Delaney v Men At Work Plc [1994] UKEAT 195_92_2109

EMPOLYMENT APPEAL TRIBUNAL
BAILII case number: [1994] UKEAT 195_92_2109Case No Appeal No. EAT/195/92Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
DelaneyMen At Work Plc
Date 21 September 1994
[2]BAILII case number: [1994] UKEAT 195_92_2109 Appeal No. EAT/195/92 EMPOLYMENT APPEAL TRIBUNAL 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS At the Tribunal On 21 September 1994 Judgment delivered on 8 November 1994 Before HIS HONOUR JUDGE J HICKS QC MR D O GLADWIN CBE JP MISS D WHITTINGHAM MR T DELANEY APPELLANT MEN AT WORK PLC RESPONDENTS Transcript of Proceedings JUDGMENT Revised APPEARANCES For the Appellant MR C MAYNARD (Of Counsel) Lawrence & Co 73 Battersea Rise London SW11 1HN For the Respondents MR J P BOTHAMLEY (Director) JUDGE HICKS: Mr Delaney, the Appellant, worked for Men At Work PLC, the Respondents, from 23 June 1986 until 2 June 1981. He received no redundancy payment and complained to the Industrial Tribunal. The Respondents opposed his application on the ground that he was not employed by them under a contract of service. There was a hearing of that issue before the tribunal, who decided by a majority that Mr Delaney was not employed and therefore dismissed his application. He appeals on the ground that the tribunal erred in law in reaching that decision. The nature of the issue necessitates a fairly full recital of the facts as found by the Tribunal:
"7........ (a)The respondent .... is an employment agency which exists to provide building workers for building contractors in London. (b)The company has two directors, and some office staff who are employees of the company. In addition the company also has some 100 workers on its books, for whom it attempts to find work. (c)The company offered to its operatives three alternative ways of working: (i)The operative could work on the basis that PAYE and National Insurance were deducted and paid by the respondent company. (ii)The operative could be self-employed with 25%tax being deducted by the respondent company. (iii)The operative could be completely self-employed under an exemption certificate, whereby no tax was deducted from any monies paid by the respondent company. 9 .... The applicant told us that shortly before 23 June [1986] he had heard .... that Men at Work plc, was an agency which could find work and as a result he telephoned them and asked if they had any work. Shortly after this .... the respondent company telephoned the applicant and told him they did have a job at the Salvation Army college and as a result he went there and started work on the following Monday. 10 He worked as a general builder's labourer, dealing with mixing concrete, carrying items and generally sweeping and cleaning. 11 We have not seen any written contract of employment. .... The exhibit R1 cannot be regarded as any form of written contract in this case. 12 .... Mr Delaney claims that he worked continuously for the respondent and this claim is substantiated by the work sheets, which show that Mr Delaney did in fact work throughout the period from June 1986 to May 1991, subject .... only to brief absences for sickness and holidays. 13 It is clear that Mr Delaney did work for considerable periods at one or more sites and the system was that when the site or sites were operational, Mr Delaney would turn up at the site for work. When any particular site ceased to [be] operational, then Mr Delaney would telephone to the respondent company and they would then endeavour to find him work at another site. 14 Mr Delaney was fortunate in that until May 1991 the respondent company had always been able to find work for Mr Delaney to do. 15 Mr Delaney worked for an average of 45 hours per week, at a rate of £4.20 per hour .... the respondent company deducted PAYE tax and National Insurance .... . 16 The respondent company also provided other benefits to Mr Delaney, under a benefit scheme operated by [a trust company]. Under this scheme Mr Delaney was able to receive payment for his holidays, he was covered for accident benefits and covered for a death benefit. The other workers, who were full self-employed or self-employed with a 25% tax deduction, did not receive benefits under the .... schemes. .... 17 In addition the respondent company operated a profit share scheme, whereby workers who had achieved certain continuity of service participated in a profit share. This scheme applied both to the workers under the PAYE system and to both categories of the self-employed workers. 18 The respondent company employed several contracts managers. These managers maintained lists of work available. Each had a specific area of London to deal with. It was their practice, periodically, to visit the sites and to discuss general matters with the workers on each site. 19 Mr Delaney told us of two instances where he said employees of the respondent company had given him orders as to his work on a particular site. However the evidence [for the respondent], which was unchallenged, was to the effect that the respondent company did also supply supervisors and foreman to the building contractor customers of the respondent company and that these supervisors and foreman worked for the respondent company on the same basis as did Mr Delaney. 20-25 [From 20 May to 3 June 1991 there was only intermittent work available and on the latter date the relationship between the parties came to an end. Mr Delaney wrote claiming 'full pay' for his 'short time' and giving notice of a redundancy claim, which the respondent rejected.] 26 Mr Delaney told us, that all the tools he used were provided for by the various building contractors at the sites where he worked and he also told us that at no time had he ever refused any offer of work."
[3]As to the law to be applied Mr Maynard, for the Appellant, submitted that the essential test is that stated by Cooke J in Market Investigations Ltd v Minister of Social Security [1968] 2 QB 173 at page 184G:
".... the fundamental test to be applied is this: "
Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes", then the contract is a contract for services. If the answer is "no", then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task."[4]That passage falls into four parts. The first, stating the `fundamental test' , is in our understanding now vitiated by reason of the fact that it rests on an assumption - that the available categories are exhaustively defined by the two named - which Mr Maynard rightly concedes is no longer tenable in the light of later authorities. The second, as to the impossibility of compiling an exhaustive list of relevant considerations or strict rules of weighting, we accept as stating the current law on the subject, as in consequence we do also the third, that control is not the sole determining factor. The fourth, the list of possibly important factors, is in the context of the present case a striking illustration of the second, since apart possibly from the provision of equipment the factors suggested are of minimal relevance or assistance, if any, in determining the status of a general builder's labourer paid not by a site contractor or sub-contractor but by a company which exists to provide workers to such contractors.[5]The next case, chronologically, to which we were referred by Mr Maynard was Airfix Footwear Ltd v Cope [1978] IRLR 396, in which an outworker making heels for shoes had been found by the Industrial Tribunal to be employed under a contract of employment. The Employment Appeal Tribunal dismissed an appeal on the ground that the Industrial Tribunal was entitled to come to that conclusion on the particular facts of the case. That decision does not therefore embody any principle of substantive law, and since this Appeal Tribunal has no jurisdiction over issues of fact there is no advantage to be gained by comparing or contrasting factual details.[6]Although it did not assist his case and was not cited by the Respondents Mr Maynard very properly drew our attention to O'Kelly v Trusthouse Forte PL C [1983] IRLR 369. The applicants there were 'regular casuals' working in the banqueting department of a London hotel. The Industrial Tribunal identified a list of nine factors tending to suggest employment and four others 'not inconsistent' with that relationship, but found five which were inconsistent with it and taking account of all these factors held that the applicants were not employed. The Employment Appeal Tribunal reversed that decision, holding that the question whether a particular relationship was one of employment was a question of law upon which it must make up its own mind on the basis of the facts found by the Industrial Tribunal. The Court of Appeal alllowed an appeal and restored the decision of the Industrial Tribunal. Both the factual background and the detailed treatment of the issues at the three levels of adjudication were complex, and they occupy a good deal of the lengthy headnote and judgments. For our purposes it suffices to extract the following passages from the judgment of Sir John Donaldson MR: "77 .... the Employment Appeal Tribunal has no jurisdiction to consider any question of mixed fact and law until it has .... extracted a question of pure law. 78 .... When reviewing such a decision, the only problem is to divine the direction of law which the lower court gave to itself. Sometimes it will have been expressed in its reasons, but more often it has to be inferred. This is the point of temptation for the appellate court. It may well have a shrewd suspicion, or gut reaction, that it would have reached a different decision, but it must never forget that this may be because it thinks that it would have found or weighed the facts differently. Unpalatable though it may be on occasion, it must loyally accept the conclusions of fact with which it is presented and, accepting those conclusions, it must be satisfied that there must have been a misdirection on a question before it can intervene. Unless the direction on law has been expressed it can only be so satisfied if, in its opinion, no reasonable Tribunal, properly directing itself on the relevant questions of law, could have reached the conclusion under appeal. This is a heavy burden on the appellant. .... 82 The test to be applied in identifying whether a contract is one of employment .... 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 or degree'. 83 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. .... 84 In the instant appeal the Industrial Tribunal directed itself `to consider all aspects of the relationship, no single factor being in itself decisive and each of which may vary in weight and direction, and having given such balance to the factors as seems appropriate, to determine whether the person [was carrying on business on his own account]'. This is wholly correct as a matter of law and it is not for this court or for the EAT to re-weigh the facts. We comment only that the words which we have enclosed in square brackets in the last paragraph of those extracts, obviously deriving from Market Investigations , would now better be re-cast to allow for the fact that not all workers who are not employed are necessarily carrying on business on their own account. Subject to that comment the statements of principle which we have extracted from O'Kelly are clearly binding on us and on the Industrial Tribunal.[7]Mr Maynard next referred us to Nethermere (St Neots) Ltd v Taverna and Gardiner [1984] IRLR 240. That was another case involving outworkers. As with O'Kelly's case we need refer only to certain statements of principle, in this instance on two points. The first concerns the need for an irreducible minimum of obligation on each side if there is to be a contract of service. On that issue Stephenson LJ, after stating that need, continued that he doubted whether it could be reduced any lower than in a sentence he had just quoted from McKenna J in an earlier case, as follows:
"There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill (paras.21,22)."
Later Stephenson LJ said:
"There must .... be evidence to support that contract, otherwise there would be an error of law or a decision which no reasonable Tribunal could have reached. I think that means evidence at least of an obligation to accept work offered by the company .... (para.28)."
Kerr LJ said:
"The inescapable requirement concerning the alleged employees however .... is that they must be subject to an obligation to accept and perform some minimum, or at least reasonable, amount of work for the alleged employer (para.38)."
Dillon LJ said:
"For my part I would accept that an arrangement under which there was never any obligation on the outworkers to do work or on the company to provide work could not be a contract of service (para.60)."
[8]The second point on which we take statements of principle from Nethermere is as to the effect of a course of conduct. On this issue Stephenson LJ said:
"I cannot see why well founded expectations of continuing homework should not be hardened or refined into enforceable contracts by regular giving and taking of work over periods of a year or more, and why outworkers should not thereby become employees under contracts of service like those doing similar work at the same rate in the factory (para.28)."
Dillon LJ said:
"I see no reason in law why the existence of a contract of service may not be inferred from a course of dealing, continued between the parties over several years, .... (para.61)."
Kerr LJ, dissenting on this point, said:
".... I can find no authority for the proposition that even a lengthy course of dealing can somehow convert itself into a contractually binding obligation - subject only to reasonable notice - to continue to enter into individual contracts, or to be subject to some `umbrella' contract (para.42)."
[9]Nethermere , in our view, establishes two propositions. The first can for the purposes of a case such as the present be expressed as follows: a contract of service requires certain minimum reciprocal obligations - on the employer's side to ensure, by the provision of work or otherwise, that the employee is paid wages, and on the employee's side to accept and perform work. The second is that the existence of a contract of service may be inferred from a sufficiently long and uniform course of dealing between the parties; we add that the words `may be' are important in the light of O'Kelly's case , because it is not a requirement of law that the Industrial Tribunal draw such an inference - whether it does so or not in the circumstances of any particular case is a `question of fact and degree'.[10]Mr Maynard next referred us to Ironmonger v Movefield Ltd [1988] IRLR 461. That was, like this, a case where the applicant's contract was with an `agency' which arranged for him to work on a building project (in fact as clerk of works). The Industrial Tribunal had found that he was employed, but the Employment Appeal Tribunal held that they had erred in that respect. Mr Maynard rightly conceded that on the basis of that authority and others the Industrial Tribunal were right to approach this case on the footing that `the recognised categories of employment are not exhausted', so that although they were `satisfied .... that the applicant was not self-employed .... [that did] not necessarily mean [he] was an employee of the respondent'.[11]Mr Maynard was concerned to distinguish Ironmonger's case on its facts, since the result was against him, but for the reasons given in paragraph 5 above we do not consider comparison of facts a useful exercise for an appellate tribunal with jurisdiction over matters of law only, and accordingly we no more take Ironmonger into account on one side than we do Airfix on the other.[12]Lee Ting Sang v Chung Chi-Keung [1990] ICR 409 was relied on by Mr Maynard as a case in which the Privy Council approved and applied the `fundamental test', as formulated in Market Investigations , but he did not, in our view rightly, suggest that that extended to reinstating the doctrine that all workers for reward are either employed or self-employed, and we therefore continue to take the view of Market Investigatons set out in paragraph 4 above.[13]Against this background of law and fact we turn to consider the Industrial Tribunal's decision and the Appellant's criticisms of it. After the passages quoted at the end of paragraph 10 above the tribunal's Reasons continue:
"36 In order to decide this last question it is still necessary for us to look at all the facts surrounding the relationship between the applicant and the respondent. 37 In this respect the majority are of the opinion that there was no contract of service. It is a fact that tax and national insurance were deducted by the respondent but we have regard to Section 38 of the Finance Number 2 Act 1975, whereby in circumstances such as these the respondent is required to deem itself the employer and make the appropriate deductions. It is true that the applicant was paid for his holidays and was also in receipt of insurance covering accident and death benefits. As against this, the respondent was in business as an employment agency, the respondent exercised virtually no control over the way in which the applicant carried out his day to day work, the work was terminated by the appropriate building contractor, as and when the relevant building work was finished. A large part of the difficulties arise in this case because there is no formal written contract or terms or conditions which can be referred to. Having heard the evidence and considered the facts mentioned above, together with the appropriate authorities, the majority are of the view that there was no contract of service, that the applicant was not an employee and therefore this application is dismissed."
[14]Mr Maynard's first submission was that the overwhelming inference was that the factors listed in paragraph 37 were those which weighed with the majority. There is implicit in this submission the proposition that a tribunal is under a duty to list all the factors which it takes into account on each side of the necessary balancing exercise, and that it should be assumed not to have taken into account any not listed. It is true that tribunals often set out comprehensive lists of all the factors which they have taken into account on each side and that this practice is often helpful to the parties and to appellate bodies and therefore to be encouraged. Nevertheless we reject the proposition that any inference should be drawn from mere omissions. That would be contrary to the principles stated by the Court of Appeal in O'Kelly and many other cases as to the way in which the Employment Appeal Tribunal should approach decisions of Industrial Tribunals. It follows that we do not assume that the tribunal here had regard only to the factors referred to in paragraph 37; on the contrary we take it that they looked, as they say in paragraph 36 they did, at all the relevant facts as found by them earlier in their Reasons.[15]In paragraph 37 Mr Maynard identified three factors as those which the tribunal expressly referred to as weighing in favour of there being no employment, and we agree. They were(i) that the respondent was in business as an employment agency,(ii) that the respondent exercised virtually no control over the way in which the applicant carried out his day to day work, and(iii) that the work was terminated by the appropriate building contractor as and when the relevant building work was finished.[16]As to (ii), the element of control, Mr Maynard submitted that since (as he contended) the other two factors were of no proper weight at all the tribunal must have placed undue weight on control, and indeed treated it as of overriding significance, contrary to Market Investigations . In our view that is fallacious. Whether the other two factors were proper to be taken into account is a separate question in each case, to which we shall come, but it does not alter the fact that they were taken into account. So also, we should assume for the reasons given in paragraph 14 above, were others not expressly mentioned at that point. There is simply no ground for supposing that the tribunal misdirected themselves in this respect. Mr Maynard referred us to the definition of `employment business' in section 13(3) of the Employment Agencies Act 1973 , which is apt to cover the respondents' activities and which describes them as `supplying persons .... to act for, and under the control of, other persons ....'. He submits that the element of control is therefore of even less weight here than in other cases. That is a legitimate consideration to be advanced, but its importance would have been a matter for the tribunal had it been put to them in those terms, and in the event there is nothing before us to indicate that it was. Even without a reference to the statute it was apparent that in a tripartite relationship of this kind the immediate control of the applicant's working activities would have been mainly exercised neither by him nor by the respondents but by the building contractor, and there is no reason to suppose that the tribunal did not have that in mind.[17]In relation to (iii), the `termination of work' point, Mr Maynard submitted that the tribunal wrongly relied on Ironmonger , where there was express provision for termination by the building contractor of the applicant's contract with the respondent, a feature absent here, as well as other distinguishing features. It is true that the tribunal refer to that case as one of the ones to which they have had regard, but that was not in the context of the present point and there is no reason whatsoever to suppose that they fell into the error suggested - indeed it is not merely possible but much more likely that they looked to Ironmonger for the principle set out in paragraph 10 above, to which they proceed immediately after the case reference. Mr Maynard's other submission was that if the tribunal's words related only to the building contractor's power to end the applicant's work on site then that was a neutral fact as between the alternative views of the relationship between the parties, while if they related to the termination (until other work was offered and accepted) of the contract between the parties then there was no evidence and no findings of primary fact to support that conclusion. There is something in this criticism, but we are doubtful whether, standing alone, it would justify the setting aside of the decision. For reasons which will appear we do not need to resolve that doubt and it is better, in all the circumstances, not to suggest ways in which the Reasons might be construed so as to meet this attack.[18]We come finally to (i), the `employment agency' point. Mr Maynard rightly points out that in the terminology of the 1973 Act the respondents were not an employment agency (where the workers are employed by the agency's customers) but an employment business (where the worker's contract remains with the supplier of his services throughout). He did not press this with any vigour as a serious defect in the Industrial Tribunal's Reasons, however, and it is clear to us that the tribunal use the expression `employment agency' in a less technical sense as including both categories, the respondents manifestly belonging to the second and therefore being properly an employment business.[19]Mr Maynard's principal criticism is that the fact that the respondents were an employment business is neutral on the issue whether Mr Delaney was employed by them. He points out that regulation 9(6)(a)(i) of the Conduct of Employment Agencies and Employment Businesses Regulations 1976, made under the 1973 Act, requires an employment business to give any worker to be supplied to a customer a written statement of terms and conditions, including whether the worker is employed under a contract of service or as a `self-employed worker' (which is defined as including, in effect, anyone not employed under a contract of service or of apprenticeship). The implication is clearly that the worker may be in either category. He suggests that, leaving aside the technicalities of the legislation, it is common knowledge that, for example, temporary office staff supplied by `agencies' (which are strictly employment businesses) are often employed by the agency. In any event, he says, there was no evidence before the tribunal, and no finding by them, that employment businesses never or rarely employ the workers in their pool under contracts of service, either generally or in the building trade in particular, or that self-employment or `non-employment' is usual.[20]In our view this ground is made out and the tribunal did err in law in treating as a factor pointing to an absence of a contract of service a fact which was not on their findings or the evidence before them capable of being such a factor.[21]It follows that the appeal is allowed and the decision of the Industrial Tribunal set aside. We have considered what should follow that conclusion. We are firmly of the view that we are not in a position to substitute our own decision for that of the tribunal. The choice is therefore whether to remit it to the same tribunal or to another, and if to the same one whether for a complete rehearing or for reconsideration of their findings and decision in the light of this judgment, but without fresh evidence. We have come to the conclusion that if it is possible to reconvene the same tribunal the last course should be followed. Our decision turns on a narrow point and does not reflect on the ability of the tribunal to reach a just decision with proper self-directions. A rehearing de novo would involve more time and expense, and experience shows that there are other difficulties and disadvantages of `retrials' which tell against their unnecessary multiplication.[22]With a view to assisting the Industrial Tribunal's reconsideration we have tried to set out the legal principles to be applied fairly fully, while endeavouring to avoid any comments which might suggest that we favour, or wish to assist the tribunal in reaching, a conclusion of the factual issues in one direction or the other. We may summarise the main principles and guidelines to be borne in mind as follows:(1) The direction quoted in paragraph 84 of the extract from O'Kelly in paragraph 6 above, reading for the words in square brackets: 'was or was not employed under a contract of service'.(2) The propositions derived from Nethermere and set out in paragraph 9 above.(3) The tribunal's own correct self-direction in paragraph 35 of their Reasons (paragraph 10 above).(4) The desirability (although not necessity) of setting out fairly fully the factors weighing on one side or the other (paragraph 14 above).(5) Our comments in paragraphs 16 to 20 above on the treatment in the tribunal's Reasons of the three factors expressly mentioned in their paragraph 37 .