is probably correct that, in formulating paragraph 5A, the draftsman drew on the Shine and Greater London Council cases. Condition(a) is Fry LJ’s first characteristic. Condition(b) is his second. Condition(c) is his fourth. Condition(d) is in partdrawn from his third. Condition (d), however, also specifies that the time computation must be by reference ‘to the amount of time for which work has been performed’. Fry LJ made no reference to ‘work’. It would seem likely, therefore, that since McKenna J had added a fifth characteristic focused on ‘work’, the draftsman considered it necessary, or at least appropriate, to provide expressly in condition (d) that the time computation had to be in relation to work done.[32]Whilst, however, I regard the Shine and Greater London Council cases as of interest as the likely sources for the movements of the draftsman’s pen when he came to paragraph 5A, I do not regard them as of direct present assistance. The draftsman has told us that ‘salary’ for the purposes of paragraph 5A means what he there says it means: he has, therefore, told us all we need to know. All that is left for the court to do is to ascertain the meaning of the language of paragraph 5A in context and then to apply it to the various contracts with which the appeal is concerned.[33]The FTT agreed with Mr Gammie’s submission as to the sense of condition (d). They expressed their reasons as follows: ‘120. … The first element [of condition (d)] is that the computation of payments … is based on time. Thus a contract providing for a fee payment or series of fee payments to an actor arrived at without any consideration of the time to be taken to carry out the work to be provided by the actor pursuant to the contract would not fulfil the terms of this condition, and as the conditions are cumulative, such a fee or fees could not be regarded as “salary” for the purposes of paragraph 5A.121. The second element of condition (d) is the reference to “work”. We consider below the meaning of this word in the context of the services contracted to be provided by the actors.122. The third element is the words “has been performed”. For the reasons we have already given, we do not consider that these are referring to the actual performance of work under the terms of the contract for services entered into by the actor; this is part of the description of a type of payment potentially to be made, rather than looking back at a later stage to the work which has ultimately been performed pursuant to the contract.123. Although condition (d) uses the word “performed”, the reasons mentioned in the previous paragraph satisfy us that it is not referring as such to the performances given by the entertainer, but to the carrying out of the contracted work pursuant to the contract for services. The words “has been performed” refer to “work”, so that condition (d) is looking at “work” which “has been performed”. As condition (a) refers to payments being made for services rendered, we interpret condition (d) in the light of (a), so that in our view where (d) mentions “work”, it is referring to the rendering of services under the contract. In the context of actors, we do not think that “work” is limited to giving a performance in front of the camera; what the actor agrees to provide is his or her services under the contract in question, which includes being available on the contracted dates, whether or not any work in front of the camera is required on any particular day in question. Thus any provision for payment computed by reference to the time for which services under the contract are to be rendered will meet the terms of the condition. …’.[34]The FTT thus equated ‘work’ in condition (d) with the contractual ‘services’ required of the actor referred to in condition (a) and concluded that, provided the remuneration includes a payment computed by reference to the time over which the services are to be rendered, condition (d) is satisfied. Sales J, in the UT, agreed with the FTT’s reasoning without discussing the issue himself.[35]Each of the contracts to which we were referred will have to be considered separately and I shall come to them. If, however, the FTT was in principle correct, one might ask why in paragraph 5A the draftsman had, within the space of four short conditions, decided in condition (d) to use, in contrast to his chosen words in condition (a), the distinct phrase ‘work has been performed’ rather than the matching phrase ‘services have been rendered’ which the tribunals below found to be sense of his words. If the draftsman had intended condition (d) to mean what the tribunals below found that it meant, it is in my view incredible that he should there have used the language he did. I regard it as obvious that his formula in condition (d) was deliberately chosen, and was not so chosen as an ill-drawn proxy for ‘services have been rendered’: if that had been his intention, he would have used those words. I therefore respectfully disagree with Mr Gammie’s careful submissions to different effect; and I consider, with respect, that on this question of principle the tribunals below were in error.[36]In probably unnecessary elaboration, an actor resting at home or away while awaiting a call from the producer to attend on set for, say, three days, in the following week is not, by any ordinary use of language, ‘performing work’. He is honouring a contractual obligation to make himself available for work on demand, and is also honouring an obligation not during the period of engagement to work for anybody other than ITV. He is thereby undoubtedly rendering part of the contractual services for which he is being paid. He is not, however, performing work. ‘Salary’ within the meaning of paragraph 5A is not focusing on the remuneration that such an actor receives in consideration for all the services that he agrees to and does provide. Paragraph 5A tacitly recognises that an actor’s remuneration for his commitment to a particular production may include more than one element, since the required inquiry is as to whether the actor’s remuneration includes ‘any payment by way of salary’. For example, part of his remuneration will usually also buy out his intellectual property rights. But that cannot sensibly be regarded as remuneration for ‘work’; and if his all-inclusive fee also buys out these rights, I cannot see how such a fee could be said to satisfy condition (d), even if the tribunals are right that ‘work … performed’ means ‘services … rendered’. The sale of intellectual property rights is hardly the rendering of a service.[37]In my judgment, when the draftsman used the words ‘work … performed’ in condition (d), he is to be taken as having chosen them deliberately, and to have intended to convey a sense different from what condition (d) would or might have meant if he had instead used the words ‘services … rendered’, the words he had used but three conditions before. He was identifying what he regarded as the key criterion for determining whether or not ‘any payment’ forming part of the total remuneration for the services rendered is ‘salary’. Since ‘salary’ is ordinarily a payment computed by time for work done on a regular basis, he was adopting and adapting the essence of that concept in condition (d). Condition (d) focuses on ‘work … performed’ in the ordinary sense of those words; and the condition (d) inquiry is as to whether ‘any payment’ forming part of the total remuneration paid to the actor qualifies under it. I therefore take a different view from the tribunals below as to the sense of condition (d).[38]A second question arising under condition (d) is this. It requires the payment to be computed ‘by reference to the amount of time for which work has been performed’. As noted, a literal reading of those words requires the contract to provide a formula for a payment calculation which could only be translated into an amount once the work had actually been done. Thus, in the case of the ‘walk-on’ who is required to attend by 9.00 am for a day’s work and is allowed to go home at 11.00 am, his performance by then satisfactorily completed, the formula would have to be one that rewarded him simply for two hours at a particular rate. If, as is the practice, his contract in fact rewards him at a daily rate, however long or short the day might turn out to be, it could be said that his payment was not computed in compliance with condition (d).[39]As I have noted, no such suggestion was made in relation to walk-ons. Mr Peacock did seek to make a submission to this effect in relation to certain of the contracts that are in issue, although it appeared to me to be inconsistent with his acceptance as to the position in relation to walk-ons. I would anyway reject the proposition that condition (d) requires such a literal interpretation. Its language is perhaps somewhat ill-chosen. It is accepted that it is a ‘forward looking’ provision, and that whether or not it is satisfied must be answered at the outset, when the contract is signed. It is, therefore, obvious that at that stage the precise amount of work that will be done by the actor on any particular day or days will be a known unknown. We were also shown no contract that included a remuneration formula that could be said to be match the demands of condition (d) if construed in the literal way that it can be.[40]I cannot offer a comprehensively satisfactory explanation of the precise sense of the language of condition (d), but I consider that it must be read in a practical way; and I would not accept that its intention is that the contract should prescribe a formula for payment that could only be worked out after the relevant work was done and in light of the precise amount of time occupied by the work. I regard the sense of the language as being to the effect(i) that it has in contemplation contracts which include provisions for either a daily, weekly or other periodical rate for work to be done on an identified day or days; and(ii) that it can make no difference to the satisfying of condition (d) that, in the event, the actor may find that on one or more of such days, he finds either that he is able to go home early because his work is completed early, or that he is even not required for work on that day after all. An employee under a contract for service who turns up for work, as required by his contract, and is told that there is nothing for him to do and that he can go home, would ordinarily be entitled to be paid for the day. I do not consider that in condition (d) the draftsman was intending to prescribe a condition of a more restrictive nature. The condition will be satisfied if at least part of the payments to be made to the actor can be identified as computed by reference to the time for which work is to be done: for example, a provision for a particular payment per day for working on the set; and it matters not that the day might, in the event, prove to be a short one. As will be seen, Mr Gammie’s submission is that all the contracts in issue include just such a provision and that they all therefore satisfy condition (d).[41]The third issue raised is this. I have noted that Mr Peacock accepts that any payment by way of ‘salary’ under the contract will be sufficient to make the column (B) exclusion inapplicable. In most of the contracts, the actor is entitled, but only on a contingent basis, to a particular type of payment that, if made, Mr Peacock accepted will be ‘salary’ within meaning of paragraph 5A. That presented a problem for ITV, to which Mr Peacock’s answer was that a merely contingent entitlement of such a nature could not require the contract to be characterised as falling outside the column (B) exception. The FTT did not deal with that point, but Sales J in the UT did and he disagreed with the submission that Mr Peacock repeated to us. Rather oddly, Mr Gammie advanced no submission to us on the point and informed us that nor did he advance any argument on it below (he appeared before both the FTT and the UT): he said he did not need to. I must, however, also deal with that issue, although we have the benefit only of Sales J’s reasoning and Mr Peacock’s arguments by way of assistance on it.[42]The fourth and final issue is this. Whilst Mr Gammie sought to uphold the tribunals below on their resolution of the primary issue (as to what ‘work’ is), he also submitted, as I have indicated, that whatever the answer to that, all the contracts anyway include at least some payments by way of ‘salary’ as defined. That is because they incorporate provisions of collective agreements providing for payments called ‘production day payments’ and ‘attendance day payments’ amounting to ‘salary’ within the meaning of the definition. Mr Peacock’s position was that, if such provisions of the collective agreements were incorporated, Mr Gammie was correct. He said, however, that the relevant provisions of the collective agreements were overridden by the express provisions of the actors’ contracts.[43]The ‘collective agreement’ point was raised by Mr Gammie for the first time in the course of his response to Mr Peacock’s submissions on the second day of what was originally fixed as a two-day hearing. It featured neither in a respondent’s notice, nor in Mr Gammie’s original skeleton argument. It was first raised in paragraph 18ff of a speaking note he provided to the court at the beginning of his address on the second day. He assured us that the argument had always been part of HMRC’s case below, although it is not reflected in anything that the FTT or UT said or decided.[44]The court regarded the raising of this point at the stage it was as presenting difficulties. First, it involved a fresh reconsideration of the several contracts to which Mr Peacock had already referred us in his submissions, but now by reference also to the collective agreements they incorporated, the latter being substantial documents. Second, it was apparent that Mr Peacock had not come prepared to deal with the argument. The court considered the alternative courses open to it as to how best to deal with the point and concluded that the best solution was to adjourn the appeal to a third day at which the parties could come prepared argue it. That is what happened.[45]Having set the stage as to the issues, and expressed my views on certain of them, I regard it as unhelpful to consider further at this point the interpretative questions to which paragraph 5A gives rise. Condition (d) is of course of central importance, because it is plainly the main driver in deciding whether or not the terms of an actor’s engagement bring him within the column (B) exception. The answer in any particular case requires a consideration of whether or not, under the relevant contract, the actor is, at least in part, entitled to a payment ‘computed by reference to the amount of time for which work has been performed’. That requires a reference to the contracts, of which we referred to several (although not as many as were the FTT). In the UT, it looks as if the argument before Sales J focused essentially on just one agreement, the ‘Bespoke Agreement’, but we were not so fortunate. I turn to the agreements.

The All Rights Contract

[46]Although there is no dispute that the engagement of an actor under this form of contract does not entitle him to ‘any payment by way of salary’, it may be helpful to refer to it. It is the type of contract used commonly, although not exclusively, for actors doing ‘voice overs’. Unlike the other contracts to which I shall come, this contract does not incorporate the terms of any collective agreement. It is an agreement under which, by clause 1, the actor agrees to ‘take part’ in an identified programme ‘performing the role of […] for the fee (payable shortly after completion of work) and in accordance with the schedule set out below’. It is a single fee payable for the artist’s performance of the role over one or more days, at times and places to be advised. By clauses 4, and 6 to 9, the actor agrees that the fee is inclusive and in full consideration for any and all use of the programme throughout the world in all media, and he assigns to ITV all his intellectual property rights in the programme.[47]Clause 11 provides in part:
‘11. You undertake: (a) to be ready in every way to go on at least thirty minutes before transmission or rehearsals begin at places fixed by the Company … (e) the Artist agrees that (subject to the reasonable requirements of the Artist’s prior professional engagements) the Artist shall attend and render services as, when and where reasonably required by the Company in order to attend press interviews and meet other reasonable publicity requirements during the Period of Engagement and thereafter during the period of exploitation of the production.’
The fee paid to the artist is also by way of reward for his assumption of that obligation. The fee does not purport to be calculated by reference to any period of actual work beyond being remuneration for (inter alia) attending on specified days to take part in the programme. Nor does it purport to be computed by reference to time. Unlike the other contracts, the All Rights Contract is not one under which the actor is committed for a defined ‘period of engagement’.[48]The FTT, in paragraph 148, recorded Mr Gammie’s acceptance that the fee was a single fee by reference to the artist’s performance on a single occasion and was not computed on a daily basis comparable to that on which a ‘walk-on’ is paid. The FTT explained as follows why the fee under the All Rights Contract included no element of ‘salary’:
‘150. We find that the All Rights Agreement is not a contract under which any part of the fee is calculated by looking at the time which is to be taken for the actor to provide the contracted services, and that the fee is not buying the actor’s exclusive time for a period during which the contracted services are to be provided. The actor is being paid for providing the service of taking part in the particular programme for a specified fee. As we have indicated in setting out our conclusions on the legislation, this is payment for particular work, where the payment is buying a particular service or performance; it falls outside condition (d). We find that payment under the All Rights Agreement is not “salary”, so that in respect of the earnings under such a contract the actor does not fall to be treated as employed earner within Class 1.’
[49]I interpret the FTT as having decided that the All Rights Contract was one providing for payment on a piece work basis. Sales J either misunderstood or, when writing his judgment, overlooked what the FTT had said about the All Rights Contract, which was not in issue before him. He said, in paragraph 34:
‘The terms of the All Rights Contract … require the actor to attend for filming on specified dates and provide for them to be paid a simple fee for doing that. [Leading counsel for ITV] submitted that this is more in the nature of a fee paid for a particular performance or for an actor’s overall involvement in a particular production than computed by reference to the amount of time for which work is actually performed. However, the fee is payable “shortly after completion of the work”, being the work by the actor on the contractually specified days. In my view, the FTT was entitled to characterise the fee as “salary” for the purposes of the Categorisation Regulations, and in particular was entitled to regard the fee as a payment “computed by reference to the amount of time for which the work has been performed.’
The FTT did not so characterise or regard the fee, nor was it argued before the UT that they should have done.[50]The All Rights Contract was not in issue before us. I shall say no more about it than that nothing said to this court caused me to consider that the FTT were other than correct in saying what they did about the All Rights Contract. Neither side sought to uphold Sales J’s apparently different view.

Other contracts

[51]HMRC’s position in relation to the other contracts is that it is important to recognise that they expressly incorporate the terms of collective agreements negotiated in the industry: this goes to the fourth issue I have identified. Certain of the contracts to which we were referred incorporate the collective agreement between Producers Alliance for Cinema and Television and Equity (‘PACT’) of 7 November 2007 and which took effect as from 1 January 2008. I refer first to this agreement, which I shall call ‘the PACT Agreement’. The PACT Agreement[52]Clause T2 states that the agreement ‘provides for the minimum terms and conditions for all Artists [with certain exceptions, including ‘walk-on’ artists], including dancers … and Stunt Performers/Co-Ordinators employed in productions produced primarily for exhibition on television …’. Clause T6 provides, inter alia, for a ‘network engagement fee’ and a ‘production day payment’. It provides, so far as material:
‘1. Network Engagement Fee The Artist shall be paid an engagement fee of not less than £477 for the first day worked in each and every consecutive seven day period whilst on first call to the Producer. The engagement fee is negotiable and should reflect the Artist’s status, role and length of engagement in the production. Where the Artist’s performance is incorporated into a number of episodes, segments or instalments of a production the Artist must be guaranteed their engagement fee for each episode, segment or instalment into which their performance is incorporated … The engagement fee acquires non-theatric rights … 2. Production Day Payment In addition to the engagement fee(s) which includes the first day worked in any consecutive seven day period the Artist shall be paid a non-negotiable production day payment of £53 for each subsequent day worked beyond the first. If the Artist is required to render services on the seventh consecutive day the Artist shall receive an enhanced production day payment of £79. Example of Work over a consecutive seven day period 2 days Engagement Fee plus a production day at £53 6 days Engagement Fee plus five production days at £53 7 days Engagement Fee plus five production days at £53 plus one production day at £79 (seventh day payment) ….’
[53]Clause T13 provides, so far as material:
‘1. The Artist’s aggregate earnings shall be the aggregate of the Artist’s engagement fee(s), production day payment(s), second call payments made under Clause T(18) sub-clauses 5, 6 and 7, any additional payments for multi-episodic use and any other payments so specified in the Agreement as being included in the Artist’s aggregate earnings. For the purposes of rights and additional use payments Clause T(23) the Artist’s aggregate earnings in respect of each episode, segment or instalment shall be the aggregate of their earnings for the production divided by the number of episodes, segments or instalments into which any part of the Artist’s performance is incorporated. The Artist shall be provided with a statement confirming both their total and aggregate earnings at the completion of the production …’
. Mr Peacock conceded that clause 2 of T6, when read with T13, provides for the payment of a ‘salary’ within the meaning of paragraph 5A, and that if it is incorporated into an artist’s contract without relevant variation, the consequence will be that the contract provides for the payment of ‘salary’. That is because clause 2 of T2 provides for a per day payment for work done. His position is that, whilst the PACT Agreement was substantially incorporated into certain of the contracts, clause T6 was not.

The Bespoke Agreement

[54]This agreement is used for ‘key talent’ artists and the sample agreement before us was for the engagement of an artist for a role in ‘The Prisoner’, consisting of six 60-minute programmes. The agreement defines the ‘start date’ as one commencing on 26 July 2008 and the ‘Period of Engagement’ as eight shooting weeks, to be confirmed, between 25 August and 17 November 2008. Its definitions in clause 1 refer to ‘the Equity Agreement as varied herein and as amended, extended or replaced from time to time’, a reference to the PACT Agreement. The ‘Term of the Agreement’ means ‘the period prescribed hereunder during which the Artist is contracted to provide his services’.[55]By clause 2, ITV engages the artist ‘to perform the role in the making of the programme on the terms and conditions’ set out in the agreement. Clause 3.2 entitles ITV to the artist’s exclusive services in respect of the programmes during the ‘Period of Engagement’. Clause 3.3 provides:
‘3.3 The Artist agrees that the Company shall also be entitled to the services of the Artist as required by the Company on an exclusive basis during the Period of Engagement, and thereafter subject only to the Artist’s prior professional commitments: 3.3.1 prior to and/or after the Period of Engagement on a second call basis in connection with publicity of the Programme and press and media interviews, including in particular the taking of still photographs for the use in such publicity. 3.3.2 prior to the Period of Engagement on 2nd call basis for conference, wig dress and clothes fittings; 3.3.3 on an exclusive basis for 6 “free” further production days in addition to the eight shooting weeks within the Period of Engagement and/or following immediately consecutive to the Period of Engagement, for any added and substituted scenes, retakes as the Company may require to complete principal photography of the Role if necessary 3.3.4 after the Period of Engagement until the date of transmission of the Programme on a second call basis for any post-synchronisation and/or other post production matters for which the Artist shall receive no additional remuneration.’
[56]Clause 4 is headed ‘Artist’s Services’. By clause 4.2, the artist agrees to ‘work such hours as are necessary to fulfil his obligations under this Agreement and accepts that this may involve working an average of more than 48 hours per week’. Clause 5, under the heading ‘Guaranteed Remuneration’, reads so far as material:
‘5.1 Subject to the provisions of this Agreement relating to suspension and termination and to the due compliance by the Artist with his obligations and undertakings hereunder, the Company shall as remuneration and (save as otherwise provided) as full consideration for all services rendered inclusive of all daily payments which might otherwise be due under the Equity Agreement [i.e. the PACT Agreement] and granted to the Company hereunder pay or procure to be paid to the Artist, the total inclusive fee of [US$2.25m], which covers all services hereunder and all rights in all media throughout the universe in perpetuity. The Artist shall not be entitled to any further remuneration in respect of the Artist’s Services or Rights other than for 4th and subsequent network showings on ITV1. 5.2 The payments made to the Artist under Clause 5.1 shall in addition to the rights granted to the Company be deemed to have been made on account of and as prepayment for the additional use fees detailed below, which would otherwise be payable to the Artist in respect of the exploitation of the Programme in accordance with Clause T23 and Appendix TA of the Equity Agreement First UK Network transmission, transmissions on ITV plc owned secondary channels and Worldwide non-theatre rights: (“the Aggregate Earnings”) $756,938 [There follow various other earnings for second and subsequent transmissions and the like, each being a percentage of the base figure of $756,938 which, when added to it, total $2.25m] 5.2.1 It is agreed that the Aggregate Earnings (as defined more fully in Clause T13 of the Equity Agreement) shall for all the purposes of this Agreement be deemed to be $756,938. 5.3 In the event that the Artist is required for principal photography beyond the agreed dates and the agreed 7 day extension period as outlined in Clause 3, overage shall be paid to the Artist at the rate of $109,863 per week or $27,456 per day.’
The effect of clauses 5.1 to 5.2.1 is that there is a single payment to buy the artist’s availability and performance and all his intellectual property rights. In fact, clause 21 provides for the single payment to be paid by five instalments totalling £2.25m at irregular intervals between 4 August and 24 November 2008. Mr Peacock submitted that, if he was right in his submission on condition (c) (see paragraph 21 above), this would prevent any payment under the agreement being ‘by way of salary’. I have, however, expressed my disagreement with that submission and I do not accept that, if the remuneration otherwise satisfies the conditions of paragraph 5A as to whether any payment is ‘by way of salary’, clause 21 disqualifies it.[57]Clause 7 is headed ‘Expense, Transportation and Special Stipulations’. A provision in relation to ‘Transport/Travel’ provides that:
‘In any period over 5 days that [the] Artist is not required to work in Namibia he can elect to be flown to Cape Town, to be paid by the producer. (No first class accommodation is available on these flights)’. and, under the heading ‘Stand In/Assistant’, there is a provision that: ‘The Artist will be provided with an exclusive stand in when the Artist is working, and the non-exclusive services of an assistant. Mr Peacock referred to this as showing that ITV recognised when the actor was or was not ‘working’
. The decision of the tribunals below was, however, that the actor was ‘working’ when he was resting in South Africa.[58]Clause 13, headed ‘Equity Agreement’ (a reference to the PACT Agreement), provides that:
‘Save where varied [by] or otherwise inconsistent with the provisions herewith, the provisions of the Equity Agreement shall be deemed to be incorporated herein as if the same were set out herein in extenso and the Artist shall comply with his obligations contained in the Equity Agreement in so far as they are incorporated herein. In the event of any conflict between the terms of this Agreement and the Equity Agreement the terms of this Agreement shall prevail.’
[59]Three main questions arise in relation to the Bespoke Agreement. First, whether its remuneration terms in general amount to a ‘payment by way of salary’ within paragraph 5A. Second, whatever the answer to that, whether the actor’s entitlement under clause 5.3 is by itself an entitlement to a ‘payment by way of salary’ within such meaning. Third, and whatever the answer to those questions, whether the incorporation of the terms of the PACT Agreement includes a right on the part of an actor to the daily ‘production day payments’ provided for by T6 of the PACT Agreement, which by themselves amount to a ‘payment by way of salary’. ITV requires a negative answer to each issue if it is to succeed on the appeal in respect of this agreement. I shall take each issue in turn. A. Is the remuneration under the Bespoke Agreement a ‘payment by way of salary’?[60]The FTT held that actors engaged under the Bespoke Agreement: ‘135. … were engaged for a period of engagement and paid “guaranteed remuneration”. The period of engagement referred to the time during which the actor had to be available to film the production or programme, and was the time during which the actor was on first call to ITV and was not free to take any other work. This period was determined principally by reference to the number and duration of episodes to be broadcast, on the basis of which the production schedule was determined. … 140. We consider that under this agreement, ITV is buying the actor’s time during which the latter agrees to provide his or her services. As a result, the agreement fulfils condition (d). …’.[61]That was in line with the FTT’s earlier expression of their understanding of condition (d) (in effect, that ‘work has been performed’ means ‘services have been rendered’). Sales J (paragraph 35) agreed with that view. He said: ‘As a matter of overall impression, the fee appears to be directed primarily to paying the actor for their services in the Period of Engagement, and hence as a payment computed by reference to the amount of time for which work has been performed. That impression is reinforced by clause 5.1, which says in terms that the “total inclusive fee” to be paid to the actor is “inclusive of all daily payments which might otherwise be due under the [PACT Agreement]” (i.e. payments due by virtue of work by the actor for set periods of time), and by clause 3.3.3, which refers to an obligation of the actor to work on an exclusive basis for six “free” further production days (which indicates that what the actor is being paid the fee for is the work actually to be performed by them in the contractual “Period of Engagement”).[62]For reasons given, I respectfully disagree with the tribunals below that the inclusive fee paid to the actor under the Bespoke Agreement was ‘computed by reference to the amount of time for which work has been performed’ within the meaning of condition (d). The fee was paid for the purchase of the actor’s exclusive services during the period of engagement and for the acquisition of his intellectual property rights in the programme. The actor would be ‘working’ for ITV during part of that period, when he was required to be on set and when learning his lines. He would not be working during all of it, in particular when simply making himself available for work and awaiting the call to do so. He was in part being paid simply to make himself so available during the period of engagement. During such time he is not ‘working’.[63]I do not, therefore, accept that his all-inclusive fee was ‘computed by reference to the amount of time for which work has been performed’. It was a payment in reward for the rendering by the actor of his services under the agreement and the acquisition of his intellectual property rights in the programme. His services extended both to performing work and to making himself available to do so. His remuneration was not computed ‘by reference to the amount of time for which work has been performed’. B. Is a Clause 5.3 payment itself a ‘payment by way of salary’?[64]As for clause 5.3, nothing was in fact payable, or paid, under it. Mr Peacock submitted that if clause 5.3 merely required the actor to be available, and not on set, any payment under it would not be ‘salary’, because the payment would not be computed in compliance with condition (d). If, however, the actor was required to be on set, Mr Peacock accepted that it would in principle be ‘salary’. He said, however, that in that event it could still not be a ‘payment by way of salary’, because the actor’s entitlement to it at the outset is contingent with the result that, at the point when his status as a person within or without paragraph 5A has to be determined, it cannot be said that his remuneration includes any such payment: that is because he might never receive it.[65]In my view, clause 5.3 deals with the case in which the artist’s attendance is required for further photography work, for which he is then to be paid at either a daily or weekly rate, according to the number of days he is so required. I therefore consider that it provides for a ‘payment by way of salary’, as on such interpretation Mr Peacock accepted. The question is whether, the fact that at the outset of the actor’s engagement the right to such payment is uncertain, or contingent, means that it is not a right to a ‘payment by way of salary’ for the purposes of paragraph 5A.[66]The FTT did not deal with that question. Sales J did and held that the right to a clause 5.3 payment was ‘a payment by way of salary’. He said, in paragraph 36: ‘I consider that the presence of clause 5.3 in the Bespoke Agreement would, in itself, be such as to require that an actor working under it is categorised as an employee for NICs purposes. This is because, addressing the effect of the Bespoke Agreement on the forward-looking, contractual basis which the Regulations require to be adopted, it can be seen that the Agreement contemplates that part of the remuneration in respect of the engagement for the production in question is an overage payment, which is clearly a “payment by way of salary”. Therefore it cannot be said that the remuneration of an actor in respect of their employment for that production “does not include any payment by way of salary”. It is true that an overage payment will only in fact be paid if certain conditions are fulfilled (i.e. the actor is required to attend to work for an extra overage period and does so), and they might not be fulfilled, but looking at the contract at the point of time at which it is entered into, in a forward-looking way, that is usually true of any element of remuneration – it will only be paid if the work is in fact done. What is important for the purposes of the operation of the Regulations is that the contract contemplates that such a payment (computed by reference to the amount of time for which work is performed) may be made’.[67]I agree with that and cannot usefully add to it. Mr Peacock’s submission to the contrary effect led him into difficult territory, in which he had to rationalise what the NI position would be if and when the contingency happens and the ‘salary’ payment made. Did that change the status of the actor for NI purposes retrospectively (surely not); or, if not, did it change it in some manner prospectively? He offered no explanation that satisfied me that there was any workable, practical foundation to his submission. I therefore agree with the UT that the provisions of clause 5.3 by themselves meant that the actor’s remuneration under the Bespoke Agreement includes a ‘payment by way of salary’ within paragraph 5A. The consequence is that paragraph 5.3 is, by itself, sufficient to prevent the paragraph 5A exception from applying. C. The incorporation of

The PACT Agreement

[68]Mr Gammie submitted that clause 5.1 of the agreement in terms provides that the total inclusive fee of $2.25m is ‘inclusive of all daily payments which might otherwise be due under the [PACT Agreement]’, so that the total fee includes ‘production day’ payments of £53 a day. I agree with Mr Gammie that if that is the right interpretation of clause 5.1, part of the $2.25m figure is referable to payments ‘by way of salary’, which I did not understand Mr Peacock to challenge. Mr Peacock’s responsive submission was, however, that on the true interpretation of clause 5.1, the agreement does not incorporate the PACT agreement obligation to pay ‘production day payments’ of £53 a day for each day worked beyond the first day. It instead excludes any such obligation, and replaces it with the obligation simply to pay the inclusive fee of $2.25m. That, he says, is the effect of the phrase in clause 5.1 reading ‘which might otherwise be due’.[69]I disagree with Mr Peacock’s submission and accept Mr Gammie’s. I see no answer to Mr Gammie’s point that clause 5.1 states that the total fee is ‘inclusive’ of the daily payments payable which might otherwise be due under the PACT Agreement. In fact, such payments would otherwise have been due, but in my view nothing turns on the ‘might’. The plain sense of clause 5.1 is that the agreement is saying that the $2.25m fee is to be taken as ‘including’ the production day payments which, if not so included, would be payable in addition by reason of the incorporated provisions of the PACT Agreement. It is a provision against double counting.[70]I would therefore find against ITV on this issue too. The result is that I would hold that actors retained under the Bespoke Agreement are to be treated as employed earners for Class I purposes.[71]In order to deal with the contracts further along Mr Peacock’s spectrum, I must first refer to another collective agreement.

The Agreement between ITV and Equity

[72]This is a minimum rates agreement between ITV and Equity dated 1 April 2007 (‘the Equity Agreement’). The relevant provision is clause 20, headed ‘Attendance Days’, an ‘attendance day’ being ‘any day upon which an artist is required to attend at a studio, on location, or other designated premises for one or more of the following purposes’, being pre-rehearsal read through, rehearsal, recording and performance. Clause 20(a)(ii) provides for an attendance day to be up to ten hours, including eight hours of work. Clause 20(b) provides, by reference to Schedule C, for the daily payment for an ‘attendance day’ in studios, rehearsal room or on location to be £53.40; and for a variety of weekly rates, one of which is £1,011. Schedule C also provides a minimum daily payment of £253.65 for stunt performers. Mr Peacock accepted that that, if incorporated into an individual contract, the clause 20 provision for ‘attendance day’ payments would constitute a ‘payment by way of salary’.

The All Inclusive Fees Equity Agreement (‘Coronation Street’)

[73]This is a contract (‘the All Inclusive Agreement’) between ITV and an artist made on 16 April 2009 that, by clause 1, expressly incorporates the Equity Agreement. It is the type of agreement typically used for better known actors in long running parts in soaps. The contract we were shown relates to Coronation Street. It engages the actor to appear in a particular role for 36 guaranteed episodes during a period of engagement from 13 June to 11 December 2009, about six months. The guaranteed programme fees total £775 per episode. Under ‘Additional Fee Information’, the agreement provides: ‘Subject to the Artist fulfilling all obligations hereunder, the Company guarantees that the total sum payable, pursuant to this clause, shall amount to a minimum guarantee of £33,650.00 …. This amount is inclusive of 36 episode fees and all daily payments totalling £5,750.00 for the 26 week contract period (£239.58 per week including holiday weeks) which might otherwise be due under the [Equity Agreement] including paid holiday of 14 days due under the Working Time Regulations 1998.’ (£775 x 36) + £5,750 = £33,650. The all-inclusive fees are so-called because they also buy out the actor’s intellectual property rights in the performances.[74]Clause 5 sets out the times for payment, although these provisions are in fact materially superseded by a further provision under the ‘Additional Fees Information’ heading. Clause 8, under the heading ‘Specific Requirements of Particular Engagements’, provides in part:
‘8.1 After completion of the above period of engagement, provided the Artist’s professional engagements shall have priority, the Artist shall attend, if required by the Company, post-synchronisation sessions, each not exceeding 4 hours, which may be spread over 5 hours to permit a rest period or meal break of one hours [sic]. Such a session shall attract a fee of £255.36 but shall not attract repeat or additional use payments. For the avoidance of doubt the Artist shall undertake post-synchronisation work within the above period of engagement if required by the Company for which the Artist shall receive attendance day payments as described in the [Equity Agreement]; 8.2 Save as otherwise specified hereunder, the Artist agrees that throughout the Period of Engagement the Company shall have first call on the Artist’s services and the Artist will not undertake any commitment for supplying or rendering the Artist’s services to any third party for any purpose without the Company’s written consent.’
Clause 8.2 is a first call provision: the artist is not required to be on the set for the whole period of engagement. Clause 8.1 is a second call provision in the nature of a contingent entitlement that operates if, at all, after the period of engagement. Mr Peacock submitted that, if clause 8.1 were to come into play, it would constitute a separate engagement; alternatively, he again submitted that, as a contingent entitlement to ‘salary’, it is not ‘salary’ within the meaning of paragraph 5A.[75]Clause 10, headed ‘Artist’s Consent and Authorisation’, provides in part: ‘10.2 The Artist agrees that he will work such hours as are necessary to fulfil his obligations under this agreement as the Company’s recording schedule [‘requires’, or perhaps ‘demands’: neither word is included, but that is the sense], and the Artist accepts that this may involve working an average of more than forty eight hours per week. … 10.6 The Artist hereby agrees to and gives every consent necessary under the Copyright Designs and Patents Act 1998 [sic: should be 1988], or any amendment to or replacement thereof for the use worldwide of the Artists contribution pursuant to this agreement and services provided hereunder but only as provided for in the [Equity Agreement] and in any other agreement current at the time of such use between the Company and Equity in relation to any means of distribution now known or hereafter developed’.[76]Finally, I refer to paragraphs 1.1, 3 and 5 of Schedule 2 to the contract (which the contract did not expressly incorporate, but it is not in dispute that it is to be read as if it had done so). They provide:
‘1.1 In the event that there shall be any conflict between the provisions of this Contract or of these Special Stipulations and the provisions of the Agreement between the [Equity Agreement] (as amended from time to time during the currency of this Contract) then the provisions of this Contract shall apply in so far as may be necessary to give effect thereto and the terms of this Agreement shall be varied accordingly…. 3. Without prejudice to the Company’s rights hereunder the Artist agrees and undertakes during the currency of the Contract that he shall not without the Company’s prior consent: - 3.1 take part or appear in any television or theatrically released film or programme or other recording for exploitation in any media in the United Kingdom for any other person, firm or company including without limitation the British Broadcasting Corporation; or 3.2 give any performance on or to be used on sound radio or theatre in the United Kingdom. … 5. The Artist is on first call to the Company at all times during the currency of this Contract (subject to the terms of the Clause relating to “Other Work” hereof) and will not enter into any commitments or arrangements which may interfere with or otherwise adversely affect the full performance by the Artist of his obligations hereunder. These commitments and arrangements shall include the Artist not voluntarily engaging in any hazardous pursuit nor taking any risks, the taking of which would invalidate or affect any normal policy of insurance on the Artist’s life or health effected in connection with the Production or which might interfere with the Artist’s ability to provide his services under this agreement, nor shall the Artist fly otherwise than on a scheduled airline.’
Mr Peacock submitted that the restrictions in these paragraphs do not amount to the performance of ‘work’ by the actor, nor does the actor’s commitment to make himself available for work amount to work.[77]For like reasons I have given in relation to the Bespoke Agreement, I agree with Mr Peacock that the remuneration as a whole is not a payment ‘by way of salary’. However, as for Clause 8.1, Mr Peacock accepted that if he was wrong on his point as to contingency, this was ‘salary’. For like reasons given before, I would hold that the actor’s entitlement to such a payment amounts to a right to a payment ‘by way of salary’ within paragraph 5A.[78]As to whether the first paragraph of the ‘Additional Fee Information’ section has the effect that the ‘minimum guarantee of £33,650’ includes the daily ‘attendance day’ payments provided for by the Equity Agreement, the position is not as straightforward as under the Bespoke Agreement. The £239.58 weekly figure is the result of £5,750 divided by 24, the other two of the 26 contract weeks being paid holiday. On a five-day week basis, that equates to £47.91 a day. The attendance day rate in the Equity Agreement is £53.40, so that a five-day week at that rate comes to £267. The daily rate guaranteed in the contract is therefore less than the rate provided by the Equity Agreement.[79]Mr Gammie pointed out that the £33,650 figure is a ‘minimum guarantee’ and that such minimum is inclusive of the ‘daily payments’ totalling £5,750 for which the contract provides. He said, however, that there is nothing in the contract excluding the actor’s right under the incorporated terms of the Equity Agreement to recover an attendance day payment at £53.40 for any additional days worked over and above those included within the 26-week contract period. There is, he said, nothing in the contract that excludes, is inconsistent with or cannot be reconciled with such a right to the attendance day provisions of clause 20 of the Equity Agreement.[80]Mr Peacock said that the language of the contract implicitly excludes clause 20. Whilst the £33,650 figure is admittedly a minimum figure which could in certain circumstances (unrelated to daily payments) be increased (for example, if the actor is asked to appear in more episodes), he said that the £5,750 figure itself is incapable of increase but replaces and overrides the attendance day entitlement provided by clause 20.[81]I agree with Mr Peacock. In my view it is plain that the agreement to pay the actor a global all-in figure of £5,750 for ‘all daily payments’ (however many might be worked), calculated on a basis differing from the daily ‘attendance day’ rate provided in the Equity Agreement, reflects an obvious intention to supplant the clause 20 obligation in the Equity Agreement with the tailor made provisions of the contract. In my judgment, the clause 20 obligation to make ‘attendance day’ payments is therefore excluded; and the provision that replaces it is not a provision providing for an identifiable daily rate for days of work, because the number of days that would be worked is unknown.[82]Although, therefore, I would find in favour of ITV on the first and third issues, I would find against it on the second issue. This agreement therefore also includes an obligation by ITV to make payments to the actor retained under it ‘by way of salary.

The All Inclusive Fees Equity Agreement (‘Emmerdale’)

[83]This is similar to the All Inclusive Agreement just discussed and is for the engagement of an actor for a role in ‘Emmerdale’. The contract expressly incorporates the Equity Agreement. It is for 95 guaranteed episodes and provides for a guaranteed fee of £700 per episode. The period of engagement is a year, from 20 July 2009 to 18 July 2010. Clause 3, headed Fees, includes the following provision:
‘Subject to the Artist fulfilling all obligations hereunder, the Company guarantees that the total sum payable, pursuant to this clause, shall amount to a minimum guarantee of £78,500 … This amount is inclusive of 95 episode fees, daily payments totalling £12,000 … which might otherwise be due under the [Equity Agreement], including paid holidays of 28 days.’
[84]Clauses9.1 and9.2 impose respectively second and first call obligations in terms identical to those provided by clauses8.1 and8.2 of the All Inclusive Agreement. Mr Peacock again relies on the first call obligation as showing that the remuneration is paid also in return for the actor’s availability to work on call, and not just for the work he does.[85]This agreement is not relevantly distinguishable from the All Inclusive Agreement. For the same reasons, I would answer all three issues in the like way. It follows that this agreement also includes an obligation by ITV to make payments to the actor retained under it ‘by way of salary’.

The Option Equity Agreement (‘Coronation Street’)

[86]We were shown a further ‘Coronation Street’ agreement, this one being for the engagement of an actor in 80 episodes. It incorporates the Equity Agreement. It is for a period of engagement from 13 July 2008 to 10 July 2009. As regards the amounts paid, it is similar in format to the All Inclusive Agreement and the ‘Emmerdale’ agreement. Clauses 8(a) and (b) respectively provide for second and first call obligations in terms (apart from the figure in clause 8(a)) identical to clauses8.1 and8.2 of the All Inclusive Agreement.[87]Clause 1.1 of the ‘Special Stipulations’ forming part of the contract provides: ‘Save as stated in the [sic] Clause 2 hereunder in the event that there shall be any conflict between the provisions of this Contract or of these Special Conditions and the provisions of the [Equity Agreement] (as amended from time to time during the currency of this Contract) then the provisions of this Contract shall apply insofar as may be necessary to give effect thereto and the terms of the Agreement shall be varied accordingly’.[88]Clause 11 of the contract’s ‘Special Stipulations’ again provides for the actor to be on ‘first call’. The total agreed amount payable to the actor is in clause 12, which provides for ‘guaranteed earnings under this contract [of] £69,180.00, which sum is inclusive of fees for 80 episodes and daily payments at the negotiated rate of £11,500 per annum’ (my emphasis).[89]A special feature of this agreement drawn to our attention is clause 8(f). It is in the nature of a put option by the actor, in consideration of the fees payable by ITV under the contract, entitling ITV to engage him for a further period from 11 July 2009 to 9 July 2010 for a minimum guarantee of 80 episodes, the option to be exercisable on or before 10 April 2009.[90]Again, I agree with Mr Peacock that the general remuneration payable under this agreement does not satisfy condition (d) as it is not computed by reference to the time of work performed. I consider, however, that the actor’s contingent entitlement to payment under clause 8(a) does amount to an entitlement to a payment ‘by way of salary’. I agree with Mr Peacock that the effect of clause 12 of the special stipulations is to replace the obligation to make ‘attendance day’ payments by an all-inclusive obligation to pay £11,500 (part of the total guaranteed earnings of £69,180) for daily payments. Since, however, the £11,500 is not computed by reference to actual days worked, which cannot be known when the contract is signed, it does not satisfy condition (d).[91]I would therefore decide in favour of ITV on the first and third issues, but against it on the second issue. It follows that this agreement also includes an obligation by ITV to make payments to the actor ‘by way of salary’.

The Weekly Equity Agreement (‘The Royal Today’)

[92]This is for the engagement of an actor to appear in a role for a maximum of 50 episodes in ‘The Royal Today’. It incorporates the Equity Agreement. The period of engagement is 18 weeks from 9 July 2007 to 16 November 2007. Clause 3, ‘Fees’, provides for a ‘weekly fee’ of £1,010.99, a penny less than the ‘weekly rate’ of £1,011 provided for by Schedule C to the Equity Agreement for productions which will be broadcast to between 76% and 100% of national television households. Whether ‘The Royal Today’ is within this bracket is not disclosed by the contract. Mr Peacock assured us that the £1,010.99 figure in the contract was ‘not deliberate’, although it looks to me like a fee arrived at with studied deliberateness. Clause 5, ‘Time of Payment’, provides for payment of the weekly fee to be made not later than the Friday following the week in which the actor completes work for the programme. Clauses 8(a) and (b) provide respectively for second and first call obligations in terms identical to clauses8.1 and8.2 of the All Inclusive Agreement.[93]The weekly fee rewards the actor both for his first call obligation and for the work he does, and buys out his intellectual property rights in his performance. For reasons given, I do not regard it as satisfying condition (d). It is, in that respect, no different in character from an all-inclusive fee payable either in a lump sum or in instalments. On the other hand, also for reasons given, I regard the actor’s contingent entitlement to a fee computed by reference to work done upon a second call under clause 8(a) as meaning that the agreement provides in part for a payment ‘by way of salary’ within the meaning of paragraph 5A.[94]As to whether under this agreement the actor is entitled to ‘attendance day’ payments and/or a ‘weekly rate’ as provided by the Equity Agreement, I regard the answer as no. I would regard the agreement as impliedly excluding any such entitlement.[95]As ITV in my view fails on the clause 8(a) point, it fails on this agreement as well.

The All Inclusive Fee PACT Agreement (‘Miss Marple’)

[96]This is for the engagement of an actor to play a role in a ‘Miss Marple’ production, ‘Ordeal by Innocence’. It expressly incorporates an earlier version of the PACT Agreement, one effective from 1 August 2004, which includes a right to production day payments of £49.10 for each day worked beyond the first.[97]Section E entitles ITV to ‘first call’ on the actor’s services:
‘… for a period beginning on the first day on which the Artist shall, following a call from the Producer, attend to render services in the filming/recording of the Artist’s part for the following nominated and/or unspecified period(s) in accordance with the provisions of clause (T8) 1 and 2: - Dates of Engagement From: 10.01.07 To: 31.01.07’
The period of engagement is thus 21 days. Clause (T8) 1 and 2 of the relevant PACT Agreement provide, so far as material:
‘1. Nominated Period(s) Should the Producer wish to engage the Artist for nominated specified day(s) and/or week(s) the Artist must receive their engagement fee for the first day worked in any period of seven consecutive days plus a production day payment for the second and subsequent day worked in that seven day period. … 2. Unspecified Period(s) Should the Producer wish the Artist to be available on first call over a period without nominating the day(s)/week(s) to be worked, the Producer must pay the Artist’s engagement fee on the first day of every seven consecutive day period within the period of engagement and not less than four production day payments in each seven consecutive day period. …’
[98]Section K provides for a ‘Total Guaranteed Minimum Payment (Section G+H+I+J) = £6,000’, adding ‘I and J where applicable’. To understand the section G payment, it is necessary to go first to section F, which reads, so far as material:
‘(iv) Total Engagement Fees payable [(ii) + (iii)]: N/A multiplied by Engagement Fee (v) Number of Production Day payments: N/A multiplied by £49.10’
On one view, the calculation identified in each of (iv) and (v) is 0 x £X, to which the arithmetical answer is in each case £0.[99]That arithmetic is of interest because section G then provides:
‘The Producer shall pay the Artist £3,680.98 for the periods specified in Section E above calculated by adding Section F(iv) and F(v) whether or not the Artist is called to render services. Other payments under the Agreement may form part of the Artist’s aggregate earnings upon which additional uses are calculated.’
So, on one view the figure of £3,680.98 is arrived at by adding £0 to £0, another conclusion of questionable arithmetical soundness. Section H is headed ‘Nominated Additional Uses’, which I shall not explain in detail but includes a fee of £1,288.34 for TV rights in territories other than the UK and the USA (the figure is described as 35% of the Section G figure). Section I, headed ‘Other Additional Uses’ includes a figure for the acquisition of further rights, totalling £1000.68. Section J appears to include no figures. My totalling of the G+H+I+J figures is £5,970, or £30 shy of the £6,000 in Section K.[100]This agreement is no masterpiece of drafting. Mr Peacock’s submission was that its effect, however, is to provide for an all-in fee of £6,000, in which section F(iv) and (v) are stated to be inapplicable. Therefore, although the agreement expressly incorporates the terms of the earlier PACT Agreement, its express terms of remuneration are in conflict with it and must be read as excluding the obligation to make ‘production day’ payments. Mr Gammie advanced no submissions directed specifically to this agreement, although his general submission was that all the agreements included provisions for either production day or attendance day payments.[101]Insofar as this agreement provides for an all-in fee for the actor’s services, including whilst the actor is on first call, I consider, for reasons given, that it does not include a payment ‘by way of salary’. I disagree, however, with Mr Peacock that it does not also provide for daily production day payments at a rate of £49.10, the rate provided for by the earlier PACT Agreement. I agree that section F(v) can be read as suggesting that there is to be no payment for production days (even though it pointlessly still goes to the trouble of spelling out the inapplicable rate for the payment that is not to be made, namely £49.10). It remains the case, however, that the section G fee is expressly stated as comprising a section F(v) element. The drafting is, to put it politely, a bit of a mystery (perhaps one even worthy of Miss Marple herself), but the court has to do the best it can to interpret it and, so far as possible, give sense to its component elements, however nonsensical they may on one view appear to be.[102]So approaching this agreement, I consider that the more likely sense of the ‘N/A’ in section F(v) is that it simply means that the precise number of production days for which payment is being made is not being identified. Section G, however, makes it tolerably clear that the fee of £3,680.98 includes daily payments of £49.10 for however many production days are worked. It also appears to provide that the fee is payable whether or not the actor’s services are called upon. I am not clear whether that means that the actor receives his £3,680 even if ITV decides not to go ahead with the production. Whatever the answer to that, the agreement is anyway one that, in my view, provides for the payment to the actor of a fee that includes a reward at the rate of £49.10 in respect of any production days worked. That, I consider, means that, viewed at the outset, it includes an obligation by ITV to make payments to the actor retained under it ‘by way of salary’, and I would so hold.

The Short Term Equity Agreement (‘Heartbeat’)

[103]This agreement also incorporates the Equity Agreement and is for the engagement of an actor in a role in a single episode of ‘Heartbeat’. It is for a 10-day period of engagement. It provides for total guaranteed programme fees of £2,000, but under the heading ‘Additional Fee Information’ there appears this:
‘The fee as stated in this clause is inclusive of payment in lieu of the Artist’s holiday entitlement under the Working Time Regulations 1998. In addition, Production Day payments and Standby Day payments will be payable in accordance with the [Equity Agreement].’
[104]Clause7.1 and7.2 provide respectively for second and first call obligations, in a form identical to that of clauses8.1 and8.2 of the All Inclusive Agreement, with the former giving the actor a contingent entitlement to salary, as Mr Peacock accepted. Paragraph 9.1 of Schedule 1 provides that the actor ‘will render services willingly and to the best of the Artist’s creative ability and such services shall be rendered on a first call basis during the Period of Engagement’.[105]Since the guaranteed fee is inclusive of the actor’s first call obligations and the purchase of his intellectual property rights in the performance, I would not regard it as computed in accordance with condition (d). However, for reasons given, I consider that the actor’s contingent entitlement to a clause 7.1 payment is ‘salary’ within paragraph 5A. In addition, clause 3 makes it plain that the actor is entitled to daily ‘production day’ payments, which I take to be an inaccurate reference to ‘attendance day’ payments, and I would regard that as also amounting to ‘salary’.[106]ITV therefore fails on this agreement as well.

The Guaranteed Engagement Days PACT Agreement (‘Lewis’)

[107]This contract is in the like form as the Miss Marple agreement (see paragraph 96 above) and incorporates the same earlier PACT Agreement. It is for the engagement of an actor in a single episode of ‘Lewis’. There are two separate periods of engagement, being of two specified consecutive days in the third week of August and the first week of September 2008 respectively. Section E provides that the producer ‘shall have first call on the Artist’s services …’ and so on in the same terms as the Miss Marple agreement. Section F.4 provides for the payment to the actor of two engagement fees of £700, totalling £1,400; and F.5 provides for the payment of two production day payments of £53 each (one each for each second day of the two engagements). Section G, like its equivalent in the Miss Marple agreement, provides:
‘The Producer shall pay the Artist £1,506.00 for the period(s) specified in Section E above calculated by adding Section F(iv) and F(v) whether or not the Artist is called to render services. …’
. Section H provides for the payment to the actor of £527.10 to buy out his rest of the world TV intellectual property rights in the episode. Together with other small payments for overseas video rights, the total guaranteed minimum payment to the actor provided for in Section K is £2,168.64.[108]In this agreement, unlike the Miss Marple agreement, the arithmetic makes sense. Mr Peacock accepted that this contract unambiguously includes the payment for four days work, including the payment of two production day payments. As regards the former element, I understood him to submit that this is still a payment for being on call and is not therefore computed by reference to work performed. As regards both the former and the latter, he said that the production day payments are paid whether or not the actor ‘is called upon to render services’ and so no element of them is computed by reference to the time of work performed, since the whole is payable whether or not any work is performed. It follows, he said, that on no basis is condition (d) satisfied.[109]The same provision – ‘whether or not the Artist is called to render services’ – appears in the Miss Marple agreement and I have expressed my views on its effect. In my judgment, for reasons there given, at least the production day payments amount to ‘salary’ within the meaning of paragraph 5A. ITV therefore fails on this agreement too.

The Equity Stunt Agreement (‘Heartbeat’)

[110]A stunt performer (as compared with a stunt co-ordinator) is an entertainer within the meaning of the Categorisation Regulations. This agreement incorporates the Equity Agreement. It is for an engagement of a stunt artist for an episode of ‘Heartbeat’ for two days on 15 and 16 December 2008. The fee is at ‘an agreed daily rate’ of £370, the total fee being £740, including the buy out of the performer’s intellectual property rights in his performance. Mr Peacock’s submission, advanced with what he admitted was a degree of diffidence, is that whilst the fee is computed by time, it is not computed by reference to time worked and so is not ‘salary’ within the meaning of paragraph 5A. Clauses8.1 and8.2 again provide respectively for second and first call obligations in terms identical to those of clauses 8.1 and 8.2 of the All Inclusive Agreement, although Mr Peacock recognised that the application of a ‘first call’ obligation to a contract relating to two specified days, when the inference is that he was required to be on site on both days, was different in character from a contract covering a period of engagement of several weeks or months.[111]Mr Peacock realistically accepted that this is an agreement that provides for a daily payment for each of the two days of the period of engagement. In my view, the agreement provides providing for the payment of a ‘salary’ within the meaning of paragraph 5A. ITV fails on this agreement too.

A Walk-on’s Contract

[112]We were shown no sample contract relating to walk-ons, but were shown a template for their engagement in a collective agreement relating to walk-ons between ITV and Equity. Clause 5, headed ‘Rates of Pay’, provides:
‘Walk-ons shall be paid at the rate listed in Schedule B for each day or night of attendance or recording. When 41 or more Walk-ons are called for work on a location on a day then the discounted rate listed in Schedule B shall be paid. Payment for night work shall be one and one-half times the appropriate day rate.’
Walk-ons have to be in attendance on location in order to earn their pay. Mr Peacock advanced no submission to the effect that their pay is not a ‘payment by way of salary’ for the purposes of paragraph 5A: he accepted that it is.

Disposition

[113]I would dismiss the appeal.

Sir Stanley Burnton :

[114]I am exceedingly grateful to Lord Justice Rimer for setting out the facts, the applicable legislative provisions and his conclusions so clearly.[115]It is thankfully rare for such deceptively simple and superficially clear formulations as those in paragraph 5A of column (B) of the Categorisation Regulations in force with effect from 6 April 2003 to create difficulties of interpretation and application such as those in the present case. The reason for the difficulty is not hard to find. The formulations were drafted without sufficient thought being given to the peculiarities of the work of an actor in the making of a film, whether for television or the cinema. The principal peculiarity with which we have been concerned arises from the fact that a scene may have to be enacted only once, or several times; and the actors required for that scene may during the course of a day be actually acting for a very short time or again and again for a considerable time until the director is satisfied. Equally, the actors in the scene next to be filmed may spend much of their day waiting for the preceding scene to be completed; or they may be fortunate to have to wait for a very short time and complete their acting in an equally short time. Similarly, if the filming is to be carried out at an external location, the vagaries of the weather may affect when the actual acting may be carried out.[116]It is relatively easy to conclude that an actor is at work if he is at the studio waiting to be called on, even if he or she is not called on at all. It is rather more difficult to conclude that he is performing work when is waiting to be called on. Moreover, a producer, realising that an actor may not be required, but is available at home close by, may allow him to wait at home to be called. Or he may permit him to wait at his hotel. Is the actor to be paid for work performed by him if he may spend part of his contracted time at home in such circumstances? Can the distance of the actor’s home or of the hotel from the studio or filming location matter? The hotel may be a considerable distance away, as in the case of the actor permitted to be at his hotel in South Africa pending his being actually required for filming in Namibia. Is his or her remuneration “computed by reference to the amount of time for which work has been performed” if his contract provides that if he is not required on location he is to spend some of his contracted time on call in South Africa, to be paid at the same rate as the days when he is actually filming?[117]The difficulties of construction are aggravated by the use of the past tense in subparagraph (d). It indicates a lack of care in its drafting. For reasons of practicability, it is obvious that the NI status of a worker (to use a neutral expression) must depend on the terms of his contract. The test must look forward, and that is common ground before this Court. The practical difficulties of any other approach are similar to those referred to by Lord Justice Rimer in paragraph 67 of his judgment. In order to construe paragraph 5A as creating a test that looks forward, it is necessary to do violence to the words of, in particular, subparagraph (d).[118]It is because of the defects in the drafting of these provisions that I am not confident that the change of terms, from “services” in subparagraphs (a) and (b) to “work” in (d) reflects a decision on the part of the draftsman to refer to different things. On one view, the service rendered by an actor is acting, and he does not render a service while he is on call, albeit that he is complying with a contractual obligation. I therefore reserve my opinion on the conclusion reached by Lord Justice Rimer in paragraph 35 of his judgment.[119]However, I agree with the analysis of Lord Justice Rimer of the effect of the incorporation of the collective agreements into the contracts in issue and the application of subparagraph (d) to them. For the reasons he gives in paragraphs 52 to 112 of his judgment, I too would dismiss the appeal.

Sir James Munby, P :

[120]I agree that the appeal should be dismissed on the basis identified by Sir Stanley Burnton. Like him I prefer to reserve my opinion in relation to the precise meaning of subparagraph (d). I too must express my gratitude to Lord Justice Rimer for taking us so clearly though this most unhappily drafted legislation.

Cited in 1 later judgment