MR M C WOOD v ROGER ALBERT NEED T/A A1 INVESTIGATIONS BUREAU [2002] UKEAT 1230_01_2801

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 1230_01_2801Case No Appeal No. EAT/1230/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR M C WOODAPPELLANTROGER ALBERT NEED T/A A1 INVESTIGATIONS BUREAURESPONDENT
Before
Lord Gladwin of CleeDate 28 January 2002
[1]APPEARANCES For the Appellant No appearance or representation by or on behalf of the Appellant For the Respondent No appearance or representation by or on behalf of the Respondent MR COMMISSIONER HOWELL QC This is the full hearing of an appeal by Michael Charles Wood in proceedings by himself against Robert Albert Need, trading as A1 Investigations Bureau in which Mr Wood seeks to have set aside as erroneous in law the decision of the Mold Employment Tribunal sitting on 18 July 2001, set out in extended reasons sent to the parties on 23 August 2001, at pages 5 – 11 of the appeal file before us.[2]Neither party appears before us at the hearing today. The matter has been set down for full hearing without any preliminary hearing having taken place ex parte, and the Appellant's solicitors have sent a letter to the Tribunal dated 25 January 2002, explaining his position. He is unable to attend for practical reasons and is similarly unable for reasons of finance to be able to be represented, but his solicitors have sent with that letter a skeleton argument to supplement the grounds set out on his behalf in the Notice of Appeal all of which we have taken into account. The Respondent does not appear either but has submitted a notice of appearance in response to the Notice of Appeal. We are informed that he has been made aware that the hearing today is taking place, but no argument has been received from him or on his behalf.[3]The Notice of Appeal seeks to set aside the Tribunal's decision on the ground that it has misapplied the law and reached perverse conclusions in relation to two matters which were before them for decision. The first matter was the issue of whether Mr Wood was an employee or a self-employed person after a date on 30 June 2000, when as recorded by the Tribunal an agreement had been reached between himself and Mr Need who up until that point had been his employer in a small firm of Private Investigators. The agreement was to the effect that from that date onwards, Mr Wood would cease to be an employee of the bureau but would from that time on continue to work on an "as and when required" basis, being from that time a self employed person, submitting invoices for such work as he agreed to take on and did.[4]On that question depended the issue of whether the Originating Application in Mr Wood's proceedings which was not presented to the Tribunal until 19 December 2000, felt be admitted before the Tribunal at all. His Originating Application had been predicated on the basis that he remained an employee, and claimed unfair dismissal from a date on 25 December 2000 after which he and Mr Need parted company. It also claimed amounts for unpaid wages by way of a claim in effect under part 2 of the Employment Rights Act 1996 for improper deductions from wages, also on the footing that he was an employee. That part of the claim was based entirely on his contention that his status had not changed on 30 June 2000 and that he still remained an employee of Mr Need.[5]The Tribunal's conclusion, reached by a majority, was that in view of the express agreement reached between the parties on 30 June 2000, Mr Wood has indeed ceased to be an employee and so after that was no longer entitled to the protections of an employee under the Employment Rights Act 1996 . It followed that his application having been submitted considerably outside the normal 3 month time limit from the termination of his employed status, and it having been practicable for it to have been submitted at an earlier date, it should not be admitted. On the basis of the majority decision on the first issue, the Tribunal then held they had no jurisdiction over his contract after 30 th June 2000 under part II of the Employment Rights Act 1996 , since as he was no longer an employee no claim for unlawful deduction of wages from him could be entertained. They accepted the submission of the Respondent's solicitor who appeared at the hearing, that of course the Applicant had a right to proceed for any money alleged to be due to him as an independent contractor for work done after 30 th June 2000 in the normal way through the county court.[6]The Tribunal's findings on which the majority conclusions were based were recorded in the statement of extended reasons in dealing with the evidence before the Tribunal as follows. It is important to note that these appear to be unanimous findings as to the facts, made by all the members of the Tribunal, 5. "The Applicant received payslips with his salary up to 30.06.00. He received a P45 which was not produced to the Tribunal but which he says was dated 30 June 2000, although he only received it after he commenced these proceedings. The applicant said that he was paid up until 30 June 2000 and the wages that he was claiming for in these proceedings were for August and September 2000. 6. The Applicant was unable to give any details of his claim for expenses nor for his outstanding holiday pay. 7. At the instigation of the Respondent a discussion took place with the Applicant as to the future of the relationship between them. The Respondent wanted to change the status of the Applicant so that he was no longer an employee. He would continue to provide work on an as and when required basis and the Applicant would become self-employed submitting invoices for work done. 8. The Tribunal find that this arrangement was agreed upon. The Respondent supplied a booklet at first instance to the Applicant to complete with regard to invoicing. The meeting took place in May 2000. Nothing was put in writing. The Respondent wanted a different way of operating. The same arrangement was put to the only other person that worked for the Respondent, namely Mr Gillam, but he would not accept the new arrangement after the end of June 2000 and would not carry out any work for the Respondent. 9. After 30 June 2000, the Applicant started to submit invoices for work done. Furthermore, he took significant steps to set up his own competing business. To this end he arranged for advertisements to be placed in Yellow Pages and Talking Pages. The next publication required the Applicant to get his order in by 9 or 10 October 2000, and he did the deal. Furthermore, business cards were printed with his name on them. The Applicant said he did not authorise them to be printed and they were done by his colleague Mr Gillam with whom he intended to go into business. The Tribunal find that the evidence of the Applicant on that point is not credible and that he was setting up a competing business and the printing of the cards would have been authorised by him".[7]On that basis the members of the Tribunal differed in the legal construction to be placed on those facts as is apparent from the following paragraphs under the heading "Conclusions and Reasons": 20. The three members of the Tribunal found that there were changes but the minority view was that the term "self-employed" was simply a label for the benefit of the Respondent and that in reality nothing at all had changed in the relationship which remained as employer and employee and that the Applicant was an employee within the meaning of s.230. The Applicant was allowed to keep the Respondent's van as before. The majority were not influenced by this point , because it was a short-term measure to help the Applicant who did not want to use his own "classic" car but rather wait until he had a replacement for the van. 21. The majority view was that the change after 30 June 2000, was such that the Applicant became self-employed. Of critical importance to the majority was the intention of the parties. The idea of the change undoubtedly came from the Respondent but the majority say that this was accepted by the Applicant. This was evidenced by the fact that he then went on to set up the competing business called "Quest". This involved the purchasing of advertising and the printing of business cards. 23. In conclusion, with the majority decision prevailing, the contract of employment as between the Applicant and the Respondent ended on 30 June 2000. Thereafter, the relationship continued on a different basis with the Applicant being self-employed and providing services on an as and when required basis. The Applicant did not "resign" on 25 September 2000, but ceased to provide the service that he had been providing to the Respondent after 30 June 2000. The time for presenting a complaint for unfair dismissal, unlawful deduction of wages, and breach of contract and holiday pay, expired on 29 September 2000. 24. The Applicant has not shown that it was not reasonably practicable to submit form ITI until 19 December 2000 and, therefore, the majority of the Tribunal are not prepared to extend the time until that date. 25. Dealing with the three questions that we had to determine at the outset we answer these as follows:-(a) It was reasonably practicable for the application to have been submitted within the three month time limit.(b) The Applicant ceased to be an employee on 30 June 2000 and thereafter his relationship with the Respondent was one of a self-employed person providing services.(c) The Employment Tribunal has no jurisdiction over the Applicant's contract with the Respondent after 30 June 2000 under Part II of the Employment Rights Act 1996 as he was no longer an employee. As Mr Tudor Williams pointed out, the Applicant has a right to proceed for the monies due after that date in the county court. These are majority decision. The minority decision was that the Applicant never ceased to be an employee of the Respondent until he resigned on 25 September 2000 and, therefore, his claim was within time. The issue of "reasonably practicable" did not have to be considered nor did the third question of jurisdiction arise simply because the Applicant was an employee and the outstanding monies were subject to the jurisdiction of the Tribunal and could proceed under Part 11 of the 1996 Act, because the claim was in time and which did not expire until 24 December 2000."[8]Against that decision of the majority on those two issues, the Notice of Appeal seeks to argue that the Tribunal have misdirected themselves, alternatively reached a perverse conclusion in holding on the facts that Mr Wood had ceased to be an employee after 30 June 2000. In particular our attention is drawn in the skeleton argument submitted to authorities such as Ferguson v. Dawson [1976] 1 WLR 1213 , that the assessment of whether a person is an employee or a self-employed independent contractor is a matter for determination by the fact finding Tribunal on the evidence in the case. It is not a matter simply of looking at the labels the parties themselves have chosen to place on the arrangement, in particular as in that case, instances of "labour-only sub-contractors" working on what is colloquially referred to as the lump, have to be scrutinised with some care to see what the real substance of the transaction is. As Lord Justice Megaw observed by reference to some of the very wide range of existing authority in that case at page 1223, whether the relation between the parties to the contract is one of master and servant or otherwise is a conclusion of law dependent on the rights conferred and the duties imposed by the contract. If these are such that the relation is that of master and servant it is irrelevant that the parties have declared it to be something else. He quoted Lord Widgery in Global Plant v. Secretary of State [1972] 1 QB 139 at 152, saying:
"One must not overlook that the intention of the parties was that the relationship should be that of an independent contractor, and although the parties cannot by intention make a transaction into something which it is not, yet it is recognised that such intention is a factor for consideration in these cases."
None of that is in our judgment inconsistent with the way the Tribunal approached the issue they had to decide in this case, and they correctly directed themselves as to the law they had to apply in paragraphs 17, 18 and 19 in their extended reasons by reference to the various tests that are normally considered in determining such issues, and by reference in particular to the authority of Hall v. Lorrimer [1994] IRLR 171 .[9]In our judgment the Tribunal's unanimous finding that there was an express agreement between the parties that Mr Wood would cease to be an employee, and from 30 June 2000 onwards would become a self-employed contractor doing work on a contract basis, submitting invoices as and when he did so, demonstrates that there was more than a change of label involved in this case. The conclusion of the majority that that was so, and that there was indeed a change of substance, by reference in particular to the facts that he ceased to receive payslips, he thereafter did work and submitted invoices and so forth, was a decision that the majority of the Tribunal were reasonably entitled to reach on the evidence before them, and cannot be said to be erroneous in law. Accordingly as far as the first issue is concerned, we have not been persuaded that there was any error of law on the part of the majority of the Tribunal and that aspect of the Appeal is dismissed.[10]The second issue taken before us on the Appeal is that the majority misdirected themselves in relation to the meaning of "workers" for the purposes of part II of the Employment Rights Act 1996 dealing with the right not to have unlawful deductions made from an Applicant's wages. That was an argument put forward so far as we can see only for the first time in the Notice of Appeal and developed in the skeleton argument before us. So far as we can see, it does not appear to have been argued at all before the Tribunal as a separate point independent from the issue of whether Mr Wood remained an employee entitled to make claims for unfair deductions of wages in that capacity after 30 June 2000. There is no record of this point having been put forward as an independent point in the Originating Application in the event that the main argument on continued employment status was not successful. As Mr Wood represented himself in front of the Tribunal on the basis only of the written material that had been prepared for him by the solicitors in advance of the hearing, and there is no record of this argument having been put to the Tribunal in the Tribunal's extended reasons, we have not been satisfied that it is a proper matter which can now be raised as an issue on the appeal before us. However as we are sitting and determining the case in the absence of the parties, we will proceed to deal with that issue as sought to be raised on the Appeal, assuming ourselves to be wrong on whether it is a matter that can be legitimately raised at all. Our conclusion is that even assuming it was properly raised at the proceedings below or could properly be raised before us now, we have not been persuaded that the point taken is correct as a matter of law.[11]The starting point is the Tribunal's finding that it had been expressly agreed that Mr Wood's status would change from that of an employee to becoming an independent provider of services on a self-employed basis, submitting invoices to Mr Need (as in effect a customer of Mr Wood) for whatever was done after 30 June. On that basis it appears to us there was no error on the part of the Tribunal in treating Mr Wood as falling outside the meaning of a "worker" for the purposes of bringing proceedings under part II of the Employment Rights Act 1996 after that point.[12]The definition of "worker" in section 230 of the Employment Rights Act 1996 , which the Notice of Appeal and skeleton argument are correct in pointing out is the applicable definition for this purpose, refers first to an individual who has entered into or works under:
"(a) a contract of employment"
On any footing on the Tribunal's first finding that cannot be so after 30 June, to what is founded on is:
"(b) any other contract…whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any professional business undertaking carried on by the individual"
[13]In our judgment, the status of Mr Wood's former employer was altered by virtue of the express agreement found by the Tribunal to have taken effect from 30 June to being that of "a client or customer" of a professional business undertaking carried on from that date onwards by Mr Wood himself on his own account. On that footing, he fell outside the definition of a worker after 30 June 2000 and the Tribunal's decision that proceedings under part II of the Employment Rights Act could not be brought by him for money alleged to be due after that date was correct. For those two reasons, we now dismiss this appeal.