MacAlinden (t/a Charm Offensive) v Lazarov & Ors (Jurisdictional Points : Worker, employee or neither) [2014] UKEAT 0453_13_1710

EAT
MacAlinden (t/a Charm Offensive) v Lazarov & Ors (Jurisdictional Points : Worker, employee or neither)
[2014] UKEAT 0453_13_1710 · 2014-09-08
[53]“54. It is clear that the statute recognises that there will be workers who are not employees, but who do undertake to do work personally for another in circumstances in which that ‘other’ is neither a client nor customer of theirs – and thus that the definition of who is a ‘client’ or ‘customer’ cannot depend upon the fact that the contract is being made with someone who provides personal services but not as an employee. The distinction is not that between employee and independent contractor. The paradigm case falling within the proviso to 2(b) is that of a person working within one of the established professions: solicitor and client, barrister and client, accountant, architect etc. The paradigm case of a customer and someone working in a business undertaking of his own will perhaps be that of the customer of a shop and the shopowner, or of the customer of a tradesman such as a domestic plumber, cabinet maker or portrait painter who commercially markets services as such. Thus viewed, it seems plain that a focus upon whether the purported worker actively markets his services as an independent person to the world in general (a person who will thus have a client or customer) on the one hand, or whether he is recruited by the principal to work for that principal as an integral part of the principal's operations, will in most cases demonstrate on which side of the line a given person falls. ” 21. In Hospital Medical Group Ltd v Westwood [2012] IRLR 834 the Court of Appeal was concerned with a general practitioner who, as a separate activity, works for an organisation running clinics which provided cosmetic surgery procedures and non-surgical procedures. In that capacity the doctor agreed to provide his services exclusively to the organisation. He did not offer that service to the world in general and had been recruited to work as an integral part of its operations. It was held that he was a “worker”. Maurice Kay LJ said:[20]“ I do not consider that there is a single key with which to unlock the words of the statute in every case. On the other hand, I agree with Langstaff J that his ‘integration’ test will often be appropriate, as it is here. ” 22. In Bates van Winkelhof Lady Hale addressed an argument that subordination was a key ingredient of “worker” status. She said:[39]“ 39. I agree with Maurice Kay LJ that there is ‘not a single key to unlock the words of the statute in every case’. There can be no substitute for applying the words of the statute to the facts of the individual case. There will be cases where that is not easy to do. But in my view they are not solved by adding some mystery ingredient of ‘subordination’ to the concept of employee and worker. The experienced employment judges who have considered this problem have all recognised that there is no magic test other than the words of the statute themselves. As Elias J recognised in Redcats , a small business may be genuinely an independent business but be completely dependent upon and subordinate to the demands of a key customer (the position of those small factories making goods exclusively for the ‘St Michael’ brand in the past comes to mind). Equally, as Maurice Kay LJ recognised in Westwood , one may be a professional person with a high degree of autonomy as to how the work is performed and more than one string to one's bow, and still be so closely integrated into the other party's operation as to fall within the definition. As the case of the controlling shareholder in a company who is also employed as chief executive shows, one can effectively be one's own boss and still be a ‘worker’. While subordination may sometimes be an aid to distinguishing workers from other self-employed people, it is not a freestanding and universal characteristic of being a worker.” 23. To my mind the evidence before the Employment Judge raised a real issue as to whether the Claimants were carrying on a profession or business undertaking. 24. To illustrate this, I think it is helpful to set out a paragraph from the witness statement of Ms Ramakrishnan:
“2.2 I am a UK National who first came to the UK in 1996. After a short break in India, I came back to the UK again in 2003 and have lived here as a permanent resident and UK national. Prior to Pentecost, and following the finishing of my studies, I have worked professionally as an actor in a feature film (The DiVicenczo Cose), a few short films (Music Land World, How to Date..., Moving ON), in an episode of the TV show Fake Britain), commercials (118,) and a music video. I was working for a very few days on another project at the same [time] as Pentecost rehearsals. This was for the production, ‘BaBa Shakespeare’, but my part in the project came to an end very soon within a few days. I was paying my own tax and National Insurance.” 25. This description is strongly suggestive of a person who has embarked on a profession or business undertaking. She appears to be actively marketing her services as an independent person to the world in general rather than being recruited to work for any individual as an integral part of that individual’s operations. She was, no doubt, immersed in the Respondent’s play once she had been cast in it; but she was not integrated into the Respondent’s theatre production business. 26. The Employment Judge made no findings about the way in which the Claimants carried on their work as actors. He does not appear to have recognised that there was a potential issue in this respect. In my opinion there clearly was. It is no doubt true that some of the Claimants were just starting out on what they hoped would be acting careers. The question, however, still arises: upon what were they embarking? Was it a profession or business undertaking (or both); if they were actively marketing their services as an independent person to the world in general, picking up or attempting to pick up work where available from a variety of sources, this may be a powerful indication that they were not “workers”. 27. In my experience Employment Judges generally provide a statement of applicable principles by reference to relevant legislation and case-law rather than a textbook. This is a good discipline. It is usually the legislation and the leading cases which identify with most precision the legal principles which must be applied. Textbooks tend to be more discursive. Sometimes (as in Chief Constable of Lincolnshire Police v Caston UKEAT/0530/08) the textbook takes very much a line of its own. In this case the Employment Judge understandably chose a textbook which was particular to the kind of case he was considering – a national minimum wage case. However the textbook did not purport to be an exhaustive treatment of the question of “worker”: it specifically cross-referenced, for a more detailed treatment, to another textbook in the same series. In the result, the Employment Judge did not identify the statement of principle by Langstaff J in Cotswold . I think he missed the potential significance of the point. That he did so is also clear from his partial citation of the definition, omitting reference to “profession or business undertaking carried on by the individual” (an omission, I should make clear, which cannot be laid at the IDS handbook). 28. I have asked myself why it seemed so obvious to the Employment Judge that the Respondent was not a “client or customer”
. He may have thought that these were inappropriate words ever to describe the relationship between a film or theatre production company and an actor. It is true, I think, that the words “client” and “customer” would not usually be used in this way. But this is true in other areas: for example, a doctor may well be in independent practice, but one would not usually describe those whom he treats as his “clients” or “customers”: one would describe them as his patients. It is important to look at the definition as a whole and to understand its purpose within employment law as laid down by the cases. 29. For these reasons I conclude that the Employment Judge has not approached the question of worker status correctly and has not given sufficient reasons for his decision. The matter must be remitted for re-hearing. Whether to remit to the same, or to a different, Employment Judge is a discretionary decision for the Employment Appeal Tribunal, taken in accordance with criteria laid down in Sinclair Roche & Temperley v Heard [2004] IRLR 763 . In this case I consider that much the most satisfactory course is to remit the matter to be heard afresh. It would be unsatisfactory for the Employment Judge to attempt to recapture evidence received at a one-day hearing more than a year ago when he did not make findings upon it at the time. A one-day hearing will be necessary in any event: it is much better that it should start afresh. 30. There are four concluding points to mention. 31. Firstly, Mr Maggs did not take a Kumchyk v Derby City Council point: that is to say, he did not argue that the Respondent was unable to take this point on appeal because it had not been taken below. In my judgement he was quite right not to take such a point, and I would have rejected it if he had done so. There are some cases where a principle is so well-established that an Employment Tribunal might be expected to consider it as a matter of course: Langston v Cranfield University [1998] IRLR 172 . In a case concerned with worker status an Employment Tribunal ought always to consider whether one party is carrying on a profession or business undertaking in which the other is client or customer. 32. Secondly, cases which concern the question whether a particular activity amounts to a “profession” for other legal purposes will be of limited value. The “worker” definition is directed to distinguishing between the “intermediate class of workers” and those self-employed persons who are in business on their own account and undertake work for their clients or customers. These self-employed people may or may not be professional for other legislative purposes. 33. Thirdly, nothing turns in this appeal on the Employment Judge’s use of the language of mutual obligations. He was entitled to conclude that the Claimants contracted to perform their work personally for the Respondent. 34. Fourthly, I did not hear any substantial argument on this appeal concerning the contractual provision relating to sharing of profits. Mr Jennings suggested that the willingness of an actor to enter into such an arrangement might be indicative that he was carrying on a profession or business undertaking, but he put it no higher than that. I am inclined to think that he was right to take this approach, but I heard no sustained argument on the question and I express no concluded view upon it.