MR J HAWKINS v MR N DARKEN T/A SAWBRIDGEWORTH MOTORCYCLES [2004] UKEAT 0367_04_2007

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2004] UKEAT 0367_04_2007Case No Appeal No. UKEAT/0367/04Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR J HAWKINSAPPELLANTMR N DARKEN T/A SAWBRIDGEWORTH MOTORCYCLESRESPONDENT
Before
Mr Justice Mitting Ms V Branney Professor P D WickensDate 20 July 2004
[1]APPEARANCES For the Appellant MR M REED Free Representation Unit 4th Floor Peer House 8-14 Peer house London WC1X 8LZ For the Respondent MS P HIGGINS (of Counsel) Instructed by: Messrs Jameson & Hill Solicitors 72-72 Fore Street Hertford SG14 1BY SUMMARY For the purposes of the DDA 1995 an "employee" is someone who contracts principally to do work and not just someone employed under a contract of employment. THE HONOURABLE MR JUSTICE MITTING The Appellant was employed as a motor cycle valet by the Respondent at his BMW motorcycle dealership in Hertford from 3 October 2002 until his dismissal by notice, which expired on 17 May 2003. By his Originating Application dated 10 July 2003, the Applicant claimed, amongst other categories of relief, compensation for disability discrimination, namely for(1) failure to make reasonable adjustments in working arrangements for his disabilities, and,(2) treating him in a manner which did not apply to other workers, in the terms on which he was employed by the Respondent and by his dismissal by the Respondent. The disabilities alleged were dyslexia and depression.[2]The Applicant claimed that the alleged discrimination was unlawful under sections 5.2 and 6.1 and 4.2 and 5.1 of the Disability Discrimination Act 1995 respectively. The Respondent claims that the Act did not apply to the Applicant's employment, by virtue of section 7(1) because he had fewer than 15 employees at the relevant time. The Employment Tribunal in a reserved decision, sent to the parties on 17 February 2004 upheld the Respondent's contention and dismissed this aspect of the Applicant's claim.[3]It was common ground that at all material times the Respondent employed at least 14 people. The Applicant contended that he employed at least 15. He identified 3 people as employed by the Respondent, in addition to the admitted 14, including himself:(1) Christopher Robbins, a bookkeeper working at the Hertford premises, but employed by Black Bear Harley Davidson Ltd, a company of which the Respondent was principal shareholder and managing director, which traded in Newmarket. It is no longer contended that he was an employee of the Respondent.(2) An unnamed cleaner(3) Brian Cowell. The live issues concern (2) and (3).[4]Section 7(1) of the Disability Discrimination Act provides:
"(1) Nothing in this part applies in relation to an employer who has fewer than 15 employees"
Section 68(1) defines "employment" as follows:
"it means subject to any prescribed provision, employment under a contract of service or of apprenticeship or a contract personally to do any work, and related expressions are to be construed accordingly"
It is clear that "employee" is a "related expression", so that it must be interpreted in the light of the definition of "employment" in section 68(1).[5]The second of the two claimed employees, the unnamed cleaner, was dealt shortly by the Employment Tribunal and can be dealt with shortly by us. In paragraph 9 of its Decision, the Tribunal found:
"We are satisfied that the cleaner is employed by Mr Cleaning" [in fact Minster Cleaning] "
We have seen a copy of the contract between Mr Cleaning and the Respondent." The written contract is included in the appeal bundle. It is between the Respondent and Minster Cleaning Services and is dated 11 April 2001. The work, which is the subject of the contract is stated to be:
"To provide a professional cleaning service three times a week, Monday, Wednesday , Friday excluding Bank Holidays."
For that work, a monthly charge is payable. Clause 3c imposed the following obligation on Minster:
"carry out the work to the reasonable satisfaction of the Customer and shall provide all necessary staff and materials for this purpose"
[6]It is common ground that the work, for a small number of hours per week, was in fact done by a lady called Karen, when, as was usual, she was available to do it. Therefore, on undisputed facts, the contract to do work was made between the Respondent and Minster, it was Minster which undertook to do the work not Karen, Minster did not contract personally to do the work, it contracted to provide "all necessary staff" to do it. There was no contract between the Respondent and Karen, the only contract to which she was a party was with Minster, and not the Respondent, therefore the Respondent did not employ her under a contract, personally, to do any work. There is no room, as was contended by Mr Reed for the Applicant, for the implication of a contract between Karen and the Respondent, let alone any contract under which Karen undertook to do work personally for the Respondent.[7]A simple test can demonstrate the point. If Karen refused to work, would the Respondent have had any claim in contract against her? The answer is no; any remedy that the Respondent would have had would have been against Minster only. Minster could have fulfilled the contract by arranging for other staff to do the work. If the Respondent refused to let Karen work, she would have no remedy against the Respondent; she would, or may have, been entitled to be paid by Minster during the hours during which she was willing to do the work, but was unable to do it because of the Respondent's refusal, but she would have had no direct claim against the Respondent. For those reasons which are slightly longer than those given by the Employment Tribunal, but which are implicit in its shortly stated Reasons, we are of the view that its conclusion on that issue was plainly right.[8]The heart of this appeal concerns the third alleged employee, Mr Cowell. The Employment Tribunal's findings were set out in a number of paragraphs in its Decision, first in paragraph 10:
"We accept the evidence of Mr Brian Cowell. He describes himself as a self employed van driver and his work involves the delivery and recovery of motorcycles. He has from time to time provided driving services to Sawbridgeworth Motorcycles over the last two years. He is contacted by Sawbridgeworth Motorcycles as and when they need him to carry out driving work and he provided his services for approximately 2½ days per week. He is not guaranteed any regular work. When he has built up a certain number of hours he invoices them for his time. He had previously worked for other motorcycle companies including "
On Yer Bikes" in Aylesbury and "On Yer Triumph" in Aston Clinton. Business for those companies had been quite slow and he hadn't carried out any driving duties within the last 18 months. On 17 May 2003 he was not working for the Respondent. 11 We are also satisfied that from the evidence of Mr Darken that he keeps no separate pay records for Mr Cowell and payments are made to him from petty cash. It is right that Mr Cowell would wear a winter jumper with "Sawbridgeworth Motorcycles" on it. He is not obliged to wear it and indeed often wears a "Triumph" jacket. He submits accounts as a self employed person in business on his own account to his accountant for Revenue purposes."[9]Various arguments were addressed to the Employment Tribunal most of which centred on the question whether or not Mr Cowell was an employee, according to the well known traditional tests propounded by McKenna J in Ready Mixed Concrete -v- The Minister of Pensions and National Insurance [1968] 2QB 497 . The Employment Tribunal's conclusions were set out in paragraphs 15 to 19 of its Decision.[10]In paragraph 15 it recited section 68. In paragraph 16 it found:
"16 We are satisfied having considered this matter that Mr Cowell does not fall within the definition. He is on business on his own account. He delivers motorcycles, he does it for Mr Darken from time to time. It was open to him to send an employee, were he to employ one, to undertake his deliveries. He was not obliged to wear the respondent's uniform. He is not tied to working solely for the respondent. He has done work for other similar organisations. We are satisfied he fails the personal service test, as set out in the decision of the Court of Appeal in Express and Echo Publications Limited v Tanton [1999] IRLR 367 . 17 We are satisfied that there is no mutuality of obligation as that principle is explained in Clark v Oxfordshire Health Authority [1998] IRLR 125 which was upheld by the House of Lords in Carmichael v National Power [2000] IRLR 43 . 18. Looking at this in the round we are satisfied that Mr Cowell worked ad hoc for the respondent on a self employed basis. There was no obligation to work, there was no obligation to offer him work. He submitted invoices for his work at negotiated rates. The Tribunal prays in aid its own decision in Stone [supra] and is satisfied that Mr Cowell is clearly a self employed individual and independent contractor."
Pausing there, the reference to Stone was a reference to the decision of the Employment Tribunal in which it held that where a dismissal on notice had occurred, then the relevant period for determining how many employees were employed was the whole of the period of notice and not just the date on which it expired.[11]Applying that decision, in paragraph 19 of its Reasons, the Tribunal observed:
"However, Miss Higgins argues in the alternative that since Mr Cowell was not working on 17 May 2003 that he does not count in any event for the purposes of Section 7. We do not uphold that submission, we agree with Mr Sankey's interpretation of the previous decision of this Tribunal (same Chairman) where our primary conclusion was that dismissal on notice is a continuing act and that therefore if Mr Cowell was at work on any day during the notice period, it would count for the purposes of the total number of employees, as defined in the Act. It matters not that he was not working on the last day."
Its conclusions were summarised in paragraph 20:
"Thus we find that Mr Cowell, applying the well known laid test in Ready Mixed Concrete as set out by Ms Higgins, is an independent contractor and in those circumstances the respondents do not have more than 14 employees at any stage during the applicant's notice period."
[12]Kelly -v- Northern Ireland Housing Executive [1998] ICR 828 was not cited to the Employment Tribunal or referred to in the Skeleton Arguments submitted to this Appeal Tribunal until I drew the attention of Mr Reed and Ms Higgins to it. As a majority decision of high persuasive authority on virtually identical wording, it is an authority that is, in our view, directly in point and which contains guidance to the interpretation of section 68, which is directly binding on us. The only material difference in the provision under consideration in Kelly - section 57(1) of the Fair Employment (Northern Ireland) Act [1976] and section 68, is the presence of the word "execute" in section 57 in place of "do" in section 68. As was rightly conceded by Mr Higgins, there is no material difference between the two words.[13]The purpose of the 1976 Act was to prohibit discrimination in the field of, amongst other areas, "employment" on the ground of religion or politics. Two solicitors applied for appointment to a panel of solicitors, which defended public liability claims against the Northern Ireland Public Housing Authority. One was a sole practitioner and one was a partner in a two partner firm. Neither were employees on the Ready Mixed Concrete test. Each claimed that the Authority had discriminated against them unlawfully. The claim was only admissible if each were seeking to enter into a contract "personally to execute any work". The Northern Ireland Court of Appeal held that the sole practitioner, Mr Loughran, was but the partner, Mrs Kelly, was not. The majority of the House of Lords held that both were. In the case of Loughran, the ratio was the same.[14]Lord Slynn, at page 835G - 836A said:
"My Lords, having considered all these matters, I have no doubt that the Court of Appeal were right in respect of Mr Loughran. The definition of employment is clearly wide enough to cover the provision of services by a professional man, as was held in Mirror Group Newspapers Ltd v Gunning [1986] ICR 145. Whatever he called himself he was the individual seeking employment in the sense of someone offering to enter into a "contract personally to execute any work or labour"
. He was the person undertaking to do the work and he would be liable for any breach of the contract that was made. On the form he was said to be "mainly responsible for carrying out the panel work." So far as "responsible" means legally responsible he was solely responsible. In so far as it means "would mainly in fact carry out the work" he was such person even if he was entitled to delegate some part of it to his assistant. Plainly it does not cease to be as contract "personally to execute any work" because his secretary types and posts the executive's defence to any claim or that his assistant solicitor goes along to file such a defence. The dominant purpose is that he will do the essential part of the work."[15]Lord Griffiths, at page 840 C - H said:
"I find the question under section 17 more difficult. Neither Bernadette Kelly nor Oliver Loughran were seeking employment as employees or apprentices, but were they seeking employment "personally to execute any work?"
The tribunal held that they were not: they held that the dominant purpose of the contract was not that a contracting party would personally execute the work or labour but that a designated solicitor would do so, and the fact that the contracting party and the designated solicitor might be one and the same person they regarded as fortuitous rather than purposeful and unrelated to the contract. Whilst I see the force of this argument I cannot accept it. It was of the first importance to the executive that their work should be personally carried out by an identified solicitor of not less than three years' qualification. No doubt it was also of importance that the firm should be of good standing with a partner who would assume overall responsibility for the work, but if one is looking for a dominant purpose of the contract I would say it was to secure the services of a particular solicitor personally to defend their cases. The importance of this legislation has been stressed in your Lordships speeches and I would not wish to adopt an approach to its construction or application that cut down the protection it was intended to afford. In the case of Oliver Loughran he had applied to be appointed to the panel and undertook personally, as the designated solicitor, to defend the cases against the executive. If he had been successful, the terms of his retainer for each case in which he was instructed by the executive would have required him personally to carry out the work necessary for the defence of the claim. No doubt others would give assistance, such as secretarial, but the solicitor's work he would do himself. This seems to me to be a clear example of a contract personally to execute work. Oliver Loughran is the contracting party and he personally is to execute the work. The fact that he practises under the firm name of Oliver M. Loughran & Co. cannot stand in the way of his claim. Accordingly, in agreement with the Court of Appeal and Lord Slynn of Hadley, I would dismiss the appeal of the executive in the case of Mr. Loughran."[16]Lord Steyn agreed with the speech of Lord Slynn. Lord Lloyd held that the Tribunal's ruling that in each case the contract had to be made by the person who was personally to perform the work was correct, as was its finding in each case that it was the solicitor's firm which made the contract, and it was the designated solicitor not the firm which was to do the work - see page 842 A - 844G. Lord Clyde held that the contract was not one under which the appointee was personally to execute work, but only to make arrangements for its execution by a solicitor member of its business - see page 846 D - F.[17]Lord Clyde, however, acknowledged the correctness of the following proposition at page 845 E - 846 A:
"The language used to describe the third case" [that is to say a contract personally to execute any work or labour] " is language which has been used elsewhere in legislation and should presumably be taken to carry with it the interpretation which it receives in the other contexts in which it appears. In the context of the Equal Pay Act 1970 and the Sex Discrimination Act 1975 it was recognised in Quinnen v. Hovells [1984] I.C.R. 525, 531 that "
The concept of a contract for the engagement of personal work or labour lying outside the scope of a master-servant relationship is a wide and flexible one" and so extended to one who was self-employed. In Tanna v. Post Office [1981] I.C.R. 374 in the context of the Race Relations Act 1976 the work of a sub-postmaster was held not to fall within the definition of "employment," which was in the same terms as in the Act before us, because, while a sub-postmaster was required to provide premises and ensure that services were provided by the post office to the public, there was no provision requiring him to do anything personally. The appeal tribunal in its judgment said of the third head in the definition, at p. 377:
"It is a contract personally to execute any work or labour. That, it seems to us, quite plainly requires that the person entering into a contract shall himself be under an obligation personally to do work or labour. It may well be that some of what he undertakes to do he may delegate; but in our judgment it is essential, for there to be 'employment,' that the person making the contract shall himself undertake to do, at any rate some of the work or labour."
The critical part of the definition then relates to a contract with someone under which that person is to do at least some of the work himself. It may not be intended that he should do every bit of the work personally. But it is a contract which seeks to secure his particular individual participation as the principal and major contributor to its performance." He cited the example of a portrait painter at page 846 C - D:
"The engagement of a portrait painter personally to paint a portrait would fall within the definition even if it was contemplated that some minor work would be carried out by an assistant in his studio. The work need not be intended to be performed exclusively by the contracting party. But an arrangement with the painter that the portrait would be painted by one of the assistants would not be a contract with the painter personally to paint a portrait."
[18]From the speeches of the majority and of Lord Clyde on this point, the following conclusions can safely be drawn.(1) Employment under a contract personally to do or execute work is a wider concept than employment under a contract of service.(2) It can encompass self employment, including a person carrying on a business or profession on his own account.(3) While it is a necessary element of such employment that the person must do at least some of the work, indeed it must be the dominant purpose of the contract that he must do the work personally, performance of some of the work can be delegated. The findings made by the Employment Tribunal in paragraph 6 were therefore not decisive of the question "Was Mr Cowell an employee as defined in section 68(1)?"[19]The reliance on Express and Echo Publications Ltd -v- Tanton [1999] IRLR 367 was unsound because that case was decided, though the Court of Appeal did not expressly say so, under the Employment Rights Act 1996 which contains a narrower definition of employee and employment than section 68(1) in section 230(1) and (2): (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." Nor are Clark -v- Oxfordshire Health Authority [1998] IRLR 125 and Carmichael v National Power PLC [1999] ICR 1226 directly in point. Both were decisions on the identically worded statutory predecessor to section 230, section 153(1) of the Employment Protection (Consolidation) Act 1978 even though no express reference to section 153(1) was made in the speeches in Carmichael .[20]In her written submissions, Ms Higgins nonetheless submits that the statement of Sir Christopher Slade in Clark at paragraph 22 applies to the extended definition of employment in section 68(1). "In my judgment, two decisions of this court are authority, binding on us, for the proposition that no 'contract of employment' within the definition contained in s.153(1) of the 1978 Act (whether it be given the extra-statutory name 'global' or 'umbrella' or any other name) can exist in the absence of mutual obligations subsisting over the entire duration of the relevant period." That observation was approved by the House of Lords in Carmichael at page 1230 G - H, where Lord Irvine stated:
"If this appeal turned exclusively - and in my judgment it does not - on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the CEGB to provide casual work, nor on Mrs Leese and Mrs Carmichael to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service."
Ms Higgins submitted that the Employment Tribunal's findings in paragraph 18, applying that test of mutual obligation, were decisive of the issue.[21]On the facts found by the Employment Tribunal there was mutuality of obligation during the times that Mr Cowell was performing the work of delivering motorcycles and other minor tasks for the Respondent. He was obliged to deliver the motorcycles, which he agreed to deliver, and the Respondent was obliged to pay him for doing so. During the four week period of notice, which the Employment Tribunal held to be the relevant period, he did such work personally for the Respondent, on average we have calculated for eleven and a half hours a week. We have made that calculation on the basis of invoices contained in the Appeal and Employment Tribunal bundles and on the hourly rate stated to apply, £10 an hour, on behalf of the Respondent.[22]Therefore, applying the mutuality test, Mr Cowell and the Respondent were, for an average of eleven and a half hours at least per week, of the relevant time under mutual obligations to each other. In fact the obligations began before that work was performed. From the moment that Mr Cowell accepted the task of delivering motorcycles, usually we are told by telephone, he became under an obligation to deliver the motorcycles. That obligation endured until he had done so; the obligations of the Respondent began at the moment when he made the request. His obligation was to pay if the work was performed. It endured until Mr Cowell rendered his invoice and the obligation to pay was satisfied.[23]Applying the law as we hold it to be to the Employment Tribunal's findings of fact, Mr Cowell was therefore an employee, applying the statutory definition of employment in section 68(1) for at least a substantial portion of the relevant period. Even if the mutuality test is applied in its full rigour, it was, for substantial elements of that period, satisfied. Was the Employment Tribunal right to treat the whole of the period of notice as the relevant period? Ms Higgins accepted in written submissions to the Employment Tribunal that it was, applying the Employment Tribunal's own reasoning in paragraph 21 of its own decision in Stone v Whittley Parish Estate Agents and Valuers . "The DDA 1995 applies to omissions as much as it applies to acts and it seems to us there is a strong argument that there is a continuing omission by the employer after notice has been given until notice take effect at the date of the dismissal. The employer could at any time with the leave of the employee withdraw the notice. Failure to withdraw the notice, or to seek to withdraw the notice, could well be argued to be discriminatory act. When someone is dismissed it seems to us that the obvious date to take for the purposes of Section 7 is the date the dismissal takes effect. Up until that time the employee is employed, he has duties and obligations, as does the employer, and that whatever is happening in regard to the employee's work matters can be rectified up to and including that final date. What, we ask rhetorically, could be simpler?" The Tribunal, answering its own question held:
"It seems to us that this discrimination by reason of dismissal on notice is a continuing act over a period of time from the date notice is given until the date notice takes effect. If at any stage during that time the respondent company has more than 14 employees it cannot rely upon s.7 to avoid the provisions of the Statute."
[24]We find that reasoning compelling and hold that it accurately states the law on the point. Applying the law, as we understand it, to the Employment Tribunal's findings of fact, we therefore conclude that its reasoning and conclusions were flawed. Mr Cowell did contract to do work personally during the relevant period. The possibility, not in fact put into effect, that he could have delegated some of it to someone else did not prevent it from being such a contract. It is immaterial that he was self-employed and in business on his own account. He was within the definition of "employee", resulting from the application of the extended test in section 68(1) during the relevant period. He and the Respondent were under mutual obligations for significant parts at least of that period. The Respondent, therefore, had fifteen employees, including Mr Cowell for the purposes of the Disability Discrimination Act 1995 .[25]It follows that this application must be remitted to the Employment Tribunal to hear the claim on its merits. We therefore allow this appeal for the reasons given. We direct that it is remitted to the same Tribunal to continue to hear the case.