HER MAJESTY’S COMMISSIONERS FOR REVENUE & CUSTOMS v MRS N RINALDI-TRANTER [2007] UKEAT 0486_06_1309

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2007] UKEAT 0486_06_1309Case No Appeal No. UKEAT/0486/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
HER MAJESTY’S COMMISSIONERS FOR REVENUE & CUSTOMSAPPELLANTMRS N RINALDI-TRANTERRESPONDENT
Before
Mr Justice Bean Mr J Mallender Ms B SwitzerDate 23 January 2007
[1]APPEARANCES For the Appellant MR GERARD CLARKE (of Counsel) Instructed by: HM Revenue & Customs Solicitors Office East Wing Somerset House London WC2R 1LB For the Respondent MR JOHN O'FLAHERTY (of Counsel) (13 September 2007 only) Instructed by: Messrs Davenport Lyons Solicitors 30 Old Burlington Street London WIS 3NL MR ANDREW TRANTER (Representative) SUMMARY National Minimum Wage Whether a trainee hairdresser in the second year of a National Traineeship was entitled to the national minimum wage. THE HONOURABLE MR JUSTICE BEAN The issue in this appeal is whether a second-year trainee hairdresser was entitled to payment of the national minimum wage. The case comes before us on appeal from a decision dated 7 July 2006 of an Employment Tribunal sitting at Cardiff under the chairmanship of Dr Rachel Davies, setting aside in part an enforcement notice issued by the Revenue to the Respondent under section 19 of the National Minimum Wage Act 1998 .[2]The Tribunal set out the evidence which was before them with exemplary clarity, in the following terms:
"3. Mrs Rinaldi-Tranter operates a hairdressing business. In January 2002 the Lifelong Learning unit of Neath Port Talbot County Borough Council (NPTLFL) asked her if she would be willing to provide a training placement at her salon to an 18 year old trainee, Miss Emily Fuicher, and to pay her £50 a week. 4. NPTLFL holds contracts with Education and Learning Wales (ELWa), and other organizations, for the delivery of training programmes. These include NVQ training up to three levels, by which the trainee can receive practical work experience and on-the-job training, as well as having to attend classes provided by NPTLFL. Funding for the programme is provided by ELWa, which sets out the specifications to be followed by NPTLFL in delivering the training. 5. On 21 January 2002 Mrs Rinaldi-Tranter entered into a four-party Learning Agreement, made under Government arrangements, with NPTLFL, ELWa and Miss Fulcher. It set out the various commitments of each of the four parties. 6. Mrs Rinaldi-Tranter, described as the "
Employer", was committed "To employ the Learner (where appropriate) with effect from 21.1.02 to the completion of an agreed Individual Learning Plan. To provide….the experience, facilities and training necessary to achieve the objectives….specified in the Individual Learning Plan….To pay the Learner (where employed status) an agreed wage in accordance with the National Minimum Wage legislation….To comply with the Health and Safety Act 1974….To release the Learner for appropriate off-the-job training….To permit access to the Learner for assessment purposes. 7. Miss Fulcher, described as the "Learner", was committed "To be employed (where appropriate) and work for the Employer to the best of her ability…..To observe the Employer's terms and conditions of employment…..To promote and act in the Employer's best interests". Inserted by hand above "where appropriate" was the word "non-employed". 8. NPTLFL, described as the "Provider", was committed "To ensure training is delivered in accordance with the Modern Apprenticeship/National Traineeship Framework". 9. ELWa was committed "To ensure that the Provider delivers training which meets the criteria set out in the Modern Apprenticeship/National Traineeship Framework and the Learner's Individual Learning Plan". 10. In a final clause applicable to all parties, it was provided that "if the Employer is unable to employ/meet the terms of this agreement, all parties will use their best endeavours…to ensure that the Learner is given the opportunity to transfer to another company" 11. The significance of "to employ….(where appropriate)", and "employed (where appropriate)" with the insertion of "non-employed", was that under NPTLFL's training and apprenticeship programmes as specified by ELWa, learners who went in at level2 of the NVQ were "non-employed", whereas once they reached level 3 they had sufficient skills to be useful and became "employed" 12. Miss Fulcher was training as a Foundation Modern Apprentice at level 2 of the NVQ and so, according to the specifications set by ELWa and applied by NPTLFL, she was non-employed. 13. Under the Learning Agreement employed learners were to be paid the national minimum wage. There was no provision for non-employed learners to be paid anything. 14. In addition to the contract between NPTLFL and ELWa, and the four-party Learning Agreement, there was a Training Contract between NPTLFL as "Approved Trainer" and Mrs Rinaldi-Tranter as "Employer/Sponsor". 15. The Training Contract states "Where a young person is classified as a non-employed learner, the Sponsor is required to contribute a standard training allowance of £50 (subject to review). The Approved Trainer will pay learner allowance for periods of sickness up to 21 consecutive days….and annual holiday entitlement which is currently 24 days plus 8 statutory holidays." 16. Mrs Rinaldi-Tranter took on Miss Fulcher on the terms of the Learning Agreement and the Training Contract. The salon's hours were 9 to 5, Monday to Saturday, with an occasional half-day on Monday. Miss Fulcher worked those hours, but had Tuesdays off and an hour for lunch. Her total hours worked were therefore 35. At the start she was given simple tasks to do such as sweeping, washing hair, passing rollers and making coffee. In evidence she said "Mrs Rinaldi-Tranter told me to watch and learn which I did when doing my chores". 17. An Individual Learning Plan had been set for Miss Fulcher by NPTLFL, with nine units to complete. These included colouring, perming and neutralizing. Her evidence was that she observed the staff and was shown how to neutralize, to do trims, and at quiet times she was allowed to practise on a dummy, known as a "Sally head". On one occasion she did "extensions" for Mrs Rinaldi-Tranter. If she needed to know something she would ask one of the staff, and the staff as a whole provided her with any necessary guidance. A Training Adviser from NPTLFL reviewed her progress, and once a month she would attend a class in Neath where she was, shown various techniques. 18. On 4 April 2004 Miss Fulcher was informed by NPTLFL that she had qualified at Level two of the NVQ. Thereafter she was entitled to be treated as an employee. Mrs Rinaldi-Tranter could not afford to keep her on full-time, but offered her part-timework which she accepted. 19. On 17 May 2004 the National Minimum Wage Compliance Officer, Mrs Pauline Critchley, began examination of Mrs Rinaldi-Tranter's books to establish whether her employees were in receipt of the national minimum wage. Mrs Critchley understood Miss Fulcher to have been working a 40 hour week, and noted the £50 a week payment. Taking the view that she was a worker entitled to the protection 'of the National Minimum Wage Act, she made further enquiries. She concluded that having started at the age of 18, Miss Fulcher was entitled to the National Minimum Wage as from 21 January 2003, which was the beginning of the second year of her apprenticeship. The rate at that stage was £3.60 an hour. From 1 October 2003 it went up to £3.80. Mrs Critchley calculated an underpayment totalling £6028 for the period 20 January 2003 to 6 November 2005. 20. Needless to say, Mrs Rinaldi-Tranter was extremely shocked, having complied with the Training Contract between her and NPTLFL in paying the £50 a week training allowance. She made enquiries with Mr Jon Day, NPTLFL's Skills and 'Training Manager. On 7 July 2004 he wrote to a Mr Keith Stewart of the Inland Revenue, pointing out that application of the national minimum wage to people on training programmes contradicted the advice given by the Revenue in previous correspondence. 21. With his letter he enclosed a copy letter dated 26 November 1999 from Mr Stewart to a Mrs Slee at NPTLFL, stating that "A trainee of non-employed status will not be regarded as an employee or worker. This is because the underlying purpose ... is to enable the trainee to acquire certain skills and experience, rather than to establish a relationship of employer and employee. If the trainee has a 'training plan' and his/her activities remain within the terms of this training plan, then it is likely that the trainee will not be considered a worker." 22. Mr Stewart's evidence was that this constituted standard guidance issued in response to queries on the minimum wage. 23. NPTLFL understood that letter to reflect the true situation. They have always acted on that understanding when discussing placements with sponsors, including Mrs Rinaldi-Tranter. Currently they have about 74 non-employed NVQ trainees. If the minimum wage were to apply their organization could be severely affected and, if financially responsible, they would be liable for about £200,000. 24. On 4 January 2006 Mrs Critchley issued an enforcement notice against Mrs Rinaldi-Tranter for the payment of £6259.70 in respect of the' period 21 January 2003 to 6 November 2005. Mrs Rinaldi-Tranter accepts that the minimum wage applied from 5 April 2004 when Miss Fuicher began her part-time employment as a qualified hairdresser. She does not accept that she was liable prior to that date."[3]The National Minimum Wage Act 1998 provides by section 1(2) that a person qualifies for the national minimum wage if he is an individual who is a worker. The definition of a worker in section 54(3), so far as material, reads:
"An individual who has entered into or works under … (a) a contract of employment; or (b) any other contract, whether express or implied … oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract …" "
Contract of employment" in section 54(3) is a term defined by section 54(2) so as to include:
"A contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing."
[4]The National Minimum Wage Regulations 1999 , as they stood at the time that Miss Fulcher started work at the Respondent's salon in January 2002, provided by Regulation 12(2) (3) and (5), so far as material, as follows: 12 (2) "A worker who … (b) is employed under a contract of apprenticeship or, in accordance with paragraph (3), is to be treated as employed under a contract of apprenticeship, and (c) is within the first 12 months after the commencement of that employment or has not attained the age of 19, does not qualify for the national minimum wage in respect of work done for his employer under that contract. 12 (3) A person is to be treated for the purpose of paragraph (2)(b) as a worker who is employed under a contract of apprenticeship if, and only if, he is(a) a worker within the meaning given by section 54(3) of the Act and(b) engaged (i) in England or Wales under the Government arrangements known at 1 October 2000 as National Traineeships, Modern Apprenticeships, Foundation Modern Apprenticeships or Advanced Modern Apprenticeships. 12 (5) A person who is participating in a scheme, designed to provide him with training, work experience or temporary work or to assist him in seeking or obtaining work which is … (a) a scheme provided to him under Government arrangements that are not specified in paragraph (3)(b), [or] (b) a scheme provided to him under Government arrangements that are specified in paragraph (3)(b), unless the person is a worker within the meaning given by section 54(3) of the Act by virtue of his participation in the scheme … does not qualify for the national minimum wage in respect of work done for his employer as part of that scheme ..."[5]A number of changes have been made to Regulation 12. The complete exclusion from the minimum wage of workers under the age of 18 has been revoked. The requirement for Regulation 12(2) to operate that the worker concerned had not attained the age of 26 has likewise been revoked. A new paragraph 12(4A) has been inserted, excluding altogether from qualification for the national minimum wage people participating in government arrangements known in Wales as Skill Build and in England as Entry to Employment. Finally, reference to National Traineeships has been removed from Regulation 12(3)(b) and the categories of apprenticeship in the various constituent parts of the United Kingdom referred to in that paragraph have been changed.[6]The Employment Tribunal throughout its judgment referred to the arrangement under which Miss Fulcher worked at the salon as a Foundation Modern Apprenticeship. We think, having examined the documents, that this is incorrect and that the arrangement was a National Traineeship. Fortunately, on the text of the regulations as they stood in the period relevant to the present case, this was a distinction without a difference. If the same facts were to recur today, however, the distinction would be potentially significant.[7]Mr Gerard Clarke for HM Revenue and Customs and Mr John O'Flaherty for the Respondent were agreed that in the first year of her work at the salon, that is from 21 January 2002 to 21 January 2003, Miss Fulcher was excluded from the national minimum wage, even if she would otherwise have qualified, by Regulation 12(2)(b). It is also agreed between the parties that as from 5 April 2004 Miss Fulcher became an employee and was, as such, entitled to the national minimum wage. It is the middle period of a little over a year which is in dispute.[8]It is also agreed that the effect of Regulation 12(5) is that the critical question in the case is whether Miss Fulcher in the material period was a "worker". Mr Clarke's primary submission is that Miss Fulcher "undertook to do or perform personally work or services for another party to the contract" and thus fell squarely within section 54(3)(b). If he is right about that, it would become unnecessary to consider whether the arrangements also amounted to a contract of apprenticeship or other contract of employment within section 54(3)(a).[9]The Tribunal, in the sections of their judgment headed Issues and Conclusion, found as follows:31. The first question is whether Miss Fulcher, as a Foundation Modern Apprentice, worked under "a contract of employment" within the meaning of section 54(3) (a).32. The Learning Agreement itself was far too loose a document to establish a contract of employment. It was an agreement aimed at employed learners "where appropriate" and, where inserted by hand, "non-employed".33. Under it Miss Fulcher agreed to work "for" Mrs Rinaldi-Tranter. However, Mrs Rinaldi-Tranter was not required to pay her for any work done. She was only required "to provide experience, facilities and training". Nor were the other two parties required under the Learning Agreement to ensure that Miss Fulcher was paid. Despite use of the description "employer" it is clear that the true purpose of the agreement and the intention of all four parties to it, was not that Miss Fulcher should be employed in her work placement, but that she would be there to learn in her capacity as a Foundation Modern Apprentice.34. The Learning Agreement, was what it claimed to be - an agreement and nothing more. It lacked the mutuality of obligation essential to establish an employment contract, namely the obligations to perform work and to provide paid work, and so did not achieve employment contract status as between Miss Fulcher and Mrs Rinaldi-Tranter. We find that Miss Fulcher did riot work under an express or written contract of employment.35. The next question is whether Miss Fulcher worked under "any other contract" express or implied whereby she undertook "to do or perform personally any work or services for" Mrs Rinaldi-Tranter within the meaning of Section 54(3)(b). In deciding this issue we consider the circumstances as a whole, including the Training Contract, to establish what was the reality of the situation.36. Mr Clarke for the respondents cited Flett v Matheson [2006] IRLR 281 in which the Court of Appeal held that a modern tripartite apprenticeship arrangement can constitute a common law contract of apprenticeship which imposes obligations on the employer.37. That is not the issue here. This is not a common law issue and it is not disputed that Mrs Rinaldi-Tranter did have some obligations towards Miss Fulcher, namely to let her use her facilities etc. The issue is whether those obligations together with all the other circumstances of the case, sufficed to establish an implied contract whereby she "undertook to do or perform personally any work or service" for the business.38. However, Flett is of assistance to us. At page 282 Lord Justice Pill states, "If….the appellant was receiving less than the national minimum wage, it points to the agreement being one of apprenticeship". The implication to be drawn from that statement is that receipt of less than the minimum wage can be consistent with apprenticeship.39. Mr Clarke submitted that there was an implied contract establishing worker status in that Miss Fulcher was obliged to perform her work personally, was subject to the control of Mrs Rinaldi-Tranter, was fully integrated into the workforce, and was paid what he called "wages".40. It is accepted that Miss Fulcher was obliged to perform her work personally. However, that is as consistent with a Learner situation as it is with a worker situation. It would be absurd to suggest that training could be achieved by substitution for the Learner.41. Also it is accepted that in her day-to-day activities in the workplace Miss Fulcher was subject to control by Mrs Rinaldi-Tranter, in that she was required to attend punctually and do what she was told. That however was not the full extent of the control over Miss Fulcher. Overall control lay with NPTLFL who not only provided both Mrs Rinaldi-Tranter and Miss Fulcher with instructions on following the individual Learning Plan, but who could also remove Miss Fulcher if she was unhappy with the placement or if they were dissatisfied with the training she was receiving42. It is not accepted that Miss Fulcher was fully integrated into the workforce. Not only did she differ from staff in that she had to be shown how to perform hairdressing skills, was released for training once a month and was visited by her assessor and monitored, but also her evidence was that she chose not to sit with the staff when she had her lunch. The fact that she was required to be punctual and obey instructions, and was protected by the same health and safety requirements as staff, was consistent with Learner status and did not suffice to establish integration into the workforce.43. Nor is it accepted that Miss Fulcher was paid "wages".44. The £50 a week was paid in performance of Mrs Rinaldi-Tranter's obligation to pay a training allowance under the Training Contract to which Miss Fulcher was not a party. Mrs Rinaldi-Tranter had no contractual obligation to Miss Fulcher to pay her the money. The obligation was to NPTLFL.45. The money came out of Mrs Rinaldi-Tranter's own pocket and was not reimbursed to her, and no doubt the parties to the Training Contract intended that the payment should reflect the fact that she did receive some benefit from the duties performed by Miss Fulcher despite the corresponding burden of supervision - otherwise it could have been paid by NPTLFL or ELWa, or in the form of benefit.46. That however does not suffice to establish mutuality of obligation as between Mrs Rinaldi-Tranter and Miss Fulcher for the provision of labour in return for paid work. Had there been a failure to pay, Miss Fulcher's recourse would have been against NPTLFL who would have either required Mrs Rinaldi-Tranter to perform her obligation to them, or would have removed Miss Fulcher from the placement.47. There was nothing in the evidence to suggest that the £50 was anything other than a genuine training allowance paid in accordance with Mrs Rinaldi-Tranter's obligation to NPTLFL under the Training Contract in recognition that, while learning, Miss Fulcher was also able to be of some use within the limits of her unskilled capabilities.48. There was no dispute that Miss Fulcher's functions at Mrs Rinaldi-Tranter's premises did include doing work "for" her as part of her training. However, the objective of the four-party arrangement was not to provide her with work, but to provide her with work experience. The way in which she was to gain that experience was through being allowed by Mrs Rinaldi-Tranter to attend at her premises, to observe her staff, to learn from that observation, to receive guidance, to use the facilities and equipment, and to put whatever skills she acquired into practice by working.49. Miss Fulcher said she had no training from Mrs Rinaldi-Tranter personally. She said it was the staff who showed her what to do.50. That is immaterial. She had the benefit of supervision and guidance by staff provided by Mrs Rinaldi-Tranter, the use of her equipment on which to practise, and her premises in which to operate; and it was Mrs Rinaldi-Tranter who provided the placement in which she was to acquire the necessary experience in which to qualify as a hairdresser.51. Miss Fulcher also said in evidence that she received no training at all and that everything she learned was from her day release sessions and studying at home. That assertion is rejected. It was in total contradiction to her evidence that "I was told to watch and learn, which I did"; that staff showed her what to do; and that she was allowed to practise.52. The reality of the situation was. that the intention of all four parties to the Learning Agreement, and the purpose of Miss Fulcher's attendance at Mrs Rinaldi-Tranter's premises, was that she should learn by observation, guidance and experience, and that such work as she did "for" Mrs Rinaldi-Tranter "was done as part of a training scheme" within the meaning of Regulation 12(5). The' evidence was that had she not been there to learn she would not have been there at all. The qualified hairdressers would have done their own sweeping up etc. Miss Fulcher could not have worked as a hairdresser till she qualified at NVQ 2. We have no doubt whatsoever that any hairdressing tasks that she performed were by way of training and that the object of giving her mundane tasks to perform was more to keep her occupied rather than to benefit the business. We are satisfied that she made little or no financial contribution to the business and that almost all of the benefit was to herself.53. Mr Clarke submitted that in considering the Regulations, we should bear in mind that that they had a social purpose, namely to avoid the exploitation of cheap labour, and that in order to achieve that purpose" we should make a finding of "worker".54. The submission is rejected. The Regulations do have a social purpose, but it does not include the exploitation of those who are generous enough to tolerate an unskilled individual who is at least initially, of little use to them. The four-party Learning Agreement, made under Government arrangements also has a social purpose, namely to give young people opportunities they might otherwise never have, to learn and achieve the necessary skills to enable them to find a job. A finding of "worker" in the circumstances which applied in this case could deprive unskilled young people of those opportunities, in that the learning scheme could well collapse due to the reluctance of businesses to provide placements.55. Having regard to the above findings our conclusion is that the reality of the situation was not that Miss Fulcher worked under a contract whereby she undertook "to do or perform personally work or services for " Mrs Rinaldi-Tranter. The reality was that she worked under a Learning Agreement whereby she undertook to learn through the experience of working, for her own benefit rather than to benefit the business, at a placement provided to her by Mrs Rinaldi-Tranter.56. Accordingly, we find that up until 4 April 2004 Miss Fulcher did not satisfy the definition of "worker" in section 54(3).57. With regard to Mr Stewart's letter of 26 November 1999 we note that Miss Fulcher was a trainee of non-employed status. She had a training plan and her activities remained within its terms. We are satisfied that the guidance expressed by Mr Stewart in his letter, and the recognition that the underlying purpose of the arrangement was to enable the trainee to acquire skills and experience rather than an employer/employee relationship, was correct.[10]Mr Clarke relies on the following findings of fact by the Tribunal:
"Paragraph 16 At the start Miss Fulcher was given simple tasks to do such as sweeping, washing hair, passing rollers and making coffee. Paragraph 33 Under it (the Learning Agreement) Miss Fulcher agreed to work 'for' Mrs Rinaldi-Tranter. Paragraph 40 It is accepted that Miss Fulcher was obliged to perform her work personally. Paragraph 41 It is accepted that in her day-to-day activities in the workplace Miss Fulcher was subject to control by Mrs Rinaldi-Tranter in that she was required to attend punctually and do what she was told." (The Tribunal went on to find that overall control lay with NPTLFL, that is the Council, who could remove Miss Fulcher if she or they were dissatisfied with what was going on; but Mr Clarke argues that is irrelevant.) "
Paragraph 45 The money which Miss Fulcher was paid, £50 a week, came out of Mrs Rinaldi-Tranter's own pocket and was not reimbursed to her and no doubt the parties to the training contract intended that the payment should reflect the fact that she did receive some benefit from the duties performed by Miss Fulcher despite the corresponding burden of supervision. Paragraph 48 There was no dispute that Miss Fulcher's functions at Mrs Rinaldi-Tranter's premises did include doing work 'for' her as part of her training." (We shall come later to the qualification of that which the Tribunal made in paragraph 52 when we come to Mr O'Flaherty's submissions.)[11]In the light of these findings of fact in particular, Mr Clarke submits that the Tribunal's conclusion in paragraph 55 that the reality of the situation was not that Miss Fulcher worked under a contract whereby she undertook to "do or perform personally work or services" for Mrs Rinaldi-Tranter is logically unsustainable and the appeal must therefore be allowed.[12]Mr O'Flaherty submits firstly that the Learning Agreement lacked the mutuality of obligation necessary to amount to a contract of employment or indeed to satisfy the terms of section 54. The Tribunal found expressly at paragraph 34 that the Learning Agreement lacked the mutuality of obligation essential to establish an employment contract, namely the obligations to perform work and to provide paid work. This may well be correct if the question being considered was whether the relationship amounted to a contract of employment; but under the Learning Agreement Miss Fulcher was promising to perform, and did in fact perform, some work personally for the salon, and the findings of fact which we have recited expressly say so. Section 54(3)(b) of the Act does not focus on obligations of the employer.[13]In any event, the Learning Agreement does impose obligations on the employer as well as on the trainee. Mr O'Flaherty also draws attention to the absence of any obligation in the Learning Agreement for training to be paid but Mrs Rinaldi-Tranter did undertake, in a separate agreement between herself and the Council, to make payments to the trainee and did in fact pay Miss Fulcher direct. As with the mutuality of obligation point more broadly, we do not consider that section 54(3)(b) requires that there should be an express obligation, in a contract to which both the employer and the trainee are parties, for the employer to pay wages or salary to the trainee.[14]Mr O'Flaherty drew our attention to an observation in the case of Byrne Bros (Formwork) Ltd v Baird [2002] IRLR 96, a decision of this Appeal Tribunal presided over by Mr Recorder Underhill QC (now Underhill J), where the EAT accepted that mutuality of obligation is a necessary element in what they called a limb (b) contract, that is limb (b) of the definition of worker, as well as in a contract of employment. This is no doubt correct. As the EAT went on to say in the Byrne Bros case:
"The basis of the requirement of mutuality is not peculiar to contracts of employment. It arises as part of the general law of contract."
In other words, if there is no mutuality of obligation at all there is no contract. But here it is clear, even taking the Learning Agreement on its own, let alone taking it in conjunction with the training contract between the Council and the employer, that there were obligations imposed both on Miss Fulcher and on Mrs Rinaldi-Tranter.[15]This leads us to Mr O'Flaherty's next point, which is that the Tribunal found in paragraph 52 that any hairdressing tasks that Miss Fulcher performed were by way of training and that the object of giving her mundane tasks to perform was more to "keep her occupied" rather than to benefit the business.[16]This distinction between work done to keep the trainee occupied and work done for the benefit of the business is not the way in which the Act draws the distinction between workers and non-workers. The question is whether the trainee performs work for the employer. As Mr Clarke was inclined to concede in his skeleton argument, if all that a trainee does is to observe what others do, that may well not amount to performing work for the benefit of the business. Perhaps if matters went no further than making cups of coffee or tea for the rest of the staff that might be de minimis : it is unnecessary to decide that in this case. Plainly on the Tribunal's findings, Miss Fulcher's activities went beyond such de minimis activities. It may well be that the experienced staff could have done their own sweeping up and could have washed customers' hair themselves but it is obvious that having the sweeping up and the washing of customers' hair done by a trainee saved the experienced staff some time. The regulations do not require nor even permit a calculation of whether, having regard to the time and any money expended on the trainee on the one hand, and the time of experienced and paid staff saved on the other, the business makes a profit out of the trainee or not.[17]We do consider that it is significant that the regulations draw a distinction, where one is considering an apprenticeship or traineeship of a type listed in Regulation 12(3)(b), between the first year and subsequent years. The first year in an apprenticeship or traineeship of this kind is excluded altogether from the national minimum wage. That does not mean to say that every second-year apprenticeship, or in 2002 and 2003 National Traineeship under government arrangements, makes the apprentice or trainee ipso facto a worker; but it does suggest a judgement by the maker of the regulations that the value of a trainee to the business increases as time goes on.[18]Mr O'Flaherty understandably lays emphasis on the finding as to what the object of giving Miss Fulcher mundane tasks to perform was (more to keep her occupied than to benefit the business) but it is not the question that has to be answered under the regulations. The question is whether work was performed for the business. We are satisfied it was; that therefore Miss Fulcher was a worker within section 54(3)(b); and that accordingly, once the first year exemption granted by Regulation 12(2) ceased to apply, she was entitled to the national minimum wage on that ground.[19]We therefore need not decide whether this was a contract of apprenticeship within section 54(2) and section 54(3)(a). Counsel drew our attention in that context to the decision of the Court of Appeal in Flett v Matheson [2006] ICR 673 where at paragraph 33 Lord Justice Pill observed that a modern tripartite apprentice arrangement can constitute a common law contract of apprenticeship. Like the Court of Appeal in Cable and Wireless v Muscat [2006] ICR 975 , we find it hard to imagine a case in which a worker would be found to have no recognised status at all, whether employed or self-employed; but trainees are difficult to classify, and we do not think it appropriate to come to a conclusion on this issue.[20]We observe, finally, that Mrs Rinaldi-Tranter has every reason to feel aggrieved by the outcome of this litigation. She was wrongly advised by Neath Port Talbot Council's Lifelong Learning Unit, who in turn had been wrongly advised by a compliance officer of the Inland Revenue, (as they then were) in 1999, although it is fair to that officer to say that his advice was that it was "likely" rather than that it was certain that a trainee of non-employment status would not be considered a worker for the purposes of national minimum wage legislation. It is not for us to decide in this case whether Mrs Rinaldi-Tranter has any kind of remedy elsewhere but we do have a good deal of sympathy with the situation in which she finds herself. The appeal, however, must be allowed.