MR DAVID ASTBURY v GIST LTD [2005] UKEAT 0446_04_1404

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2005] UKEAT 0446_04_1404Case No Appeal No. UKEAT/0446/04Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR DAVID ASTBURYAPPELLANTGIST LTDRESPONDENT
Before
His Honour Judge Richardson Mr C Edwards Mr T HaywoodDate 14 April 2005
[1]APPEARANCES For the Appellant MR D ASTBURY (The Appellant in person) For the Respondent MR P GILROY (of Counsel) Instructed by: Messrs Halliwell Landau Solicitors St James' Court Brown Street Manchester M2 2JF HIS HONOUR JUDGE RICHARDSON This is an appeal by Mr David Astbury against a Decision of the Employment Tribunal sitting in Shrewsbury entered in the Register on 22 April 2004. Mr Astbury claimed that he was an employee of Gist Ltd ("Gist") and that they had made unlawful deductions from his wages. The Tribunal rejected his claim that he was an employee of Gist. He appeals against that Decision.[2]For the purposes of Part II of the Employment Rights Act 1996 it would have been sufficient for Mr Astbury to establish that he was a worker: see section 13(1), 23(1). However it has always been his case, both before the Tribunal and in this appeal, that he was an employee of Gist. The question whether he was an employee of Gist is also relevant to an unfair dismissal claim which (we are told) Mr Astbury has made against Gist. That unfair dismissal claim is stayed pending the outcome of this appeal. Triangular relationships[3]The arrangements under which Mr Astbury worked with Gist were triangular. Adopting terms used in the recent decision of the Court of Appeal in Dacas v Brook Street Bureau [2004] ICR 1437 , Mr Astbury was the worker, Gist was the end-user, and also involved was an employment agency, Pertemps Ltd ("Pertemps"). At issue in the proceedings before the Tribunal was whether Mr Astbury was an employee of Gist (as he said) or of Pertemps (as the Tribunal concluded) or of neither.[4]These triangular relationships create substantial problems of legal analysis which are of practical importance. If, as the end user usually contends, the worker is not its employee, then the worker may have limited recourse in law to the entity which makes daily use of his services. He will have no right of unfair dismissal; there may be important ramifications in other areas of law, such as tort liability, insurance and health and safety. On the other hand, some businesses have fluctuating needs for labour which can be managed by the use of specialist employment agencies and temporary labour. These problems of legal analysis and practical injustice were discussed at length in Dacas , which was reported very shortly before the Tribunal's hearing. The Tribunal and the parties were grappling with its implications.[5]Before we turn to the detail of the appeal, we have some general observations arising out of the Tribunal's Decision.[6]Firstly, there is in paragraph 20 of the Tribunal Decision some suggestion that the Tribunal thought Mr Astbury might have been employed by Gist for the purposes of an unfair dismissal claim. They say:
"…there may have been, had this been a case of unfair dismissal, considerable force in the applicant's submission that he was employed by the respondent."
[7]The right not to be unfairly dismissed is conferred by Part X of the Employment Rights Act 1996 upon an employee: see section 94(1). An employee means an individual who works under a contract of employment, ie a contract of service or apprenticeship: see section 230(1) and (2). The right not to suffer unauthorised deductions from wages is conferred by section 13 of the 1996 Act upon a "worker". The definition of "worker" is wider than the definition of "employee": see section 230(3). But this wider definition includes those who work under a contract of employment: see section 230(3)(a). There can be no question, in our judgment, of a person being an employee for the purposes of Part X, but not for the purposes of Part I. The contrary suggestion in paragraph 20 of the Decision is incorrect. Whether a person is an employee, as defined in section 230 of the Employment Rights Act 1996 , cannot vary depending on the remedy he seeks.[8]Secondly, we note that the Tribunal derived, from Dacas v Brook Street Bureau , three propositions, which it expressed as follows(i) the requirement for a contract of employment to be based upon the fundamental bedrock of mutuality of obligation and control remains;(ii) in the triangular relationship of worker, agency and end-user, the worker may have a contract with either (i) the end-user or, (2) the agency or, (3) the agency and the end-user jointly exercising the functions of an employer;(iii) the tribunal will fall into error if it does not consider whether an implied or "deduced" contract of employment has come into existence between the worker and the end-user .[9]With these propositions we agree, but we would add the following. There is guidance in Dacas for tribunals on the importance of making careful findings of fact before reaching conclusions about the legal analysis of the triangular relationship.[10]We quote paragraph 52 of the judgment of Mummery LJ, adopting, however, standard nomenclature for the names of the parties:
"…in ascertaining the overall legal effect of the triangular arrangements on the status of [the worker] , the Employment Tribunal should not focus so intently on the express terms of the written contracts entered into by [the agency] with [the worker] and [the end-user] … in respect of the work actually done by her exclusively for [the end-user] at its premises and under its control…. The formal written contracts between [the worker] and [the agency] and between [the agency] and [the end-user] relating to the work to be done by her for [the end-user] may not tell the whole of the story about the legal relationships affecting the work situation. They do not, as a matter of law, necessarily preclude the implication of a contract of service between [the worker] and [the end-user]. There may be evidence of a pattern of regular mutual contact of a transactional character between [the worker] and [the end-user] , from which a contract of service may be implied by the tribunal. I see no insuperable objection in law to a combination of transactions in the triangular arrangements, embracing an express contract for services between [the employee] and [the agency] , an express contract between [the agency] and [the end-user] and an implied contract of service between [the worker] and [the end-user] , with [the agency] acting in certain agreed respects as an agent for [the worker] and as an agent for [the end-user] under the terms of the express written agreements."
[11]Further, at paragraph 68 of his judgment, Mummery LJ said:
"… in future cases of this kind the Employment Tribunal should, in my judgment, at least consider the possibility of an implied contract of service. The result of the consideration will depend on the evidence in the case about the relationship between the [worker] and the end-user and how that fits into the other triangular arrangements. In general, it would be surprising if, in a case like this, the end-user did not have powers of control or direction over such a person in such a working environment. The end-user is the ultimate paymaster. The arrangements were set up and operated on the basis that the end-user was paying the agency. What was the [end-user] paying for, if not for the work done by [the worker] under its direction and for its benefit?"
[12]What Mummery LJ calls "a pattern of regular mutual contact of a transactional character" will not be found in the contractual documents. It will be found by examining carefully what has taken place in practice between the parties.[13]Thirdly, while the Court of Appeal in Dacas v Brook Street Bureau unanimously allowed the agency's appeal against the Employment Appeal Tribunal's finding that Mrs Dacas was an employee of the agency, there is a divergence of view as to the question whether there might have been an implied contract of employment between Mrs Dacas and the end-user (the Council). Both Mummery LJ and Sedley LJ considered that this was a permissible result, depending upon the facts which the Tribunal found. Indeed, Sedley LJ thought the inference that Mrs Dacas was an employee of the Council was inexorable: see paragraph 77. Munby J, however, regarded the analysis of Elias J in Stephenson v Delphi Diesel Systems Ltd [2003] ICR 471 at 478-479 as likely to be determinative of the general run of triangular cases: see Munby J at paragraph 94.[14]The middle ground between these two positions was occupied by Mummery LJ. He addressed Stephenson v Delphi Diesel Systems Ltd in his judgment at paragraphs 59-61. In paragraph 61 of his judgment he again emphasised that the question whether there was a contractual obligation between the end-user and the worker depended on findings of fact as to what actually went on between the worker and the end-user while the worker worked for the end-user on the end-user's premises.[15]Finally, we wish to address one matter of practice. A recurrent problem in the cases concerning triangular relationships has been that cases have been heard, and decisions taken, in circumstances which did not bind one of the three parties, and often where there was no evidence or argument from one of the three parties. In Dacas v Brook Street Bureau in the Court of Appeal the end-user was not bound by the result (though argument was heard on appeal from the end-user). In other cases it has been the employment agency which has not been bound by the result. This unsatisfactory state of affairs renders the process of taking a decision in a triangular case all the more difficult and perilous. In this case, Pertemps was not a party to the proceedings before the Tribunal; it has been held to be Mr Asbury's employer but is not bound by the result.[16]When the legal consequences of these triangular relationships have to be determined, it is, in our judgment, highly desirable that all three parties should be involved. There are usually means by which this can be achieved. If the worker knows that there will be an issue as to the legal position of the different sides of the triangle, it may be appropriate for him to claim against both in the alternative. It will generally be reasonable for him to do so. Moreover, we draw attention to the Tribunal's power under rule 10(2)(k) of the Employment Tribunal Rules of Procedure (Schedule 1 to the Employment Tribunals (Constitution and Rules of Procedure) Regulations) 2004 ). The tribunal may order that any person who the chairman or tribunal considers may be liable for the remedy claimed should be made a respondent in the proceedings. The power to add a respondent has always been available as part of the tribunal's general powers to regulate their own procedure: see Cocking v Sandhurst (Stationers) Ltd [1974] ICR 650. September 2001[17]On 11 September Mr Asbury started work as a picker for Gist at their premises in Crewe. He entered into an agreement with Pertemps. This Agreement is headed "Terms of Engagement for Temporary Workers".[18]Clause 2 is headed "The Terms of the Contract for Services". It reads, in part:
"The Temporary Worker hereby appoints the Employment Business to act on his behalf in arranging assignments with Clients. The Employment Business does not charge a fee for providing its introductory service to the Temporary Worker. a) The Terms herein constitute a contract for services between the Employment Business, acting as agent for the Client and the Temporary Worker and they govern each and every assignment undertaken by the Temporary Worker. However no contract shall exist between the Employment Business and the Temporary Worker between assignments. b) For avoidance of doubt, these Terms shall not give rise to a contract of employment between the Client or the Employment Business and the Temporary Worker. The Temporary Worker is engaged as a self-employed worker, although the Employment Business is required to make statutory deductions from his remuneration in accordance with clause 4."
Clause 2(a) describes Pertemps as "agent for the Client". By clause 1, the "Client" is defined as the "person, firm or corporate body engaging the services of the Temporary Worker. Clause 4 similarly provides that Pertemps will pay the temporary worker remuneration "on behalf of the client".[19]The Terms of Engagement do not promise that Pertemps will obtain assignments for the temporary worker: see clause 3. There are provisions for statutory leave, indicating that Pertemps acknowledges the application of the Working Time Regulations 1998 , hence that the temporary worker is a "worker" for the purpose of those Regulations . There are provisions for termination, conduct on assignments and timesheets. We need not set these provisions out in full. October 2001[20]It was not Mr Astbury's case that he became an employee in September. His case was that he became an employee when he was placed on "fixed term assignment" at Gist's Crewe premises, later in the year. The Tribunal found that Pertemps introduced this new form of agreement because Gist were becoming concerned that there was little continuity in the workers being provided by Pertemps, and there were concerns about the quality of work of those supplied.[21]Mr Astbury received a letter dated 29 October, which reads as follows:
"We are pleased to be able to inform you that you have been recommended for a "
Fixed Term Assignment" with Pertemps Group Limited at BOCDS, Crewe. This will take effect from Monday 5 th November 2001 onwards, working on a Monday to Friday and Tuesday to Saturday rotational basis, although there will be occasions, due to the needs of the business, when you will be required to work at the weekends. Enclosed is your Assignment details and Terms of Engagement, these should be signed and the originals kept by yourself and the photocopies, returned to the Pertemps office."[22]Attached to this letter, which Mr Astbury signed, was a document entitled "30 hour Week Fixed Term Assignment". This document provided that Mr Astbury would be rostered for a minimum of five shifts per week, working on a five from seven basis, which would equate to a 30 hour working week. Shift start and finish times were to be flexible and to be arranged by BOC (effectively Gist) and Pertemps. Mr Astbury was to "be prepared to be flexible for up to 8 extra hours per week" in accordance with the needs of the business; this might include Saturday or Sunday. When overtime was required, he was expected to take up a reasonable amount of overtime when asked, again in accordance with the needs of the business, and again including, if necessary, Saturday/Sunday work. There was a provision for "statutory leave"; this was to be "As laid out in the Terms of Engagement". Although there is no finding by the Tribunal, we think this must mean the September Terms of Engagement.[23]Also attached to the letter dated 29 October was a document entitled "Criteria for Fixed Term Assignment". This particularly applied to line-picking work. It seems clear from this document (although the Tribunal make no findings about it) that in practice Mr Astbury was responsible to Gist's Shift Manager for the work he did, and was required to have the Shift Manager's permission before leaving site.[24]In the course of the hearing before us, we enquired in what sense the assignment by Pertemps was "Fixed Term". Pertemps, of course, were not represented before us. On behalf of Gist it was suggested that it might be a fixed term assignment in the sense that there was a fixed 30 hour minimum working week. But it seems to us that the assignment was not "Fixed Term" in any normally recognised sense of those words.[25]The Tribunal's findings contain very little detail as to the relationship between Mr Astbury and Gist Ltd. There are no findings at all about the manner in which Mr Astbury did his work, and the way his work was controlled. It would appear from the documents to which we have referred, that Mr Astbury was under the effective control of a shift manager once he arrived at work. It seems highly improbable that Pertemps employees were expected to direct or control the manner in which he did his work. It seems far more probable, as a matter of contract, that Gist Ltd had the power to control the manner in which Mr Astbury did his work; or possibly that such control could be exercised by both. We, however, in the Appeal Tribunal are not in a position to find facts.[26]There are no facts found by the Tribunal as to the hours which Mr Astbury actually worked. He did, however, produce a schedule of hours worked, which the Tribunal marked as exhibit A3. The Tribunal said that there was little factual dispute between the parties; it is unclear whether the Tribunal accepted the hours set out in this documents, although we think they probably did. If this schedule is correct, Mr Astbury (unless he was ill or on holiday) almost invariably worked a six-day week from Monday to Saturday. He generally worked more than 45 hours per week; often 48, occasionally more. If this schedule is right, he did not work a "Monday to Friday and Tuesday to Saturday rotational basis", as the letter dated 29 October 2001 would suggest. Rather he worked a steady Monday to Saturday throughout the period. Mr Astbury's case indeed was that the rotational basis never came into effect, that his normal days of work became Monday to Saturday, and that he was entitled to work and be paid for shifts on those days. The Tribunal make no findings as to how, in practice, it came about that the rotational basis never applied, and Mr Astbury worked the long hours he did.[27]The relatively short findings of fact made by the Tribunal concentrate on the responsibilities of Pertemps. The Tribunal find that Pertemps had an on-site coordinator, permanently present, who would work out rosters for what the Tribunal describes as "temporary workers". The Tribunal found that the on-site coordinator was responsible for checking start, finish and meal breaks for agency staff, which were taken at different times from permanent employees. The Tribunal found that agency staff were disciplined on occasion by Gist, and were told where to work by Gist, although the on-site coordinator had a responsibility for disciplining them and allocating their place of work. It seems from these findings that Pertemps was to a significant extent "embedded" within Gist's organisation, on Gist's own site. The Tribunal's Decision[28]In order to succeed in his claim, Mr Astbury did not have to prove that he was Gist's employee. It would have been enough to prove that he was a "worker" for Gist. But his case at the Tribunal (and on appeal) was that he was Gist's employee. He put his case in two main ways. Firstly, he submitted that Pertemps were agents for Gist. Secondly, he submitted that there was an implied contract between Gist and himself of the kind contemplated by Dacas v Brook Street Bureau .[29]The Tribunal reject the agency argument in paragraph 13 of its Decision. The Tribunal said:
"In our view this approach is misconceived. The agreement specifically provides that this is not the case. Whilst it is for us to look at the reality of the situation and decide whether or not as between the applicant and the respondent there was an employment contract, to do so on this basis would mean ignoring the express terms of the contract which in our view we cannot do."
[30]As to implied contract, the Tribunal concluded in paragraph 18:
"It appears to us that in reality control of the applicant was shared between Pertemps and the respondent and that the respondent exercised sufficient control for that test to have been met. As against the respondent it is not, however, in our view possible to discern any mutuality of obligation. The "30 hour week fixed term assignment" was not matched by any agreement between Pertemps and the respondent. On any given day or week the respondent had no obligation to offer work either to Pertemps or to any of its workers and was not involved in the selection of those to whom work would be offered."
[31]Mr Astbury's case was that Gist was in breach of contract by failing to provide him with work on a particular Thursday in September 2003, and then on subsequent Mondays. The Tribunal, in case its conclusion on the question of employment was wrong, went on to consider whether Gist was in breach of contract. The Tribunal understood Mr Astbury's case to be that his entitlement to work on particular days derived from Pertemps' letter dated 29 October 2001. This letter, the Tribunal concluded, could not be imported into any agreement between Mr Astbury and Gist. They point out correctly (although they have made no findings about this in any other place in the Decision) that the shift pattern was not adhered to. Submissions[32]Mr Astbury provided detailed written submissions for us. We will not summarise them here. To the forefront of his case before the Appeal Tribunal he put his submission based on Dacas v Brook Street Bureau that there was an implied contract of employment between Gist and himself. In his preparation for the Tribunal hearing, he had relied to a greater extent on an argument that Pertemps were agents for Gist. Both aspects of the case were dealt with before the Tribunal, and it is indeed virtually impossible to separate them. On behalf of Gist, Mr Gilroy submitted that the Tribunal did, as Dacas v Brook Street Bureau required, consider the question of implied contract. Having considered the question in accordance with Dacas , the Tribunal reached a conclusion which was both open to it and correct. Our conclusions[33]We sympathise with the Tribunal, which had to grapple with the implications of Dacas v Brook Street Bureau shortly after it was decided, and which had skilled advocacy only on behalf of Gist, and no participation at all from Pertemps. But in our judgment the Tribunal had erred in law in two respects and – most fundamentally – has not carried out the careful factual assessment which will be required before reaching the conclusion whether or not there is an implied contract of employment between worker and end-user.[34]Firstly, as we have already said, the Tribunal erred in law in supposing there might be a difference in Mr Astbury's status as an employee depending on whether his claim was for unpaid wages (as it was here) or for unfair dismissal. No distinction exists. The Tribunal thought that there might be "considerable force" in Mr Astbury's submission that he was employed by Gist if it had been dealing with a case of unfair dismissal. If that is so, then there was "considerable force" in the submission for all purposes. But it is not possible to detect in the Tribunal's Decision what features led them to say there was considerable force in Mr Astbury's submission that he was employed by Gist.[35]Secondly, we do not think the Tribunal dealt correctly with the question of agency in paragraph 13 of its Decision. Whether, in and after October, Pertemps acted as Gist's agent is a question of fact. It is not and cannot be concluded by the terms of the original contract in September. As Mummery LJ said in Dacas (paragraph 52, quote already in this judgment) the express contract for services between the worker and the agency does not preclude and implied contract of employment between the worker and the end-user. The agency may in certain agreed respects act as agent for one party or the other in respect of this implied contract.[36]Although the September Terms of Engagement cannot be conclusive on this question, they do contain assertions by Pertemps that they indeed acted as agents for Gist. Moreover, as we have already said, there are indications that Pertemps were effectively "embedded" in Gist's organisation. It seems virtually certain that for some purposes Pertemps did act as the agents of Gist. We think the Tribunal's concentration on the terms of the September agreement may have deflected it from making the detailed findings of fact which were required.[37]This leads us to our third reason for allowing the appeal. As we have said, considering the question of whether there was an implied contract of employment between end-user and worker will involve a careful factual investigation. The intensity of this investigation will no doubt vary with the circumstances. Where, as here, the contractual documentation relates to a 30 hour per week "Fixed Term Assignment", but the reality on the ground is that the worker works a six-day week, working 40 hours plus, over an extended period of time, we think a tribunal ought to make careful findings of fact as to how this has occurred. There are no such findings.[38]Although the Tribunal went on to find that Gist was not in breach of any contract, in our judgment its finding on this question is inextricably bound up with the question whether there was a contract of employment with Gist, and if so what it terms were. If there was a contract of employment between Mr Astbury and Gist, it is difficult to see how Gist could have refused to pay him for the Thursday shift, which was his first complaint. As to Monday working, once granted a contractual relationship between Gist and Mr Astbury through the agency of Pertemps, it is difficult to see why a claim should not have succeeded in respect of at least one of the Mondays. It was Mr Astbury's case, set out in his Notice of Appearance, that by the time in question his normal working week had become a six-day week: whether to imply the existence of such a term from the practical arrangements made between the parties is a matter for the Tribunal to consider.[39]For these reasons we allow the appeal and remit the matter to the Tribunal for reconsideration in accordance with this judgment. Given that careful findings of fact are necessary, and we think for this purpose that it would probably be desirable to hear fresh evidence, we consider that the interests of justice are best served by remitting the matter to a fresh tribunal.[40]Each party invited us, if the our decision was adverse, to grant permission to appeal. Our Decision is adverse to Gist. We refuse permission to appeal. In the light of Dacas v Brook Street Bureau we do not think an appeal has reasonable prospects of success. We appreciate, and have summarised above, the differences of approach found in the different judgments of the Court of Appeal in that case; but we do not consider that anything in those differences of approach renders an appeal arguable in this case.[41]Accordingly the appeal is allowed, and the matter remitted to be considered by a fresh tribunal. We have mentioned that we understand there to be a linked unfair dismissal complaint by Mr Astbury against Gist which has been stayed pending the hearing of this appeal. We think the Tribunal and the parties would do well to give thought to case management of the two claims before embarking on the remitted hearing. We raise for consideration(a) whether and to what extent the two claims should be heard together and(b) whether Pertemps can or should be joined to either of them. On this last question we express no concluded view, although we have already pointed out the general desirability of determining triangular relationships in circumstances where all three parties are joined to the hearing and bound by the result.