MR F GRAHAM (2) MR D CALVERLEY v HEADS EMPLOYMENT SERVICES LTD [2001] UKEAT 917_01_1710

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2001] UKEAT 917_01_1710

Case No Appeal No. EAT/917/01

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MR F GRAHAM (2) MR D CALVERLEYAPPELLANT

HEADS EMPLOYMENT SERVICES LTDRESPONDENT

Before

Mr Justice Lindsay

Date 17 October 2001

[1]APPEARANCES For the Appellants MR COLIN CARR (Trade Union Official) Transport & General Workers Union Transport House Islington Liverpool L3 8EQ MR JUSTICE LINDSAY (PRESIDENT) : We have before us, as a preliminary hearing, the appeal of Mr F. Graham and Mr D. Calverley in the matter Graham and Calverley against Heads Employment Services Ltd. Today, Mr Colin Carr of the TGWU has appeared for the Appellants.

[2]This is a case in the vexed area of the position that arises where an employment agency intervenes itself between a worker and the person who requires work to be done. The ability of the Courts to meet this situation is circumscribed to some extent by authority and practice and ultimately it is an area which may need to be visited by Parliament.

[3]There is a possibility of a curious situation arising in which the more the position of employees properly-so-called is improved by legislation, the more employers may wish to economise by using as workers persons not employees properly-so-called. But that is a very big subject which does not arise in this case and, as I say, may well require the attention of Parliament rather than of the Courts.

[4]Coming more directly to the position of Mr Graham and Mr Calverley, on 3 April 2001 each of them presented an IT1 in similar terms asking for interim relief for unfair dismissal and for unfair selection relief, relying on the Trade Union and Labour Relations Act 1992 , sections 152 and 153. They believed that they had been dismissed because they were members of Mr Carr's union and believed also that they had been dismissed because of union activity on their part. That was broadly the nature of the IT1s.

[5]On 26 April 2001 IT3s were entered by Heads in similar terms for each of the two Applicants. They claimed that the Respondent involved was an employment and recruitment agency; that one of its clients was called "Rotary"; that the Respondents interviewed the Applicants for a job with Rotary in the Isle of Man; that the Applicants had begun work in the Isle of Man and that they were engaged under contracts for services not of service. They were, therefore, said Heads, not employees of Heads. They therefore, it was alleged, could not claim under sections 152 and 153. The Employment Tribunal, it was urged, had no jurisdiction and, in any event, it was said, the men were not dismissed for a trade union activity.

[6]So there was the conflict and at the heart of it was going to be the question of whether or not Mr Graham and Mr Calverley were employees properly-so-called of Heads.

[7]On 27 April there was a hearing at the Employment Tribunal. Oral evidence was given on both sides. On 22 May Summary Reasons were given for the decision but it must have been indicated that an appeal was wished and that also therefore Extended Reasons were necessary and on 11 June the Decision was sent to the party with, by now, Extended Reasons. The decision, which was the decision of the Tribunal at Manchester under the chairmanship of Mr M.E. Coles, was as follows:

"The unanimous decision of the Tribunal is that: (i) neither applicant was at the date of their dismissal an employee of the respondent within the meaning of the provisions of section 295(1) of the Trade Union & Labour Relations (Consolidation) Act 1992; (ii) therefore the Tribunal does not have jurisdiction to hear the applicant's complaints of unfair dismissal on grounds relating to union membership or activities, selection for redundancy on grounds in relation to union membership or activities or their applications for interim relief."

So Mr Graham and Mr Calverley had manifestly failed.

[8]The Notice of Appeal raises three grounds and the first is that the Tribunal misdirected itself in relation to the well known three-part test stated by McKenna J in Ready Mixed Concrete (South East) Ltd v Ministry of Pension and National Insurance

[1968] 1 All ER 433

. It was said that the misdirection was, in particular, as to mutuality of obligation and control. I have not brought the Ready Mixed case itself here. Mr Carr had, but I am looking at it as cited in Deacon & Morris Labour Law 3 rd Edition at page 166 and it says:

"A contract of service exists [when] three conditions are fulfilled: (1) the servant agrees that in consideration of a wage or other remuneration he will provide his own work and skill in the performance of some service for his master; (2) he agrees expressly or impliedly that in the performance of that service he will be subject to the others control in a sufficient degree to make that other master; (3) the other provisions of the contract are consistent with its being a contract of service."

In the Extended Reasons the Tribunals says, at their paragraph 18:

"18 In considering the question of the status of these two applicants, the Tribunal had regard to a number of authorities including the case …"

And then they refer to Ready Mixed Concrete and Mr Carr tells us that the case was gone into in some detail before the Tribunal.

[9]There is no misdirection in paragraph 18; all the Tribunal say is that they have had regard to it. The notion of mutuality seems to have played no part in the Employment Tribunal's decision, nor necessarily needed to have done. The three-part McKenna test requires all three parts to be satisfied. If only one of the three is not satisfied, that suffices to conclude that there is no employment properly-so-called and so it may be that mutuality was not fully explored because it did not need to be. It is not suggested that Heads were bound to offer work to Mr Graham and Mr Calverley nor that, if they were offered work, they were bound to accept it if it was offered to them. Mutuality or the lack of it seems to have played no part and one would be a little surprised in the employment agency context, which we are in, if there was some provision or oral agreement that amounted to adequate obligations of mutuality.

[10]So far as control was concerned the Tribunal dealt with it sufficiently to establish that the Appellants were not in Heads' control. What they said was this, in their paragraph 15:

"Although Mr Graham's immediate supervisor when he was working in the Isle of Man was a chargehand who had been set-on by the respondents under the same terms and conditions as Mr Graham, the work chargehand and, indeed, Mr Graham did was on the instructions of senior personnel within Rotary. The respondents themselves, of course were not engaged in any way whatsoever in the day-to-day running of the operations in the Isle of Man. Furthermore, on other occasions Mr Graham was not working directly under that chargehand but under the direct supervision of Rotary employees."

And in their paragraph 19(d) the Tribunal said:

"After the applicants commenced work on the Isle of Man, the Tribunal was satisfied that effectively day-to-day instructions to them and control of them was vested in Rotary."

[11]Against those findings of fact we see no arguable error of law in this first ground and, of course, as Mr Carr will know, we can only deal with errors of law.

[12]The second ground in the Notice of Appeal is this:

"The Tribunal accepted that the applicants were not working for the respondents under the conditions of a document headed 'Terms and Conditions of Temporary Workers' which specifically referred to 'a contract for services'. Therefore, the Tribunal should have relied on the reality of the contract between the parties that was implied by the nature of the employer/employee relationship that existed on the commencement of employment of the applicants."

There was no such finding, strictly speaking.

(b) :

"The applicants were not working for the respondents under the conditions of a document headed 'Terms and Conditions of Temporary Workers' subsequently issued to the applicants by the respondents after they had commenced work."

[13]So that was the finding. Any contract therefore depended on oral agreements and the implications of the law but those, so far as they existed or were found, did not help the Appellants. Thus, quite apart from control resting outside Heads, as we have seen, there was no agreement held to exist that Heads would be the employer and it was not even thought by one Appellant, at first, that Heads would be the employer.

(c) said:

"The respondents had not expressly agreed with the applicants that the applicants would be working for the respondents as employees within the meaning of the provisions of section 295(1) of the Act. Indeed the applicant Mr Graham told the Tribunal that when he first started working on the Isle of Man he believed that he would be an employee of the third party contractor ('Rotary'). And then, the Tribunal went on to say (and one has to bear in mind that the Tribunal included two people with commercial and business experience): "

The Tribunal was satisfied that it has traditionally been custom and practice for persons working under the sort of arrangement that the applicants had with the respondents, for it not to be intended to create the relationship of employer/employee nor was the Tribunal satisfied that in the particular circumstances of this case the relationship was such that an employer/employee relationship had arisen by implication of law."

[14]So custom and practice militated against an employer/employee relationship and, again, we see no arguable error of law in that part of the case.

[15]That leaves the third ground in the Notice of Appeal that begins at (iii) to say this:

"It was a finding of fact at the tribunal that the applicants were being supervised by the respondents which meant in practice that the applicants' work was subject to a direction and control exercised to the extent that the ultimate authority in the performance of their work was subject to the respondents' authority."

There was no finding that Mr Graham and Mr Calverley were supervised by Heads. On the contrary, as we have seen in a passage already cited, the Tribunal said:

"The respondents themselves, of course were not engaged in any way whatsoever in the day-to-day running of the operations in the Isle of Man. Furthermore, on other occasions Mr Graham was not working directly under that chargehand but under the direct supervision of Rotary employees"

[16]It does not follow that because Mr Graham was supervised by a chargehand who was himself working on Heads' terms and conditions that he, Mr Graham, was supervised by Heads. That does not follow and it cannot stand alongside the finding that Heads were not involved in any way in day-to-day operations and that effectively day-to-day instructions to Mr Calverley and Mr Graham and control of them was vested in Rotary. I have not cited the whole of the third ground in the Notice of Appeal but we are unable to spot any arguable error of law within it.

[17]Accordingly, although Mr Carr has addressed us skilfully and with moderation, he is up against findings of fact that do not assist his clients. We can only deal with errors of law and, for the reasons we have given, we have been unable to find arguable errors of law and hence must dismiss the appeal even at this preliminary stage.