Plant Movements Ltd v Long [1992] UKEAT 607_91_0710

EAT
Plant Movements Ltd v Long
[1992] UKEAT 607_91_0710 · 1992-10-07
MR JUSTICE KNOX: This is an appeal by Plant Movements Limited, the employer, which I will call "the Company" from a decision of the Industrial Tribunal sitting at Brighton, on the 16th August 1991 on a preliminary point, the familiar question whether the Applicant, Mr Long, was an employee with the benefit of the Employment Protection (Consolidation) Act 1978 provisions or whether he was a person who had entered into a contract for services and was therefore not an employee and not within that Act. The decision was a Reserved one in which the facts were found and the authorities which were cited to us today were referred to and presumably that was on the basis that they had been cited to the Industrial Tribunal by the parties.At that hearing Mr Long was represented by a friend of his, a Mr Riddington. There is nothing to indicate that Mr Riddington was legally qualified. He did not appear either by himself or through Mr Riddington before us. We have only had Counsel for the Company, Mr Randolph, who has appeared here whereas the Company was represented by a Mr Stebbing, a Solicitor, before the Industrial Tribunal.The facts so far as relevant to this preliminary issue can be summarised as follows. Mr Long, was undoubtedly, an employee when he first joined the Company's service and worked for them. That was because there was a letter of the 5th February 1988 written to him, on behalf of the Company, which recorded the Company's understanding that Mr Long would prefer to be employed on a regular basis rather than in a self-employed capacity and it was common ground between the parties that there was no doubt but that he was an employee from then until either April or May of 1990 and that to anticipate a term that has been used in some of the cases, the label that was placed on the relationship was an entirely accurate one, namely the label of employment rather than contract for services.In September 1989 there appears to have been a somewhat unusual episode, in that, another letter was written to Mr Long confirming terms and conditions of employment on a self-employed basis, and we have seen that letter which was before the Industrial Tribunal, and it appears to be the fact, as found by the Industrial Tribunal, that no one paid the smallest attention to what that letter provided. The Industrial Tribunal says this about it:
"but in fact there was no change at all at that time and the Applicant continued to work for the Company on the terms agreed in February 1988."
It therefore does not seem to us to be possible to place any significant reliance on anything that is found in that letter of September 1989, which appears to have been ignored by everybody.One then comes to April and May of 1990 when the Company approached Mr Long and put before him two sets of conditions of employment, one with the addition at the heading of "Self-Employed" the other without that. They again, were before us and were before the Industrial Tribunal. They do provide for different methods of computing the remuneration of Mr Long and there was before the Industrial Tribunal and has been put before us a schedule that compares what Mr Long did receive, as a self-employed person, if he was such, at the rates in the self-employed version of the conditions of employment as compared with what he would have received had he been remunerated in accordance with the other set of conditions of employment which were not headed "Self-Employed". It is a matter of no surprise to anyone with any experience in this field that the rate of remuneration under the conditions of employment that were described as "Self-Employed" were higher than the other rates because there are obligations on employers, where there is a contract of service, which the person who does the work has to provide for if he or she is self-employed. Sickness benefit and National Insurance are the two most obvious ones. There are also, no doubt, fiscal advantages, the exact quantification of which is a question of some complication in the shape of the delay that the tax payer enjoys in assessments under Schedule D as opposed to the system of contemporaneous deduction of tax under PAYE system that operates under Schedule E and the somewhat more generous basis upon which expenses can be claimed under Schedule D as compared with the provisions which are more stringent in relation to expenses under Schedule E.Many of the clauses in the two versions of the Conditions of Employment, that headed "Self-Employed" and that not so headed, were identical one with the other but there were, in particular, the differences in relation to the rate of pay which was the one which was principally relied upon before us.There is no specific finding exactly how Mr Long acceded to the Company's suggestion that he might choose one or other of those two conditions of employment. What the Industrial Tribunal says after recording that both versions were sent to Mr Long is this:
"It was the Company's case that thereafter the relationship between the parties changed at the option of Mr Long. He obtained a sub-contractor's tax certificate from the Inland Revenue, was issued with a P45 and all outstanding holiday stamps. He rendered sub-contractor's vouchers for monies he claimed to be due to him from the Company in respect of work done (forms 715) - all part of the Inland Revenue system for tax on earnings where a sub-contractor's tax certificate has been issued to an individual.
It was not disputed, indeed it was readily agreed, that in all other respects as between the Company and Mr Long everything carried on exactly as before, except that he knew, understood, and accepted that he would not be paid for holidays, or if he were absent by reason of sickness."and then it goes on to record guarantees of the amount of work that he would be provided with by the Company.There is no evidence, and indeed it was accepted by Mr Randolph on behalf of the Company, that it did not happen, that Mr Long signed either of the two sets of conditions of employment so that all that we have is a finding that there was an implementation of the consequences of the adoption of the self-employed version. To some extent, therefore, that makes the case rather less clear cut than it would have been if there had been a formal written agreement regulating the relationship between Mr Long and the Company. But it is clear that the self-employed version was implemented to a very significant extent if not in its totality.Mr Long's employment came to an end on the 21st February 1991 and he applied for compensation for unfair dismissal by an Originating Application to the Industrial Tribunal presented on the 4th April 1991. The preliminary issue as to whether he came within the jurisdiction of the Court therefore arose and was taken as a separate issue by the Industrial Tribunal, which held that it did have jurisdiction because Mr Long was, notwithstanding the implementation of the Self-Employed Conditions of Employment in fact and in law, an employed person. They must have had it pointed out to them that Mr Long made more money as a result of the way in which his remuneration was calculated because they record the fact that Mr Stebbing, who appeared for the Company, submitted that the Applicant had chosen the form of supplying his labour to make more money for himself. That indicates that, as is very clear from the exhibit to which our attention has specifically been drawn, at any rate if one just looks at his gross pay without taking into account the other side of the coin as to how much he had to provide for, providing for the possibility of his being sick and such matters as that, he was, undoubtedly, getting more out of the self-employed version of his Conditions of Employment.The Industrial Tribunal, carefully, as it seems to us, looked at the plethora of authority which was cited to them. Mercifully, as with us, not every case on the subject was cited to them, but they had references to Readymixed Concrete (South East) v. Minister of Pensions and National Insurance QBD [1968] 1 AER 433, O'Kelly and Others v. Trusthouse Forte PLC CA [1983] ICR 728, which before us was cited in [1983] 3WLR 605, Massey v. Crown Life Insurance Co. CA [1978] ICR 590, Market Investigations Ltd v. Minister of Social Security QBD [1968] 3AER 732 Ferguson v. John Dawson & Partners (Contractors) Ltd CA [1976] IRLR 346 and Young and Woods Ltd v. West [1980] IRLR 201 . The authorities do not give a single clear picture because there are manifold difficulties in drawing the boundary line between employment and self-employment and we see no useful purpose in going through the authorities because superior tribunals to this have done exactly that over the years and to add to the long list of reviews of reported cases would be scant service to the profession. It seems to us that the principal issue before us is whether there is ground for disturbing the decision of the Industrial Tribunal and in attacking that question, the first and critical point is, what is the proper approach that this Tribunal should adopt to that question? Mr Randolph referred us to two passages from the authorities, one the Judgment of Lord Justice Stephenson in Young and Woods Ltd v. West and the other the Judgment of Lord Justice Ackner in O'Kelly & Others v. Trusthouse Forte plc [1983] ICR 752, from which he quoted the following passage at p.623 in [1983] 3 WLR report:
"It seems to me clear that in the Heath Laundry case [1910] 1KB 543 it was a question of law what meaning had to be given to paragraph 2(b) of Schedule 1 to the Workmen's Compensation Act 1906. Further, it must be axiomatic that whether or not A has entered into a contract with B, whether such contract be in writing or partly in writing and partly oral, or wholly oral, is a question of law involving the true interpretation of a document and/or the conduct of the parties. The facts cannot warrant a determination either way. It is not a question of degree, as in the case of the meaning of reasonableness ( Union of Construction, Allied Trades and Technicians v. Brain [1981] ICR 542) or whether a breach amounted to a repudiatory breach: see Woods v. W M Car Services (Peterborough) Ltd [1982] ICR 693. If then it is a question of law, whether on the correct interpretation of a document or whether on the true inference from the facts, parties have entered into a contract, then in my judgment it must be equally a question of law what on the facts found is the true nature of quality of that legal relationship."
and although Mr Randolph read us somewhat more of that passage, the citation so far, will suffice to show that Lord Justice Ackner espoused the view that had previously been expressed by Lord Justice Stephenson in the Young and Woods Ltd v. West case, that this question is a question of law to which there is only one answer and that accordingly, it would seem to follow, it would be the duty of this Tribunal to arrive at its own conclusion on the facts as found by the Industrial Tribunal, which of course are binding upon us. But that was a minority view in O'Kelly & Others v. Trusthouse Forte plc because it seems to us, although Mr Randolph did not cite us this authority, that Lord Justice Fox came to a very different view on this subject and the Master of the Rolls, Sir John Donaldson was very clearly of the same mind as Lord Justice Fox on this issue. At page 629 in [1983] 3 WLR ([1983] ICR 758) Lord Justice Fox said this:
"Now what is said on behalf of the applicants in the present case is this. It is accepted that in Woods v. W M Car Services (Peterborough) Ltd , for example, the nature of the issue before the court was such that there was a grey area, or a band of uncertainty, where one could not say that it would be wrong for the tribunal to decide the case one way or the other. The confines of the law were imprecise and, within the grey area, it was a matter of degree in individual cases whether the case was within the statutory provision or not. That, however, is not, so it is said, the position here. There can only be one correct answer to the question whether a contract of service exists. Reliance is placed upon the decision of this court in Young & Woods Ltd v. West [1980] IRLR 201 and, in particular, the observations of Stephenson LJ at p.205.
I do not feel able to accept that argument. The issue seems to me to be no more susceptible of the analysis that there is a right and a wrong answer to be determined as a matter of pure law than was the issue in the Heath Laundry case [1910] 1 KB 543 or Currie v. Inland Revenue Commissioners [1921] 2 KB 332 or Woods v. W M Car Services (Peterborough) Ltd [1982] ICR 693. The precise quality to be attributed to various individual facts is so much a matter of degree that it is unrealistic to regard the issue as attracting a clear `legal' answer.I do not think that the Heath Laundry case [1910] 1 KB 543 was wrongly decided. It seems to me to be consistent with the principles applied by the Court of Appeal in Currie v. Inland Revenue Commissioners [1921] 2KB 332 and the House of Lords in Edwards v. Bairstow [1956] AC 14 , and if there be any conflict between it and Young & Woods Ltd v. West [1980] IRLR 201 (in which, in fact, the Court of Appeal was of opinion that the decision of the industrial tribunal was right and did not have to interfere with it), I would follow the Heath Laundry case [1910] 1 KB 543 ."and the learned Master of the Rolls put the point equally forcibly at [1983] 3 WLR p.632 ([1983] ICR 762):
"The test to be applied in identifying whether a contract is one of employment or for services is a pure question of law and so is its application to the facts. But it is for the tribunal of fact not only to find those facts but to assess them qualitatively and within limits, which are indefinable in the abstract, those findings and that assessment will dictate the correct legal answer. In the familiar phrase `it is all a question of fact and degree.'
It is only if the weight given to a particular factor shows a self-misdirection in law that an appellate court with a limited jurisdiction can interfere. It is difficult to demonstrate such a misdirection and, to the extent that it is not done, the issue is one of fact. This, I think, is what this court meant in Simmons v. Heath Laundry Co [1910] 1 KB 543 which, so construed, is consistent with Edwards v. Bairstow [1956] AC 14 ."We have no doubt that it would be proper for us to be guided by the majority views in the O'Kelly case in approaching this decision of the Industrial Tribunal. On that basis Mr Randolph was asked what errors in law he relied upon in indicating that the Industrial Tribunal's decision was one with which this Tribunal could legitimately interfere. He identified two matters of law.The first in his submission was, that the Industrial Tribunal erred in law in failing to take account of the differences in the rates of pay between the Self-Employed version of the Conditions of Employment and the non-Self-Employed version. We are not persuaded that, in fact, the Industrial Tribunal was not conscious of that fact. True it is that they do not, in terms, either find that the rates were different, as indeed they were, and true it is that they do not include that circumstance in the list that they drew up of the factors that pointed in various different directions, to indicate either self-employment in one direction or employment in the other. Nevertheless, they do record the submission which is based on the difference, which I have already read and need not repeat, and we think that this is one of those cases where it would be wrong for us to assume that the Industrial Tribunal had not taken into account a fact because they do not specifically mention it, more especially, as they do specifically mention an argument that was clearly based on that fact.Secondly, on this score, there is the point that the difference in rates of pay does not of itself, in our view, point either towards employment or self-employment and Mr Randolph, as we understood it, was not disposed to dispute that aspect of the matter. What he did rely on the difference of the rates of pay for, was to indicate the genuiness of the shift that occurred in, or about, April/May of 1990 when undoubtedly, Mr Long started taking the fiscal advantages of a self-employed basis of remuneration. That, in our view, is a very different matter from an indication in favour of employment or self-employment. We do not find anywhere in this decision of the Industrial Tribunal an indication that the Industrial Tribunal took the view that there was anything in the least dishonest or covert about the switch that does seem to have occurred in the way in which Mr Long was remunerated because it is clear that he approached the Inland Revenue and complied with the revenue requirements for self-employed form of taxation so that everything was open and above board and Mr Randolph did not suggest the contrary. So that the genuiness of the shift, for what it is worth, was not, as we see it, a significant issue. This was not one of those cases where there was a sham or a dishonest scheme put forward in the hopes of persuading the Revenue that what was actually black was white. This was a case where the parties approached the Revenue and secured, it would appear, their consent to a self-employed treatment of Mr Long's remuneration.For those reasons, we do not find the non-mention of the difference in the rates of remuneration to be a significant factor in assessing whether or not the Industrial Tribunal made an error of law in its conclusion. The point in itself, seems to us largely neutral because it must not be assumed that because the rate of pay for a self-employed person is higher than would have been paid to him had he been treated as an employed person, he will at the end of the day be better off because, as mentioned earlier, there are other burdens that he has to shoulder the quantification of which may not be an entirely straightforward affair.I turn then to the second matter that was relied upon by Mr Randolph to show that there was an error of law in the Industrial Tribunal's decision and that is that the Industrial Tribunal did not give effect to the burden that is, in Mr Randolph's submission, placed upon those who claim that a label which parties have genuinely attached to a relationship between them is, in fact, a false one. False in the sense that it is inaccurate, rather than false in the sense that it is dishonest and a sham. We are not persuaded that this was a matter which constitutes an error on the part of the Industrial Tribunal because it seems to us that the way in which the Industrial Tribunal approached the matter is in line with the approach that many a court has adopted which has been faced with a similar problem, notably the Court of Appeal in the O'Kelly case. There are numerous factors that have to be taken into account, and there were numerous factors that were taken into account, by the Industrial Tribunal. Some pointed one way, some pointed the other. It is not necessary to rehearse them all but it is perhaps desirable to identify some. Obviously, the tax position was a pointer in favour of self-employed status. Particularly in the context of the Massey case which was cited to them, and which is perhaps the high water mark of the view that the label that the parties attach is binding unless it is shown to be a sham, they obviously have considered it and they took pains to distinguish the Massey case from the present case in paragraph 16 of their decision.On the other hand there were pointers in the other direction, although Mr Randolph persuaded us that none of them individually was by itself conclusive. We cite as an example of that category of consideration that was rehearsed by the Industrial Tribunal, the fact that at all times Mr Long was under the direction and control of the Company through its Contract Manager. Mr Long was a foreman and, Mr Randolph submitted, correctly as it seems to us, that a foreman would be subject to the direction and control of a Contracts Manager whether he was an employee or whether he was a self-employed person and that by itself that feature did not conclude the question. Nevertheless, we are not persuaded that the approach that the Industrial Tribunal adopted in weighing all the numerous factors on one side and the other, was one which was anything like as erroneous as the judgment of Sir John Donaldson in the O'Kelly case shows, has to be established, before this Tribunal has jurisdiction to interfere.On that basis we see no adequate ground for reversing the decision below and we dismiss this appeal so that the application will continue before the Industrial Tribunal.