COSTAIN BUILDING & CIVIL ENGINEERING LTD v (1) MR D R SMITH (2) CHANTON GROUP PLC [1999] UKEAT 141_99_2911

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1999] UKEAT 141_99_2911Case No Appeal No. EAT/141/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
COSTAIN BUILDING & CIVIL ENGINEERING LTDAPPELLANT(1) MR D R SMITH (2) CHANTON GROUP PLCRESPONDENT
Before
Mr Justice MorisonDate 29 November 1999
[1]APPEARANCES For the Appellants MS I SIMLER (of Counsel) Instructed By: Mr S Mobbs Litigation Executive Costain Building & Civil Engineering Ltd Legal Dept Costain House Nicholsons Walk Maidenhead Berkshire SL6 1LN For the Respondents MR A HOGARTH (of Counsel) Messrs O H Parsons Solicitors 3rd Floor Sovereign House 212-224 Shaftesbury Avenue London WC2H 8PR MR JUSTICE MORISON (PRESIDENT) : This appeal raises important questions as to whether an agency worker in the construction industry was an employee of the building contractor and whether he was eligible to be a Health and Safety representative. The Appellants ["Costain"] carry out building and civil engineering services. Mr Smith ["the applicant"] is an experienced engineer. For the whole of his career in the construction industry he was, what he described, "nominally self-employed." He was on the books of a number of agencies who supplied labour to building contractors. One of those agencies was Chanton Group plc ["Chanton"], the second respondent, who the applicant had been registered with for about 10 years.[2]On 12 th June 1998 Chanton telephoned the applicant to say that Costain required a site engineer to work at the site of a new Tesco store being built at Goodmayes, Essex.[3]The relationship between Chanton and the applicant was not governed by a written agreement, but there was an oral agreement made some time prior to the applicant's engagement with Costain. It was agreed that Chanton would pay the applicant £13 per hour, and that this money would be paid by Costain to Chanton and from Chanton on to the applicant.[4]On 15 th June the applicant attended at the Goodmayes site. Mr Kraus, Costain's Project Manager, explained the site hours but there was no discussion as to employment status. There was no written agreement with Costain and the applicant did not receive any disciplinary or grievance procedure documentation, he did not expect to receive sick pay or holiday pay and there was no provision for notice to terminate his work at the site.[5]The relationship between Chanton and Costain was governed by a written contract for the provision of temporary staff including the applicant. The contract agreed, inter alia, that Costain would pay Chanton £16 per hour (as varied) in respect of the services provided by the applicant and that the applicant would come under the strict supervision of Costain.[6]After raising a number of health and safety issues, the applicant contacted his trade union representative and after discussion the applicant was appointed as the UCATT safety representative on the site. Costain were informed of the appointment on 10 th July 1998. The applicant completed a number of safety reports which were critical of Costain's management of the site.[7]On 24 th July the applicant was informed by Chanton that Costain had indicated that they did not want the applicant to work on the site anymore. By an Originating Application dated 27 th July 1998 the applicant claimed that he had been unfairly dismissed contrary to section 100(1)(b) of the Employment Relations Act 1996, namely, that being a representative of workers on matters of health and safety at work, by reason of being acknowledged as such by the employer, he performed functions as such a representative.[8]This appeal relates to a Tribunal decision promulgated on 24 th November 1998 after a hearing on 16 th and 17 th September 1998, which was for interim relief pending determination of the application of the complaint of unfair dismissal. The matter for determination was whether or not the applicant was an employee, and if he was, to determine the identity of his employer.[9]Having considered a number of authorities and having considered the control, organisational, economic reality and multiple tests for determining employment status, the Tribunal came to the following conclusion:
"Weighing up all the facts that we have found and having considered the submissions made to us we find the Applicant was not a self-employed person but was an employee of Costains at the material times."
[10]The Tribunal did identify six indicia which were inconsistent with a contract of service between the applicant and Costain. Those elements were: the method of payment; the applicant was treated as self-employed by the Inland Revenue; his relationship with Costain was not permanent; the applicant was not issued with a disciplinary code, received no holiday pay, had no pension and there was no provision for notice; he delivered invoices for payment to Chanton; and his dismissal was brought about by Costain informing Chanton that they would not require the applicant's service.[11]The Tribunal addressed each concern and dismissed them. In relation to the fact that the applicant was paid tax-free by Chanton, and that the dismissal was brought about by Chanton, the Tribunal considered these to be artificial devices "designed to foster the image that the Applicant was not an employee of Costains." The method of payment was dismissed as "mere mechanics" set up by Costain to escape from the statutory liabilities which would result if the applicant was an employee.[12]The Tribunal concluded by indicating that they considered it likely that the applicant would succeed in showing that the reason for his dismissal was a reason identified in section 100(1)(b) of the Employment Relations Act 1996.[13]Costain were ably represented by Ingrid Simler, for whose cogent arguments and skeleton we were grateful. In summary she argued that the Tribunal had fallen into a fundamental error of law in its consideration of the relationship between the applicant and Costain. She argued that on the facts, particularly those identified by the Tribunal as inconsistent with a contract of service, the applicant could not have been employed by Costain. The reason for the Tribunal's error was its misplaced concern that Costain was attempting to evade its responsibility by treating the applicant as self-employed.[14]Mr Hogarth, who we must also thank for his helpful arguments, submitted that the Tribunal decision was correct and could not be interfered with. He argued that the Tribunal correctly directed itself on the case law on employment status and identified the applicant as an employee of Costain on sufficient facts. There were almost no indicia that the applicant was anything but an employee of Costain; in any event the Employment Rights Act should be applied purposively in order to grant protection to agency workers who can be put in an invidious position without the protection derived under that Act.[15]Defining the status of workers agency workers who may be employees or independent contractors can be a particularly difficult task. Having carefully considered the parties' arguments in this case we have no doubt that the Tribunal did err in law in finding that the applicant was an employee of Costain. There were two relevant contracts which governed the responsibilities of the parties to this case: there was a contract between Chanton and Costain, and a contract between Chanton and the applicant. There was not, however, any contract of employment between Costain and the applicant.[16]We are of the opinion that the essential facts in this case are clear: the applicant chose to operate on a self-employed agent basis as he was paid tax free and had to submit invoices to Chanton, he did not receive holiday or sick pay, had no notice provisions and was provided with no other benefits associated with being an employee. By determining that the applicant's position of self-employment was a "device" used by Costain to avoid its statutory duties, we consider that the Tribunal lost sight of the facts that clearly indicated that the applicant could not be an employee of Costain.[17]Proper consideration of the tests and criteria of service also indicate that the applicant was not an employee of Costain. Costain sought a site engineer for a temporary period and they went to Chanton to supply them with a worker. They did not identify the applicant nor did they specifically request him. Indeed, the identity of the required site engineer was immaterial, all they required was a worker to fill a temporary vacancy for four weeks. Although the Tribunal were right to state that the applicant was required to work site hours and there was an obligation to perform the work, either side could terminate the arrangement without notice without further obligations and Costain had a "supervisory" role only, which is inconsistent with the applicant working as an employee. We also accept Ms Simler's argument that the fact that termination was effected by Chanton cannot be dismissed as "an artificial device" in the light of the facts and that the Tribunal's concern about "devices" clouded their interpretation of the facts.[18]On the basis of the facts as presented we have been persuaded that the Tribunal's findings that the applicant was an employee of Costain was perverse. It was, perhaps, the applicant's position as a Union safety representative that persuaded the Tribunal that Costain were seeking to evade their responsibility for unfair dismissal. Accordingly we will turn our attention to the claim for unfair dismissal and the applicant's position as a Union safety representative.[19]The provision of health and safety representatives is governed by the Safety Representatives and Safety Committees Regulations 1977 which were made under the Health and Safety at Work Act 1974. The appointment of safety representatives is contained in section 3:
"3(1) For the purposes of section 2(4) of the 1974 Act, a recognised trade union may appoint safety representatives from amongst the employees in all cases where one or more employees are employed by an employer by whom it is recognised…"
The definition of 'employee' is contained in section 2:
" 'employee' has the meaning assigned by section 53(1) of the 1974 Act and 'employer' shall be construed accordingly."
[20]The definition in the 1974 Act is that an employee is an individual who works under a contract of employment, which is defined as a contract of employment or apprenticeship.[21]Therefore, to come within the protection afforded by section 100 of the Employment Rights Act 1996, a safety representative has to be an employee.[22]The question that arises is whether the appointment of a health and safety representative can be used by the Union as a device so that the worker is accorded the status of an employee and consequently enjoys the protection under section 100 of the 1996 Act. Did the appointment of the applicant as a safety representative mean that he was an employee or that he was elevated to the status of an employee? The answer must be no. A health and safety representative must be an individual who is already an employee. Independent contractors cannot be appointed under the auspices of the Safety Representatives and Safety Committees Regulations 1977.[23]It would be wrong of a Tribunal to consider that, because an applicant was a Union safety representative, he must also automatically be an employee. That would be to approach the matter in the wrong way. The applicant's status must be established first and then the position with regard to the Union can be considered.[24]Accordingly, we find that UCATT's appointment of the applicant as a safety representative was ineffective in law, as at the time of the purported appointment he was not an employee of Costain. Moreover, the purported appointment did not alter the applicant's status as he did not become an employee of Costain on the basis that he was a Union representative. Whether or not the applicant was employed by anyone other than Costain is not a matter before us for determination and will have to be considered before an Employment Tribunal.[25]We therefore allow Costain's appeal and dismiss the applicant's claim of unfair dismissal.