1) JAMES BAMFORD 2) WARREN BAMFORD 3) DEREK SNOWDEN 4) PAUL LAMB 5) PHILIP WARD v PERSIMMON HOMES NW LTD [2004] UKEAT 0049_04_0308

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0049_04_0308Case No Appeal No. UKEAT/0049/04Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
1) JAMES BAMFORD 2) WARREN BAMFORD 3) DEREK SNOWDEN 4) PAUL LAMB 5) PHILIP WARDAPPELLANTPERSIMMON HOMES NW LTDRESPONDENT
Before
His Honour Judge Peter Clark Mr B R Gibbs Mr D G LewisDate 3 August 2004
[1]APPEARANCES For the Appellant MR A HOGARTH QC (Of Counsel) Instructed by: Messrs O H Parsons & Partners 3rd Floor Sovereign House 212-214 Shaftesbury Avenue London WC2H 8PR For the Respondent MR J BOWERS QC (Of Counsel) Instructed by: Messrs Walker Morris Solicitors 12 King Street Leeds LS1 2HL SUMMARY Gangs of bricklayers - whether 'workers' within meaning of Regulation 2(1) WTR - ET reached permissible conclusion they were not. HIS HONOUR JUDGE PETER CLARK This an appeal by Mr Bamford and Others, Applicants before the Manchester Employment Tribunal, chaired by Mr P A Verdin, against that Employment Tribunal's reserved decision, promulgated on 30 September 2003, dismissing their claims for arrears of holiday pay brought against the Respondent, Persimmom Homes NW Ltd, on the ground that they were not 'workers' for the purposes of the Working Time Regulations (WTR) 1998 and therefore had no right to holiday pay under those regulations. The Facts[2]The Employment Tribunal found the facts as follows. The Applicants were members of 2 gangs of bricklayers working for the Respondent housebuilder on its sites. In one gang (the Snowden gang) Mr Snowden worked with Mr Lamb and one other. The Bamford gang consisted of James and Warren Bamford and Mr Ward.[3]The Respondent divided its bricklayers into 2 categories, those whom they recognised as employees (known as 'cards in') and those who worked in gangs such as the Snowden and Bamford gangs. So far as the gangs were concerned they approached the Respondent for work on site. They were quoted a rate for so many bricks laid. If the price was acceptable to the gang it would carry out the work, deciding among themselves what hours they would work during the period when the site was open. Each gang member worked different hours. The gang members provided their own hand tools and hard hats, whilst the Respondent provided all other equipment including scaffolding, fork-lift trucks and any other heavy equipment. There was no evidence that substitute gang members were engaged, but there were occasions when only 2 out of the 3 gang members were on site.[4]The Respondent's site manager carried out quality control inspections; if the work was not satisfactory he would have it redone. On each job a retention was made by the Respondent, generally £150 per man, and if work had to be put right it was to be paid for out of the retention. In practice, that procedure was not applied to these Applicants. The Applicants operated under the Inland Revenue CIS4 system. The Bamford gang had its own public liability insurance in the name of the gang. The Snowden gang members held individual public liability insurance.[5]The gangs submitted requests for payment on the Respondent's stationery each week. The gross payment was then divided between the gang members; the 3 members of the Bamford gang each received a different proportion of the gross sum paid, decided by Mr James Bamford; the members of the Snowden gang each received the same share, by agreement amongst themselves. The meaning of 'worker'[6]Regulation 2(1) of the 1998 Regulations provides:
"Worker" means an individual who has entered into or works under (or, where the employment has ceased, worked under) (a) a contract of employment; or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, 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 profession or business undertaking carried on by the individual; and any reference to a worker's contract shall be construed accordingly"
[7]It was common ground in this case that the Applicants were not employees of the Respondent under limb (a) of the definition. The terms of any contract between the parties were not spelled out in writing. The question was whether they fell within limb (b) of the definition.[8]In these circumstances Mr Bowers QC, for the Respondent, advanced a number of propositions which bear on the answer to that question on the facts of the case, and the rôle of this Appellant Tribunal on appeal, not all of which were accepted by Mr Hogarth QC on behalf of the Applicants. Having considered argument the present position, drawing on existing authorities, is in our judgment as follows:(1) Subject to the proper application of the legal principles which follow, it will be a matter of fact and degree for the Employment Tribunal to decide whether or not the Applicant falls within the extended definition of worker contained in limb (b). The fact that 2 different tribunals reach different conclusions on cases involving similar facts does not of itself reveal an error of law by one of those tribunals. See Gilhan v Kent County Council (No 2) [1985] ICR 233, 240C-F, per Griffiths LJ.(2) The Employment Tribunal must consider the terms of the contract made between the parties, provided they are not a sham (see Express & Echo Publications Ltd v Tanton [1999] ICR 693 , 697G, per Peter Gibson LJ); they should not confuse what happened in practice during the relationship with the contractual terms, express or implied. Tanton. 698A. Redrow Homes v Roberts [2004] EWCA Civ 469 , paragraph 30, per Holman J. The fact that a term is not enforced in practice does not prevent it from being a term of the contract.(3) Mutual obligations Mr Hogarth submitted that when working on site these Applicants were engaged by the Respondent under a contract. The principle of mutuality of obligation is not a criterion for determining whether the individual is an employee or a worker in the extended sense, rather it is a criterion for determining whether there is a contract at all.[9]In support of that proposition he relies on the judgement of Elias J in Stephenson v Delphi Diesel Systems Ltd [2003] ICR 471 , paragraph 11, where his Lordship said:
"The significance of mutuality is that it determines whether there is a contract in existence at all. The significance of control is that it determines whether, if there is a contract in place, it can properly be classified as a contract of service, rather than some other kind of contract."
[10]That passage was cited with approval by Munby J in Dacas v Brook Street Bureau [2004] IRLR 358 , paragraph 86. (CA). Those cases concerned the question as to whether agency workers were employees of respectively, the client company and the employment agency.[11]Mr Bowers has referred us, in the present context, to the Court of Appeal decision in Mingeley v Pennock [2004] IRLR 373 , a case concerned with the similar extended definition of employee in Section 78 of the Race Relations Act 1976. Maurice Kay LJ (paragraphs 8, 14) posed the question whether, for someone to be employed under the contract personally to execute any work or labour there has to be a mutual obligation between the parties to offer and accept work. His Lordship answered that question in the affirmative. We propose to follow that approach in the present case, as I sought to do, sitting with members, in Bunce v Postworth Ltd t/a Skyblue (UKEAT/0052/04/MH) in which the application of the mutuality principle was debated in the context of the employee question by leading Counsel now appearing before us. See paragraphs 7-14. Judgment in that case was not handed down until 2 July 2004, but a copy of the judgment in draft was shown to Counsel on a confidential basis during the argument in the present case. (4) Personal service[12]The issue as to whether, under the contract, the Applicant has unlimited or limited or no power to send a substitute has arisen directly for consideration in a number of cases. It was considered by this Employment Tribunal, but not found to be particularly helpful (Reasons - paragraph 14). In these circumstances we shall not dwell on that question here. (5) The business/customer exception[13]Mr Bowers submitted that anyone providing services to another may be contracting with that other as a client or customer of his business undertaking. He gave as an example the self-employed coach stewards in Smith v Hewitson (EAT/0489/01. 17 September 2001), held to be providing services for a client pursuant to a business undertaking for the purposes of Section 54(3)(b) of the National Minimum Wage Act 1998, itself in the same terms as limb (b) of the worker definition in the Working Time Regulations.[14]He developed that submission by contending in the context of the present case, that there is more likely than not a business undertaking where a gang of tradesmen tender as a unit for a job; decide how the gross payment will be distributed amongst the members of the gang and make their own business decisions. He relied upon the EAT decision in JNJ Bricklaying Ltd v Stacey (EAT/0088/03/ILB. 8 July 2003), which I summarised at paragraph 16.[15]We are not persuaded that even that limited proposition is invariably correct. It remains a question of fact and degree in each case for the Employment Tribunal. The Employment Tribunal Decision[16]The Employment Tribunal considered Byrne Brothers v Baird [2002] ICR 667 (EAT) and Redrow ... in the EAT, not Court of Appeal) and other decisions of the Manchester Employment Tribunal on the 'worker'question. However, they reminded themselves that each case needs to be determined on its own merits; recognising that they were operating in a 'grey area'.[17]In determining whether these Applicants fell within the definition of worker in limb (b) or the business/customer exception, they considered a number of factors, including mutuality of obligation, supervision and control, provision of plant and equipment, insurance, financial accountability, substitution, taxation treatment and the provision of stationery by the Respondent. Having analysed the facts as found under these headings, giving each such weight as they saw fit, the Employment Tribunal concluded that overall the Applicants did not fall on the worker side of the line, as opposed to those engaged in a business undertaking carried out on behalf of their customer. The Appeal[18]First, Mr Hogarth submitted that the Employment Tribunal, at Paragraph 9 of their Reasons, had misunderstood the significance of mutuality of obligation in the context of this case. It went solely to the question of whether there was a contract. We reject that broad submission for the reasons given earlier when considering this element.[19]More generally, he seeks to challenge the Employment Tribunal's findings, both individually and cumulatively, under the various heads which they considered. He further submitted that the relevant factors to be considered are invariably the 12 listed by Mummery J in Hall v Lorimer [1992] ICR 739, a case concerned with the distinction between a contract of service and one for services.[20]Dealing with the last point, we accept Mr Bowers' submission that the list set out in Hall v Lorimer was not exhaustive and was concerned with the issue in that case, which is not the question in the present case.[21]As to the Employment Tribunal's approach generally we are not persuaded that any error of law is made out. The factors taken into account by the Employment Tribunal were each potentially relevant to the limb (b) question; it was for the Employment Tribunal to assess the relative significance of each factor and then come to an overall conclusion. That they did and the conclusion which they reached was a permissible one. In these circumstances we shall dismiss this appeal.