MS A JOHNSON v (1) STEPHEN RYAN (2) ROYAL BOROUGH OF KENSINGTON & CHELSEA (3) SECRETARY OF STATE FOR ENVIRONMENT [1999] UKEAT 724_97_2911

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [1999] UKEAT 724_97_2911Case No Appeal No. EAT/724/97Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MS A JOHNSONAPPELLANT(1) STEPHEN RYAN (2) ROYAL BOROUGH OF KENSINGTON & CHELSEA (3) SECRETARY OF STATE FOR ENVIRONMENTRESPONDENTS
Before
Mr Justice MorisonDate 29 November 1999
[1]APPEARANCES For the Appellant MR J McMULLEN QC Instructed By: Mr C Dabezies Citizens Advice Bureau 140 Ladbroke Grove London W10 5ND For the First and Second Respondents For the Third Respondent MR D STILITZ (of Counsel) The Solicitor Royal Borough of Kensington & Chelsea Town Hall Hornton Street London W8 7NX MS M HALL (of Counsel) Treasury Solicitor Queen Anne's Chambers 28 Broadway London SW1H 9JS MR JUSTICE MORISON : This is an appeal by Ms Johnson against the unanimous decision of a tribunal sitting at London (North) dismissing her application for unfair dismissal. The matter came before the tribunal by way of a preliminary hearing for the purpose of determining whether the appellant was undertaking her duty as a rent officer under a "contract of employment" as defined in section 230(2) of the Employment Rights Act 1996. The facts in this matter have been helpfully agreed and can be dealt with briefly. The appellant was first employed by the Royal Borough of Kensington and Chelsea ["the Council"] from 8 December 1986 as a temporary clerical assistant in the Town Clerks Service. From 1 April 1987 she was employed as a property referencer/administrative officer in the Town Clerks Service providing assistance to rent officers. She was appointed to the post of rent officer on 1 May 1989. Prior to her appointment as a rent officer the appellant was interviewed by the Chief Rent Officer, who is the line manager for rent officers, and the "proper officer" of the Council. It was agreed that the contracts for the three positions were in almost the same form. As a rent officer the appellant was paid through the Council's personnel department and was subject to the Council's disciplinary and grievance procedure and to the disciplinary Code for Rent Officers issued by the Secretary of State for the Environment ["the State"]. Although the appellant was expected to exercise independent professional judgment, her duties were subject to supervision. The functions of a proper officer are summarised as being the appointment, supervision and dismissal of rent officers, the allocation of work between the rent officers and the designation of the chief rent officer.[2]The appellant brought an originating application claiming that she had been unfairly and constructively dismissed on 21 July 1995 as a result of the unreasonable behaviour of Mr Ryan. It was further alleged that the Council, as her employer, was vicariously liable for his conduct and in the alternative it was argued that she had been employed by the Secretary of State or by the Council and the Secretary of State jointly.[3]The matter was consolidated with a similar claim made by another rent officer and came before the tribunal on 20 January 1997 and 4 March 1997. The tribunal in its extended reasons promulgated on 9 April 1997 accepted the submissions made on behalf of the Council. They accepted that the question of whether a rent officer was an employee was a question of law and not fact, and although the appellant had received a document of terms and conditions which had the characteristics of a contract of employment it had to be read in conjunction with the existing statutory provisions. The tribunal was referred to "deeming" provisions contained in section 63(3) of the Rent Act 1977 and paragraph 3(1) of the Redundancy Payments Office Holders Regulations 1965 and paragraph 5 of the Royal Borough of Kensington and Chelsea Rent Registration Scheme 1990. On the basis of these provisions the tribunal came to the following conclusion:
"10 Taking all of these factors into account we are entirely satisfied that the intention of Parliament as expressed in the legislation referred to in this Decision was that rent officers are not to be regarded as undertaking their services under a "contract of employment"…The statutory provisions in our view demonstrate quite clearly…that rent officers are simply office holders appointed under a statutory provision and not employees engaged under contracts of employment."
The appellant appealed against the tribunal's decision that it did not have jurisdiction to hear her complaint of unfair dismissal. The Law:[4]We have been referred to a number of statutory provisions, which we shall attempt to summarise.[5]The definition of an "employee" and a "contract of employment" are contained in section 230 of the Employment Rights Act 1996, which is set out, inter alia, in the following terms:
"230.(1) In this Act "employee" means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. (2) In this Act "contract of employment" means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing. … (5) In this Act "employment"- (a) in relation to an employee, means…employment under a contract of employment…"
[6]Provision for the appointment of rent officers is contained within section 63 of the Rent Act 1977. "63.(1) The Secretary of State shall for every registration area make, after consultation with the local authority, a scheme providing for the appointment by the proper officer of the local authority - (a) of such number of rent officers for the area as may be determined by or in accordance with the scheme, …(2) A scheme under this section - (a) shall provide for the payment by the local authority to rent officers […] of remuneration and allowances in accordance with scales approved by the Secretary of State with the consent of the Treasury; (b) shall prohibit the dismissal of a rent officer […] except by the proper officer of the local authority on the direction, or with the consent, of the Secretary of State; (c) shall require the local authority to provide for the rent officers officer accommodation and clerical and other assistance; (d) shall allocate, or confer on the proper officer of the local authority the duty of allocating, work as between the rent officers and shall confer on the proper officer the duty of supervising the conduct of rent officers… …(3) For the purposes of any local Act scheme, within the meaning of section 8 of the Superannuation Act 1972, rent officers […] appointed in pursuance of a scheme under this section shall be deemed to be officers in the employment of the local authority for whose area the scheme is made; and for the purposes of- (a) Part III of the Social Security Pensions Act 1975, and (b) the Social Security Act 1975, they shall be deemed to be in that employment under a contract of service." By sections 63(6) and 63(7) the Secretary of State must provide each local authority with a grant in respect of expenditure incurred under the section in respect of Rent Officers.[7]Section 191 provides, inter alia, the following:
"(1) Subject to sections 192 and 193, the provisions of this Act to which this section applies have effect in relation to Crown employment and persons in Crown employment as they have effect in relation to other employment and other employees or workers. … (3) In this Act 'Crown employment' means employment under or for the purposes of a government department or any other officer or body exercising on behalf of the Crown functions conferred by a statutory provision. (4) For the purposes of the application of provisions of this Act in relation to Crown employment in accordance with subsection (1) – (a) references to an employee or a worker shall be construed as references to a person in Crown employment, (b) references to a contract of employment, or a worker's contract, shall be construed as references to the terms of employment of a person in Crown employment, (c) references to dismissal, or to the termination of a worker's contract, shall be construed as references to the termination of Crown employment, (d) references to redundancy shall be construed as references to the existence of such circumstances as are treated, in accordance with any arrangements falling within section 177(3) for the time being in force, as equivalent to redundancy in relation to Crown employment, and (e) references to an undertaking shall be construed – (i) in relation to a Minister of the Crown, as references to his functions or (as the context may require) to the department of which he is in charge, and (ii) in relation to a government department, officer or body or (as the context may require) to the department, officer or body."
[8]Under rule 3(1) of the Redundancy Payments Office Holders Regulations 1965 the appointment of certain office holders is to be treated "as if…it were employment". Paragraph 5 of the Royal Borough of Kensington and Chelsea Scheme for the Appointment of Rent Officers, is in the same terms, referring to rent officers "as if they were employees…and in his [the proper officer's] employment." Counsel's submissions:[9]This appeal raises two main issues: 1. Was the appellant employed under a contract of service? 2. If the appellant was an employee under a contract of service, who was her employer?[10]The appellant was represented by Jeremy McMullen QC for whose arguments we are grateful. In summary, he posited two alternative scenarios. It was his principal argument that on an evaluation of the facts and contractual conditions pertaining to the appellant's circumstances, it was clear that she was employed by the council under a contract of service. Alternatively she was employed by the Secretary of State under the provisions of section 191 of the Employment Rights Act 1996.[11]It was argued that she was an employee of the Council by virtue of her statement of particulars and appointment by the proper officer of the Council. Whilst it was accepted that the appellant may be an office holder, it was argued that she was also an employee.[12]Alternatively, it was submitted that the appellant was an employee of the Secretary of State by reason of section 191 of the Act which treats those engaged in the service of the Crown as ordinary employees for the purposes of bringing a claim of unfair dismissal. It was argued that the appellant was employed "under" or "for the purposes" of either the proper officer of the Council or Mr Ryan, who were "exercising on behalf of the Crown functions conferred by a statutory provision" as required under section 191(3) of the Act.[13]On behalf of Mr Ryan and the Council, Mr Stilitz contended that a rent officer is appointed to office by statute to operate within the area of a particular local authority and as such are statutory office holders and not employees under a contract of service. That was reinforced by the statutory provisions in force which only defined rent officers as employees in certain, restricted, circumstances. He relied on the deeming provisions contained within section 63(3) of the Rent Act and those in the 1965 Regulations which deems rent officers to be employees for the purposes of redundancy, which would be otiose if rent officers were employees. The reference to rent officers being treated "as if" they were employees is also inconsistent with rent officers having the general status of an employee.[14]Any comparison between a rent officer and the Council's Chief Finance Officer was rejected; a CFO is both an office holder in addition to being an employee and as such is more analogous to a company director and his duties are integral to the functions of a local authority whilst a rent officer does not have a local authority function, and cannot be controlled or interfered with in any way by the members of the Council. The appellant did not have a dual role as both an employee and an office holder and there was no nexus between the rent officer's functions and those of the local authority.[15]Mr Stilitz argued that case law supported his argument that rent officers are not employees. In Department of Education v Fox [1980] 1 All ER 58, a case concerning a rent officer's complaint of sex discrimination, the Employment Appeal Tribunal proceeded on the basis that the applicant was a statutory office holder. In Miles v Wakefield Metropolitan District Council [1987] ICR 368 the House of Lords held that a registrar of births was an office holder and not employed by the council which, it was submitted, was analogous to the present case. Whilst of assistance, it was conceded by the parties that these authorities alone do not determine the matter.[16]On the second issue it was argued that the appellant could not be employed either by Mr Ryan or the Council as neither had control over her employment status or her remuneration. Rent officers were statutory office holders so that local authorities would not be able to control or dictate decisions about rent and benefit levels, so it would be contrary to the purpose behind the creation of rent officers to suppose that they were also employed by the Council. The absence of control and high degree of independence enjoyed by rent officers and their quasi-judicial function was also inconsistent with an employment relationship. If she was employed by anyone, the appellant was employed by the Secretary of State as they exercised a greater degree of control over the appointment and remuneration of rent officers under statute.[17]On behalf of the Secretary of State, Ms Hall supported the argument that the appellant had not entered into a contract of service but was a holder of a statutory office which was not co-existent with a contract of employment. It was argued that the reference in section 191 to employment was not referable to 'engagement' or 'appointment' and the reference in the Act to 'under' is in the context of both an officer and a government department. Even if rent officers could be described as being employed by the chief rent officer, they were not employed 'for the purposes of a government department or any other officer or body' as required under the Act. In discharging their functions, rent officers act on behalf of the Council as its servant and not on behalf of the Crown.[18]Any control the Secretary of State had over the appellant derived from statute and not any contract, so it could not be said that they were in an employment relationship. The State had no supervisory control over the appellant, with no power to appoint or dismiss, and no responsibility for her payment. Instead, Ms Hall argued that if there was an employer, it was the Council, as it was a party to the contractual documents and had supervisory control over rent officers, controlled their pay and had the power to dismiss them. Decision :[19]This case raises an important issue of public and private law regarding the protection conferred on rent officers. There are three categories of office holder: an office holder whose rights and duties are defined by the office they hold and not by any contract, such as a police officer; secondly, there are also office holders who retain the title 'office holder' but are in reality employees with a contract of service (those workers would be rightly described as employees); and thirdly, there are also workers who are both office holders and employees, such as company directors.[20]There is no authority on the treatment of rent officers for the purposes of unfair dismissal. We do not find Miles of great assistance as the House of Lords treated the matter on the basis of an analogy with employment law. The authorities do not establish that a rent officer cannot be an employee or that a rent officer is not employed by the Council or the Secretary of State.[21]When considering the issue of whether a worker was an office holder or an employee we accept that the factual circumstances are relevant. In particular it is relevant to consider whether there was payment of a salary, and whether it was fixed, and whether the worker's duties were subject to close control by the employer or whether they worked independently. In this case the appellant was promoted from a position as an employee within the Council. Her appointment was regarded as a promotion. She was not told that her status as an employee would be lost.[22]It has been the approach of the appeal courts in recent years that an inclusive and purposive approach should be adopted in relation to employee protection. We do not consider that the presence of the statutory provisions exclude the possibility of a rent officer being both an office holder and an employee. We accept Mr McMullen's submission that the deeming provisions would act as an interpretative tool in the absence of any statutory or contractual statement to the contrary and should not be construed in a manner which would give rise to injustice. As there is no clear authority on this point any doubt should be resolved in the appellant's favour as the Employment Rights Act 1996 is protective legislation and as we have said it is to be construed in a wide, inclusive fashion. We therefore consider that it would be a most inequitable position for the appellant to lose the statutory protection to which she was entitled when she was a clerical assistant and a property referencer/administrative officer, only to lose it when she was promoted to rent officer. The unfairness would be compounded given the fact that the appellant signed a contract as a rent officer which was in similar terms to those she had previously signed. On the facts of this particular case we consider that the tribunal in this case erred in law in holding that the appellant was an office holder only and not entitled to bring a claim of unfair dismissal. The question that the tribunal should have asked itself was whether the appellant was an employee, on the basis that she was also an office holder. It was an error to concentrate solely on whether the appellant was an office holder. On the basis of the facts the appellant was in the position of being both an office holder and an employee of the Council.[23]We accept that the appellant was an employee and her employer was the Council for the following reasons. The Council was a party to the contractual documents signed by the appellant, upon which we find that she was an employee. The Council's proper officer had the power to dismiss or suspend and performed a supervisory role in relation to rent officers. The Council was also responsible for remuneration, and the provision of accommodation and clerical assistance.[24]As to the appellant's alternative argument that she was employed by the Secretary of State, specifically under section 191 of the Employment Rights Act 1996, we accept Ms Hall's well presented arguments that a rent officer has to work under a government department or body in the sense of working 'under' and not merely being in a junior position, and that given the definition of Crown employment contained in section 191(3), had Parliament intended employment to mean 'engagement' or 'appointment' as argued by the appellant, they would have said so. The appointment of a rent officer does not mean that they are employed "under" or "for the purposes" of either the proper officer of the Chief Rent Officer, who, we accept, cannot be the rent officer's employer. That role, as we have established in this case, was performed by the Council.[25]We therefore allow the appeal to the extent specified in this judgment and that the matter should be remitted to the Employment Tribunal for consideration of her claim of unfair dismissal.