MR D J ASTBURY v GIST LTD [2007] UKEAT 0619_06_2803

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2007] UKEAT 0619_06_2803Case No Appeal No. UKEAT/0619/06Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR D J ASTBURYAPPELLANTGIST LTDRESPONDENT
Before
His Honour Judge Peter Clark Mr R Lyons Mr J C ShirgleyDate 28 March 2007
[1]APPEARANCES For the Appellant MR D J ASTBURY (The Appellant in Person) For the Respondent MR PAUL GILROY (One of Her Majesty's Counsel) Instructed by: Messrs Halliwell Landau St James's Court Brown Street Manchester M2 2JF SUMMARY Contract of Employment – Definition of employee Triangular relationship – whether employment agency acted as agent for end-user in entering into a contract of service between worker and end-user. Held; not. HIS HONOUR JUDGE PETER CLARK This is an appeal by Mr Astbury, the Claimant, before the Shrewsbury Employment Tribunal, against the reserved Judgment of an Employment Tribunal chaired by Mr G H Prichard, promulgated with Reasons on 26 June 2006, declaring that he was not employed by the Respondent, Gist Ltd, under a contract of service, so that the Employment Tribunal had no jurisdiction to entertain his complaint of statutory unfair dismissal.[2]The case involves the now familiar triangular relationship of worker, employment agency, and end-user or client. Whilst each case differs on its facts, and this case has some unusual factual features to which we shall return, the recent spate of cases before Employment Tribunals and this Employment Appeal Tribunal stem from the Court of Appeal Judgments in Dacas v Brook Street Bureau (UK) Ltd [2004] IRLR 358 (particularly those of Mummery and Sedley LJJ; Munby J disagreed on the relevant aspect of that case), foreshadowed in the Judgment of Mummery LJ in Franks v Reuters Ltd [2003] IRLR 423 , and further considered in Cable and Wireless plc v Muscat [2006] IRLR 354 . Those cases raise the possibility of an implied contract of service between worker and end-user and, relevant also to the present case, the prospect of the employment agency not simply acting as agent for the worker in finding him work with the end-user, but as agent for the end-user to create a contract of employment between worker and end-user (see Mummery LJ in Dacas , para 52).[3]These concepts not only raise difficult contractual issues, as identified by Elias P in James v Greenwich Council (UKEAT 6/06. 18 December 2006) and Bean J in Craigie v London Borough of Haringey (UKEAT 0556/06. 12 January 2007) but, I venture to suggest, a potential inconsistency with the intention of Parliament reflected in current employment legislation; an aspect which does not appear to have been considered in any of those cases. We have raised the point in the present case with Mr Astbury, who, although representing himself, has plainly conducted some research into the topic, and Mr Gilroy QC, for the Respondent. It is right to say that the point took Mr Astbury by surprise; accordingly, whilst raising the matter for further consideration, we do not base our decision in this particular case on the legislative framework. Procedural History[4]The case has had a long and chequered history. The Claimant commenced work at the Respondent's warehouse in Crewe, dedicated to distributing food products to Marks and Spencer stores, on 11 September 2001. He continued working at that site until his services were terminated on 28 June 2004 in circumstances to which we shall return.[5]Whilst still working, he presented his first ET1 to the Employment Tribunal on 14 November 2003 (the first claim). It was a claim for breach of contract, directed against Gist only.[6]The nature of the case was that he had not been provided with work by Gist, in breach of his contract of employment with that company, and had thereby lost wages which he would have earned. That claim was met with a Notice of Appearance raising two preliminary issues (the claim being brought under the 1994 Extension of Jurisdiction Order for breach of contract):(1) Was the Claimant an employee of Gist? Section s3(2) of the Employment Tribunals Act 1996 limits claims under the 1994 Order to claims for beach of a contract of employment or other contract connected with employment; and(2) Had the 'employment ended'; by Article 3(c) such a claim for breach of contract could only be pursued following termination of the employee's employment, see Capek v Lincolnshire County Council [2000] IRLR 590.[7]Mr Astbury dealt with the second objection by applying to amend his ET1 to substitute a claim of unlawful deductions from wages, contrary to Part II of the Employment Rights Act 1996 , for that of breach of contract. We pause to observe that(a) such a claim may be brought during employment, and(b) that claim is not limited to 'employees' as defined in s230(1) ERA, but is extended also to 'workers' as defined in s230(3) ERA (see the various references to 'worker' in Part II). Permission to make that amendment was granted by the Employment Tribunal on 2 January 2004.[8]On 24 March 2004 an Employment Tribunal sitting at Shrewsbury (the first Employment Tribunal) heard a preliminary issue in the complaint of unlawful deductions, namely, whether he was an employee of Gist. Notably, Mr Astbury eschewed any argument based on his 'worker' status; he ran his case then, and has done since, solely on the basis that he was Gist's employee.[9]The Employment Tribunal rejected that argument. They held that he was not an employee of Gist. Thus, his claim for unlawful deductions failed. The first Employment Tribunal's decision and Reasons were promulgated on 22 April 2004.[10]Against that decision he lodged a Notice of Appeal to the Employment Appeal Tribunal on 7 May 2004. His work at Gist's Crewe site ended, to use a neutral expression, on 28 June 2004 and on 23 August 2004 he lodged his second claim at the Employment Tribunal, this time complaining of unfair dismissal by Gist. He there contended, in terms, that he was employed by Gist under an implied contract of employment. Those proceedings were stayed, pending determination of Mr Astbury's appeal against the first Employment Tribunal decision.[11]That appeal was heard by a division presided over by HHJ Richardson on 3 December 2004. Judgment was reserved and delivered on 14 April 2005. The appeal was allowed on three grounds:(1) the Employment Tribunal wrongly drew a distinction between employment status for the purposes of a claim under Part II ERA, and one brought under Part X, Chapter 1: the right not to be unfairly dismissed. Plainly, no distinction can be drawn; the meaning of employment under s230 ERA is the same for all claims justiciable by employees;(2) the Employment Tribunal had not dealt properly with the question of agency. It was and remains the Claimant's case that Pertemps had acted as agent for Gist in creating a contract of employment between Gist and the Claimant; and(3) the Employment Tribunal had not carried out a careful fact-finding exercise in connection with the Claimant's case that there was to be implied a contract of employment between himself and Gist. The case was remitted to a fresh Employment Tribunal for rehearing.[12]Mr Astbury then sought the permission of the Court of Appeal to appeal against the Employment Appeal Tribunal's decision to remit the case for rehearing. He sought an order that the matter be determined in his favour without remission. Maurice Kay LJ refused to grant permission at an oral hearing held on 18 July 2005.[13]The Employment Appeal Tribunal, in its Judgment, had recommended that Pertemps be added as a party to the proceedings. On 23 July 2005, Mr Astbury wrote to the Employment Tribunal indicating that he did not wish to join Pertemps; then, on 26 July, he changed his mind and applied to have them joined as second Respondent. Permission was granted; Pertemps entered a response on 6 September. Then, at a case management discussion held on 27 October, Mr Astbury changed his mind yet again. He did not want Pertemps as a party, so they were removed. That said, the Prichard Tribunal heard a good deal of evidence from Pertemps' representatives at the hearing held on 8-10 May 2006.[14]The Prichard Tribunal, by their Judgment, dismissed the unlawful deductions claim by consent and held, so far as the unfair dismissal claim was concerned, that Mr Astbury was not an employee of Gist.[15]Against that Judgment he appealed for a second time; initially, HHJ Serota QC ruled, under the Employment Appeal Tribunal Rules 1993, rule 3(7), that the appeal raised no reasonably arguable point of law. Mr Astbury lodged fresh Grounds of Appeal under rule 3(8); that was similarly rejected by HHJ Ansell. He then exercised his right to an oral hearing under rule 3(10). That application came before me on 29 November 2006. The Claimant was then represented by Mr Richard O'Dair of Counsel. Of the five grounds of appeal then before the Court, Mr O'Dair abandoned the last three, and concentrated on the first two grounds, (a) and (b), which themselves raised three points:(1) the agency point,(2) the implied contract point, and(3) the issue of control over the Claimant's work exercised by Gist.[16]Those points were developed in Mr O'Dair's skeleton argument dated 23 November 2006 and in oral submissions before me. On the basis of those submissions, I directed that grounds (a) and (b) proceed to a full hearing, that is, the hearing before this division. Statutory Framework[17]In Dacas , Sedley LJ stated (para 71) that the conclusion of the Employment Tribunal, that Mrs Dacas was employed by nobody, is simply not credible. We pause to observe that in the present case the Prichard Tribunal found that this Claimant was employed by Pertemps, a finding with which he disagrees, but we shall return to that challenge later. His Lordship went further; although the end-user in that case, Wandsworth Council, was not a Respondent to Mrs Dacas's appeal (but directed by the Court to attend the Court of Appeal hearing), he expressed the view (para 77) that, on the facts found by the Employment Tribunal (she had worked at the Council's premises as a cleaner for some four years) on the question as to whether she was employed by Wandsworth under an implied contract of employment, it was doubtful whether there was more than one answer, namely, that by the date of her dismissal she was an employee of Wandsworth with a statutory right not to be unfairly dismissed.[18]With great respect, those propositions do not sit comfortably with the structure of the employment protection legislation. The key, within ERA, lies in s230, which provides:
"230 Employees, workers etc (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 (3) In this Act "worker" (except in the phrases "shop worker" and "betting 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. (4) In this Act "employer", in relation to an employee or a worker, means the person by whom the employee or worker is (or, where the employment has ceased, was) employed. (5) In this Act "employment"— (a) in relation to an employee, means (except for the purposes of section 171) employment under a contract of employment, and (b) in relation to a worker, means employment under his contract; and "employed" shall be construed accordingly. (6) This section has effect subject to sections 43K and 47B(3); and for the purposes of Part XIII so far as relating to Part IVA or section 47B, "worker", "worker's contract" and, in relation to a worker, "employer", "employment" and "employed" have the extended meaning given by 43K."
[19]The rights given by the Act are dependent on the status of the individual Claimant. Three degrees of status are identified:(1) Employees; that is, those employed by the employer under a contract of employment. A contract of employment means a contract of service (or apprenticeship). In Dacas (para 16) Mummery LJ drew attention to the fact that, under s230(2), a contract of service may be express or implied. He thought that had been overlooked. We acknowledge that a contract of service may be express (oral or in writing) or implied; it may arise from the relationship between the parties with nothing having been said. Claims for unfair dismissal and breach of contract, among others, may only be brought by employees.(2) Workers; this extended definition covers both employees (s230(3)(a)) and those engaged under what, for present purposes, may loosely be called a contract for services. Thus, workers under the extended definition (s230(3)(b)) may, for example, bring a claim of unlawful deduction under Part II ERA, but may not bring a claim of unfair dismissal or for breach of contract.(3) Section 230(6) 'whistleblowers'; it is this third category which, we think, demonstrates the answer to the proposition that it is inconceivable that Mrs Dacas could be employed by nobody.[20]It is the position that the race, sex and disability discrimination statutes render unlawful acts of discrimination suffered by contract workers at the hand of end-users with whom they are placed by an employment agency. Thus, for example, s7(1) of the Race Relations Act 1976 protects contract workers who are employed not by the end-user but by the agency which supplies them.[21]The regime applicable to 'whistleblowers' neatly demonstrates the distinction between 'employees' and individuals of different status in the context of ERA protection.[22]Section 48(1A) ERA provides that a worker may present a complaint to an Employment Tribunal that he has been subjected to a detriment in contravention of s47B, that is, on the ground that he has made a protected disclosure (s47B(1). However, s47B(2) provides that the section does not apply where:
"(a) the worker is an employee, and (b) the detriment in question amounts to dismissal (within the meaning of [Part X])."
[23]Returning to s230(6), s43K provides an extended meaning of 'worker' for the purposes of Part IVA (action short of dismissal on protected disclosure grounds). Section 43K(1)(a) and (b) include certain types of contract worker.[24]Thus, those contract workers, having no employment with the end-user, are protected from detrimental treatment by him on grounds of having made one or more protected disclosures.[25]Contrast the position of those contract workers' rights under Part IVA with the 'whistleblower' who wishes to complain of unfair dismissal, the individual identified at s47B(2). He must bring his claim under s103A, contained within Part X, ERA.[26]By s103A:
"An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure."
That claim for automatic unfair dismissal is thus reserved for employees only, not workers in the extended sense of s230(3)(b), those engaged under a contract for services, nor especially those falling within the further extended definition in s230(6), contract workers.[27]It therefore seems to me, looking at the statutory framework, that had Parliament wished to give protection to contract workers who blow the whistle on the end-user with whom they are placed, and as a result their services are terminated, it would have been open to it to include such workers under s103A protection. However, that is limited to employees. Interestingly, as Mr Gilroy pointed out during argument, the position of Police officers is specifically dealt with in s43KA. They are to be treated as employed under a contract of employment for the purposes of whistleblower protection, both against action short of dismissal and dismissal itself. In particular, they are deemed to be employees for the purpose of s103A.[28]Similarly, if Parliament had intended Mrs Dacas to enjoy ordinary unfair dismissal protection against Wandsworth, it could have extended that protection to contract workers. It has not yet done so. It may in future, but that will require a change in the legislation.[29]Meanwhile, it is not for the Courts to pre-empt such a policy change, balancing the need for flexibility in the workforce with the aim of proper protection for workers. The Facts[30]Gist's warehouse at Crewe, one of six nationwide, is dedicated to the entire distribution of food products to Marks and Spencer stores. Most of the product is chilled fresh, with a short shelf life. Consequently, demand for warehouse staff fluctuates according to the season.[31]Accordingly, at the Crewe site, Gist employ core staff numbering about 385, from management down. The varying need for additional workers is achieved through a commercial contract made between BOC Group PLC (to which Gist is an associated company) and Pertemps. Unusually, under that Agreement, Pertemps have a dedicated management team on site, including an on-site co-ordinator who has certain specified duties listed at Clause 3. Pertemps provide the additional labour required from time to time, receiving a mark-up on the hourly rate paid to 'their' workers working on site.[32]Pertemps enter into written Agreements with individuals, such as Mr Astbury, who are placed at the Crewe site. Headed 'Terms of Engagement for Temporary Workers', Mr Astbury signed his Agreement on 11 September 2001.

(a) and (b) are important:

"(a) The Terms herein constitute a contract for services between the Employment Business [Pertemps], acting as agent for the Client [Gist] and the Temporary Worker [the Claimant] and they govern each and every assignment undertaken by the Temporary Worker. However no contract shall exist between the Employment Business [Pertemps] and the Temporary Worker [the Claimant] 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." (Class 1 National Insurance Contributions and income tax, pursuant to s134 of the Income and Corporation Taxes Act 1988 and any other statutory deductions). Clause 7 provides: "(d) To comply with any disciplinary rules or obligations in force at the premises where the services are performed to the extent that they are reasonable; (e) To comply with all reasonable instructions and requests within the agreed services made either by the Employment Business or the Client;"
[33]On 30 October 2001, Pertemps entered into a further written agreement with Mr Astbury, headed '30 hour Week Fixed Term Assignment' (the FTA). It provided:
"1) You will be rostered for a minimum of 5 shifts per week working on a 5 from 7 basis, which will equate to a 30hr working week (paid 28 hrs). 2) Your shift start and finish times will be flexible and arranged by BOC and Pertemps. It is your responsibility to check your start times on a daily basis. 3) You must be prepared to be flexible for up to 8 extra hours per week, in accordance to the needs of the business; this may include Saturday/Sunday. 4) When overtime is required you are expected to take up a reasonable amount of overtime when asked, again in accordance to the needs of the business, this may include Saturday / Sunday work. 5) Should you cancel/ Fail to attend, or become sick for one of your shifts you may see a reduction in the hours of work you receive in that week. 6) Conduct on FTA: c) Not to engage in any conduct detrimental to the interests of either Pertemps or BOC. d) To take all reasonable steps to safeguard his/her safety and the safety of any other person who may be affected by his/ her actions at work. Should any of the points listed or those within the Terms of Engagement be contravened then this would result in the termination of the 'Fixed Term Assignment'. 7) Statutory Leave: As laid out in the Terms of Engagement. 8) If you leave site before the shift has finished you will only be paid for the hours you have. See point 5 for 'repeated occasions'. 9) Criteria: All FTA's must adhere to the standards required on an ongoing basis. Failure to do this could result in the normal disciplinary channels being followed. (Copy of standards required attached). 10) You must give at least days notice should you wish to cancel one of your allocated shifts."
[34]Mr Astbury initially commenced work at the Crewe site on 12 September 2001, and then worked under the terms of the FTA from 5 November 2001 until his removal by Pertemps from the site, at the request of Gist, on 28 June 2004. During that period he applied three times, unsuccessfully, to Gist for a permanent position. The Employment Tribunal Decision[35]The Employment Tribunal reached the following conclusions:(1) Based particularly on the terms of the FTA, there was a contract of service between the Claimant and Pertemps. Pertemps exercised the necessary control; there were mutuality of obligations: Pertemps to provide regular work, the Claimant to perform it for fixed remuneration.(2) There was no contract between Gist and the Claimant. In particular (Reasons, para 44), the contract of service entered into by Pertemps with the Claimant was made as principal, not as agent, for Gist. Clause 2(b) of the FTA expressly excluded the possibility of Pertemps entering into such a contract as agent for Gist. In any event, there was no contract of service between Gist and the Claimant; control was exercised by Pertemps, not Gist. The Appeal[36]Over its lifetime, Mr Astbury's case has altered. We do not say that in any way critically; he has adapted to the developing case-law as he understands it. His position in this appeal before us may be summarised in this way. Initially, from 12 September 2001, he was employed by Gist under an implied contract of service. From 5 November 2001 he was employed by Gist under an express contract (the FTA) made with Pertemps as agent for Gist. Gist exercised sufficient control to render that contract a contract of service.[37]Thus, the critical issue for us to decide in the first instance is whether Pertemps acted as Gist's agent in making what the Employment Tribunal found to be a contract of service (the FTA) with the Claimant.[38]The first dispute between Mr Astbury and Mr Gilroy is whether the FTA represented a wholly new agreement, replacing the temporary Worker Agreement, as Mr Astbury submitted, or a variation to the original Temporary Worker Agreement, as Mr Gilroy contended.[39]As a matter of construction, we accept Mr Gilroy's submission. The key lies in clause 7 of the FTA:
"Statutory leave: As laid out in the Terms of Engagement."
It seems clear to us that the general terms of engagement as between Pertemps and the Claimant are those set out in the Temporary Worker Agreement. That was not a contract of service between Pertemps and Mr Astbury (see the actual decision in Dacas ). However, Pertemps agreed a variation to those terms in the form of the FTA. They may not have intended to create a contract of service, but that was the proper interpretation of the new agreement, applying the well-established test flowing from the Judgment of McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 .[40]That conclusion is important, because it undermines Mr Astbury's case that Pertemps acted as agent for Gist in entering into the contract of service. True it is that, at Clause 2(a) of the Temporary Worker Agreement, Pertemps hold themselves out as agent both for the client, Gist, and the Temporary worker, the Claimant, but at clause 2(b) they expressly state that they are not authorised to enter into a contract of employment between client and temporary worker. The possibility of Pertemps acting as agent for Gist in entering into a contract of service with the Claimant, raised by Mummery LJ in Dacas (para 52) cannot arise on the facts of the present case, since such a finding would conflict with the express representation at Clause 2(b); to imply authority in these circumstances would offend the principle stated by the Court of Appeal both in Express & Echo v Tanton [1999] ICR 693 , and in Stevedoring v Fuller [2001] IRLR 627 .[41]It follows that it is unnecessary to consider(a) whether there was an implied contract of service between Gist and the Claimant prior to 5 November 2001; his sole claim is for ordinary unfair dismissal and he is not able to show any contract between himself and Gist during the one year preceding termination on 28 June 2004, or(b) whether Gist exercised sufficient control to render any such contract a contract of service.[42]In these circumstances, we shall dismiss this appeal.