MR G A HARDIE v C D NORTHERN LTD [1999] UKEAT 1142_98_0510

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1999] UKEAT 1142_98_0510Case No Appeal No. EAT/1142/98Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR G A HARDIEAPPELLANTC D NORTHERN LTDRESPONDENT
Before
Mr Justice LindsayLord Davies of CoityDate 5 October 1999
[1]APPEARANCES For the Appellant MR S ROBINSON (of Counsel) Instructed by: Mr J Bernard-Carlin Derby Law Centre Balcony B5 PO Box 173 Market Hall Derby DE1 9XN For the Respondents MR T KIBLING (of Counsel) Instructed by: Mrs A Jeffries Messrs Nelsons Solicitors 99 Friar Gate Derby DE1 1EZ MR JUSTICE LINDSAY (PRESIDENT) : This is the full hearing of an appeal by Mr G A Hardie against the decision of the Employment Tribunal at Nottingham given, in a corrected version, on 2nd October 1998. It was a decision of the tribunal given under the chairmanship of Mr Macmillan and the members were Mr Taylor and Mr Gilliver. The tribunal had before it a preliminary question in relation to Mr Hardie's complaint under the Disability Discrimination Act 1995 . We think we need to set the scene by referring to some of the provisions of that Act. S.4(1) "It is unlawful for an employer to discriminate against a disabled person" and then in (a), (b) and (c) there are the particular kinds of discrimination which are then referred to. S.5(1) says "For the purposes of this Part "(that is Part II of the Act)" an employer discriminates against a disabled person if" - and then again there is an(a) and a(b) which sets out more detailed provisions. In subsection (2) one sees "For the purposes of this Part, an employer also discriminates against a disabled person if" and again (a) and (b) gives more detail. S.6(1), under the heading "Duty of employer to make adjustments" makes a provision:
"(1) Where- (a) any arrangements made by or on behalf of an employer, or (b) any physical feature of premises occupied by the employer, place the disabled person concerned at a substantial disadvantage in comparison with persons who are not disabled, it is the duty of the employer to take such steps as it is reasonable, in all the circumstances of the case, for him to have to take in order to prevent the arrangements or feature having that effect."
One sees, therefore, time after time a reference to the employer or an employer. Then, in s.7(1) one comes to the provision most material for today's business:
"7 Exemption for small businesses (1) Nothing in this Part applies in relation to an employer who has fewer than 20 employees."
[2]In order for a complaint to be capable of presentation to an Employment Tribunal it has to fall within s.8(1):
"A complaint by any person that another person- (a) has discriminated against him in a way which is unlawful under this Part, or (b) is, by virtue of section 57 or 58, to be treated as having discriminated against him in such a way, may be presented to an industrial tribunal."
In fact ss. 57 and 58 deal with the aiding of unlawful acts and vicarious liability and they have no relevance to Mr Hardie's complaint. Therefore, if it was to be capable of being properly presented that complaint had to fall within s.8(1)(a). In other words it had to be shown to be a discrimination unlawful under "this Part" of the Act, namely Part II of the Act.[3]S.68 of the 1995 Act is headed "Interpretation". It defines "employment":
""employment" means subject to any prescribed provision [ none has been referred to us of any relevance ], employment under a contract of service or of apprenticeship or a contract personally to do any work, and related expressions are to be construed accordingly."
Apprenticeship is here irrelevant, it is quite unmentioned in any of the facts. So in order to be within the defined employment (or also the related expression "employer") one needs to find a contract of service or a contract personally to do work. One needs to find that, for present purposes, for two reasons. First of all, to find whether Mr Hardie was employed and, if so, by whom; and if he was employed, secondly, to find whether his employer 'has' fewer than 20 persons engaged by way of contract of service or contract personally to do work. Again "apprenticeship" does not seem to have come into play.[4]Now of those two main questions, the first was never in any issue, Mr Hardie had been employed within the meaning of the Act by the only respondent, CD Northern Ltd. The preliminary question with which the Employment Tribunal had to deal was whether the employer had fewer than 20 person as employees within the meaning of the 1995 Act. The unanimous decision of the tribunal was this:
"The unanimous decision of the Tribunal is that the complaint under the Disability Discrimination Act fails. The complaint of unfair dismissal will be listed for hearing by a full tribunal."
We are not concerned with that second sentence. The Employment Tribunal held that C D Northern Ltd, the only respondent, had only 19 employees.[5]No timing point arises as to the time to which the word 'has' in s.7(1) refers. No provisions of any European or Community authorities or Directives have been drawn to our attention. Nor is the factual finding as to C D Northern Ltd itself having only 19 employees put in issue. But Mr Hardie's case urges that, looking to see who is the employer for the purposes of s.7(1), one should here look beyond C D Northern Ltd and include another or some other companies and the argument goes on to say that were that to be done no longer would there be fewer than 20 employees and accordingly the exception of s.7(1) would be disapplied.[6]This argument requires one to have in mind some mental picture of the corporate and individual structure that here obtains. As to that one starts with two individuals, Mr Charles and Mr Clarry. They hold shares, so far as is relevant, in C D Northern Ltd, the only respondent, C D Curtain Contracts Ltd and, C D Seating Specialists Ltd.. C D Seating Specialists seems to be dormant and presumably employs nobody and does not figure any further in the case. C D Northern Ltd owns the whole issued share capital of C D Furnishing Contracts Ltd. C D Curtains has another shareholder, Mr Angelique; he holds an equal one third of the shares. C D Furnishing Contracts Ltd does employ persons; it employs two. C D Curtain Contracts employs 20. So far as concerns directorships, Mr Charles and Mr Clarry are directors of C D Northern Ltd, C D Furnishings Contracts Ltd and C D Curtain Contracts Ltd. C D Furnishing Contracts has two (or at least two) other directors, Mr Hopkinson and Mr Murphy, and so also, it seems, has C D Curtain Contracts Ltd.[7]There are financial links between the companies in that, for example, C D Northern Ltd has guaranteed the debt C D Curtain Contracts Ltd to the latter's bankers and, indeed, has secured that potential indebtedness by way of a fixed and floating charge on C D Northern Ltd's own assets. There is another form of linkage in that C D Northern Ltd rents property from a partnership in which Mr Charles and Mr Clarry have an interest and CD Northern then sublets thereout to C D Curtains and C D Furnishing. Yet another link is in the administration of wages, which is apparently done by a clerk employed by C D Northern. He administers the wages of the other companies as well and in return for such services the other companies are charged a management fee. One would expect, though the position is not clear, that there are inter-company tradings and dealings. Mr Charles of C D Northern gave evidence and was cross-examined as to the ways in which the various companies were or were not linked.[8]It is against that background that there is posed the question: in such a case, who is the employer for the purpose of counting the heads to see if s.7(1) applies?[9]In his IT1 Box 5 Mr Hardie completed the box. The box says:
"Please give the name and address of the employer, other organisation or person against whom this complaint is being brought. Name of employer, organisation or person"
And Mr Hardie completes by saying C D Northern Ltd. He amplified that point in his continuation sheet by saying:
"I was employed by C. D. Northern Ltd for 8 years. I commenced work as a warehouseman and then was promoted to foreman. The company employs approximately 40 employees and six in the warehouse."
Well, that latter part was not sustained when the facts came to be found, but he is asserting only employment by C D Northern Ltd. He made no suggestion that he had any other employer than the respondent.[10]In their IT3 the respondent accepted that Mr Hardie had been employed by the respondent and they added (and this of course gave rise to the preliminary question):
"Without prejudice to the above, by virtue of Section 7 of the Disability Discrimination Act 1995, the Applicant is not entitled to have his complaint of disability discrimination determined by the Tribunal because the Respondent Company has, and had during the period of the Applicant's employment, fewer than 20 employees."
That having been an argument raised by the IT3, there was a preliminary question framed on the point.[11]We have had a lively, even passionate, argument on behalf of Mr Hardie by Mr Simon Robinson. He has to confront the principal argument of the respondent, for whom Mr Kibling has appeared, which is that unlike the present position under other Acts dealing with discrimination, there is nothing at all in the 1995 Act which in any way or for any purpose enlarges the meaning of the employer to include associated persons or companies not themselves contracting with the propositus. The employer in this case thus means, says the respondent, only the person with whom the employee has a contract of service or a contract personally to do work, (given that apprenticeship is not in play, which it is not here.) Looking at that, one finds that the employer is only, says Mr Kibling, C D Northern Ltd.[12]One, in that way, is required by the argument to look at the provisions of other legislation. First one goes to s.82 of the Sex Discrimination Act 1975 . S. 82 is the general interpretation provision of that Act. "Employment" in that Act is defined word for word as it is in the 1995 Act, but in the 1975 Act s.82(2) says this:
"(2) For the purposes of this Act two employers are to be treated as associated if one is a company of which the other (directly or indirectly) has control or if both are companies of which a third person (directly or indirectly) has control."
The term "associated employer" is defined in s.82(1) as:
"shall be construed in accordance with subsection (2)"
[13]One cannot, of course, jump from the proposition that because s.82 of the 1975 Act includes provisions which bite not only on employers but on their associates the conclusion must be that in that Act the term "employer" always includes the employer's associates. Indeed, although no doubt my cursory survey of the 1975 Act has been deficient, I have not seen where the term "associated employer" is used in 1975 Act. Doubtless it is somewhere to be found.[14]In the Race Relations Act 1976 there does not appear to be any reference to "associated employer" at all. Certainly it is not in the interpretation provisions, although again it has the same definition of "employment" as in 1995 Act.[15]There is then reference in the skeleton argument to the Trade Union and Labour Relations (Consolidation) Act 1992 . S.297 has a provision defining "Associated employers". The term is used in the Act. An example, and I daresay there are others, is to be found at s.238(4). But the very fact that there is a defined term "associated employer" which is then used in particular provisions itself points to there being no general intent that the word "employer" should automatically include employer's associates.[16]Then in the Employment Rights Act 1996 s.231 defines the term "associated employer" and one sees the term used in the Act, for example, in s.218(6). Again, it is quite plain from s.230 that there is no general intent that, without more, the word "employer" should automatically include associates of the employer.[17]Mr Kibling also draws our attention to the observations of Mummery LJ in Clark v TDG Ltd t/a Novacold [1999] IRLR 318 , where at paragraph 31 he warns that it may be positively misleading to approach the 1995 Act with assumptions and concepts familiar from experience of the workings of the 1975 Act and 1976 Act.[18]Against that legislative background, Mr Kibling's argument is thus simple. "Employer" in s.7 means the employer of Mr Hardie. When Parliament means to include associates of an employer it expressly so provides and it clearly knows how to do so, as those references in the other Acts show. In the absence of such express provisions there is no reason to extend the meaning of the word "employer" to those who do not employ Mr Hardie. It would have been easy enough to provide that when heads came to be counted for the purposes of s.7 the heads should include heads employed by associated companies or associated employers, but that has not been done. It is not for the Courts to legislate where Parliament has not done so.[19]Mr Robinson faces up to that immensely powerful argument. He says that so to construe the 1995 Act is to make it inconsistent with other legislation. In his skeleton argument he says:
"As there is commonality of concepts between the three anti-discriminatory statutes, there can be no good reason why Parliament would deliberately omit the concept of associated employers from the Disability Discrimination Act."
[20]There are a number of answers to that argument. First of all, there is no general provision such that in the other Acts the term "employer" always includes "associates". So for s.7 not to include "associates" does itself lead to any inconsistency. Secondly, it is for Parliament to frame its legislation and there is no available presumption that requires that the provisions which it requires in relation to sex and race discrimination should necessarily be the ones that it has to choose for disability discrimination. There is no presumption that requires the Courts to approach matters in such a way. There can, of course, be good reasons to distinguish between sex and race on the one hand and disability on the other. There are many provisions in the 1995 Act such, for example, as the provisions for alterations to leasehold buildings, which have no equivalent under the other Acts and the presence of which could provide a reason for distinguishing between race and sex discrimination on the one hand and disability discrimination on the other. Indeed, the very fact that s.7 exists shows a distinction between disability on the one hand and race and sex on the other, because neither of the other forms has any present corresponding exemption. In any event, it is not for the Courts to assess whether there is good or bad or no reason to distinguish between different forms; that is a matter for Parliament.[21]What we have to do is simply to ascertain the will of Parliament as expressed in its legislation. We fear, notwithstanding Mr Robinson's argument, that no weight can be attached to this first ground, however morally attractive it may be made to appear that all forms of discrimination should be treated precisely equally.[22]Secondly, Mr Robinson urges that the Employment Tribunal was wrong to regard Parliament as having deliberately exempted the employees of associated employers from the s.7(1) head count. He says there was, in effect, a mere legislative oversight. It is an oversight, he says, of a kind which the tribunal and Courts are entitled to fill in order to avoid the injustice to the disabled which is thereby caused. However, we have had no argument based on Pepper v Hart considerations and Mr Robinson frankly tells us that he has searched to find one and that the material for one does not exist. There are, in other words, no references in the Parliamentary discussions that suggests that employees of associated companies were intended to be included but were somehow inadvertently left out.[23]We have, in fact, no reason to regard Parliament as having made any slip here. It apparently decided that there should be an exemption for small businesses. It therefore had to draw a line somewhere to provide what was small for the purposes of the provision and it drew the line that the employer was to be regarded as small if that employer had fewer than 20 employees. It added nothing to include the associates or employees of associates. We cannot draw the line somewhere else simply because it would be fair to Mr Hardie to do so. One can sympathise with his case, but sympathy does not enable the word "employer" to be given a meaning which it does not have, a meaning which, if intended, as the model of the other legislation shows, can easily and deliberately be added.[24]Thirdly Mr Robinson talks about the lifting of the corporate veil. He says - now looking at paragraph 11 of his skeleton argument:
"On the basis of the information disclosed by the Respondent, it is arguable that there is such a commonality of business interests between the Respondent and its connected companies, principally due to the ownership of the Respondent and CD Furnishing Contracts ultimately residing in Mr Charles and Mr Clarry, that the said companies can be treated as being a single entity."
He has argued upon the basis of their being a single economic unit. There is, he says here, a single economic unit and it has more than 20 employees.[25]It is easy to see the moral force in such an argument. Indeed, if the splitting down of larger undertakings into small businesses that prima facie fall within the s.7 exemption was found commonly to be done specifically with a view to avoiding the obligations of the 1995 Act, Parliament might need to intervene (although, in so saying, we are not to be taken to be deciding that the present provisions would not cope with such an artificial division.) Sometimes one comes across cases, and there are a number of them cited in Mr Robinson's argument such as Adams v Cape Industries plc [1991] 1 All ER 929 and DHN Food Distributors Ltd v The London Borough of Tower Hamlets [1976] 3 All ER 462 , where the Courts have seen that the interpolation of a corporation can properly be regarded as a cloak for the truth and in such a case the 'corporate veil', as it is said, can be lifted so that the truth can be seen.[26]But here if one asks who is truly the employer, the only answer can be C D Northern Ltd. That was Mr Hardie's allegation; that was the respondent's admission. There is no economic unit other than C D Northern Ltd that is the employer. No contract for the employment of Mr Hardie or the services of Mr Hardie with anyone else was in evidence. The interpolation of a corporation in this case does not cloak the truth, it is the truth. We therefore have no reason to justify looking behind that corporation. We cannot, in other words, lift the veil. No statutory language requires or entitles us to take the employer to be anyone but the respondent, C D Northern Ltd. The position was that the Employment Tribunal said this:
"7. … It therefore seems necessarily to follow that employers which are associated to the employer respondent in a particular case only fall for consideration where there is a specific, relevant statutory provision, the definition of which encompasses them. There is no such provision in the Disability Discrimination Act and we are therefore driven to the conclusion that associated employers are irrelevant for the purposes of section 7."
They were, in our judgment, entirely right in so saying. Indeed, if throughout the 1995 Act or other legislation and without express provision in that behalf, associates of employers were in all cases to be taken into account wherever some argument about economic entities could be deployed, one could see immense problems arising. Would Mr Hardie, for example, an employee of C D Northern Ltd, be capable of being made redundant simply because difficulties had arisen in a quite different company C D Curtain Contracts? That is just an example of the difficulties that would arise if, generally speaking, the word "employer" automatically included associates of the employer for all purposes. Thus, despite the moral attractiveness of the appellant's argument, it has, in our judgment, no legal weight and it is not for the tribunals or the Courts but, if for anyone, for Parliament to extend s.7 in the way in which Mr Hardie would wish it to be extended. Accordingly we dismiss the appeal.