England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE No EATRF 96/0815/B

IN THE COURT OF APPEAL (CIVIL DIVISION) EATRF 96/0816/B

ON APPEAL FROM ORDER OF THE EATRF 96/0817/B

Royal Courts of Justice

Strand

London WC2

Thursday, 17th July 1997

B e f o r e:

THE VICE-CHANCELLOR

LORD JUSTICE WAITE

LORD JUSTICE WARD

ELMI

- v -

HARRODS LTD and Another

HARRODS LTD

- v -

REMICK

HARRODS LTD

- v -

SEELEY

(Handed down judgment prepared by

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

PROFESSOR B HEPPLE QC and MR PAUL GOULDING (Instructed by Legal Department, Harrods Ltd, London) appeared on behalf of the Appellant

MISS LAURA COX QC and MR MARTIN WESTGATE and MISS SANDHYA DREW (Instructed by Commission for Racial Equality of London) appeared on behalf of the Respondents

J U D G M E N T

(As Approved by the Court )

(Crown Copyright)

VICE-CHANCELLOR:-

This is an appeal from the judgment of the Employment Appeal Tribunal given on 18 May 1996 on a point of construction of section 7 of the Race Relations Act 1976. The appellant is Harrods Ltd. There are three respondents, Mrs Elmi, Mrs Seeley and Mrs Remick, each of whom had made a complaint to an Industrial Tribunal of unlawful racial discrimination by Harrods.

None of the three ladies has ever been or has applied to be an employee of Harrods. Their respective complaints arise out of the manner in which Harrods organised the sale of goods at its well known Knightsbridge store and exercises its power to control the individuals who staff the Selling Departments in the store.

Put very shortly, the system in operation at Harrods store is this. Harrods grants licences under which the licensee becomes responsible for a particular Department at which its, the licensee’s, goods will be sold. The licensee must provide the sales force at the Department in question. The members of the sales force will be the licensee’s employees, hired and remunerated by the licensee. Each member of the sales force must, however, be approved by Harrods and must observe Harrods’ rules regarding dress, deportment and behaviour. He or she must wear a Harrods uniform and will be indistinguishable to the public eye from Harrods’ employees. Harrods may withdraw its approval of any such individual at any time. The goods on sale at the Department, although provided by the licensee, are sold by the licensee to Harrods immediately before their sale to the public .

The price at which this somewhat artificial sale by the licensee to Harrods takes place will be the price at which the goods are sold to the public less a percentage. The percentage will constitute Harrods’ commission. These contractual arrangements have the result that the members of the sales force, each of whom will necessarily have been approved by Harrods, will be employees of the licensee but will be selling to the public goods that belong at the moment of sale to Harrods, not to the licensee.

Mrs Remick

Mrs Remick, who is black, was employed by Shaeffer Pens (UK) Ltd. She was recruited and employed to work in the Harrods Pen Department of which her employer, Shaeffer Pens, was the licensee. She was duly approved by Harrods and commenced work in August 1993. In April 1994 Harrods withdrew their approval of her. She was considered to have failed to adhere to the Harrods’ dress code but no details of her alleged failure were given to her. As a consequence of her loss of Harrods’ approval she was given notice by Shaeffer Pens and lost her job.

She complained to the Industrial Tribunal of unlawful discrimination by Harrods.

Mrs Seeley

Mrs Seeley was employed by Brigade International Ltd in March 1992 in order to work in Harrods’ Cosmetics Department of which Brigade is a licensee. She received Harrods’ approval and commenced work at the store in April 1992. She is of Asian origin and has, since the age of seven, worn a nose-ring. In July 1992 she was told by Harrods that her approval would be withdrawn unless she removed her nose-ring. She did not do so and in November 1992 Harrods’ approval of her was withdrawn. As a consequence she lost her job with Brigade.

She complained to the Industrial Tribunal of unlawful discrimination. She complained also of unlawful discrimination by her employer, Brigade.

In the cases brought by Mrs Remick and Mrs Seeley, the Industrial Tribunal was asked to decide, as a preliminary point, whether a case against Harrods of unlawful discrimination was capable of being brought under section 7. The cases came before differently constituted Industrial Tribunals. In each case the Industrial Tribunal held that, assuming unlawful discrimination by Harrods could be established, a case could be brought under section 7. Harrods appealed to the Employment Appeal Tribunal against that ruling.

Mrs Elmi

Mrs Elmi’s case is somewhat different on the facts and took a different procedural course.

Moyses Stevens Ltd have a licence from Harrods in the Florists Department. In January 1993, they advertised a vacancy for staff to work at Harrods on Saturdays. Mrs Elmi, who is black, applied for the vacancy. She was first interviewed by Moyses Stevens and then sent to Harrods for approval. Harrods withheld approval from her so she did not obtain the employment with Moyses Stevens for which she had applied.

She complained to the Industrial Tribunal of unlawful discrimination both by Harrods and by Moyses Stevens. Her case was heard in full and on 10 April 1995 the Industrial Tribunal gave its Extended Reasons. It found, in her favour, that in withholding store approval from her Harrods had treated her “less favourably on account of her race” (para. 38 of the Extended Reasons), but nonetheless it dismissed her complaint against each respondent. In her case against Harrods no reliance at all had been placed on section 7. Instead, it had been argued on her behalf that a case against Harrods on an agency basis could be established i.e., that Moyses Stevens, in refusing her application for employment, were acting as agents for Harrods. Alternatively it was argued that Harrods could be treated as an employment agency so as to bring the case within section 14 of the Act. The Industrial Tribunal rejected both these alternatives and consequently dismissed the case against Harrods. As to Moyses Stevens, the Industrial Tribunal held that Harrods’ discriminatory conduct could not be regarded as tainting Moyses Stevens’ decision not to employ Mrs Elmi.

Mrs Elmi appealed to the Employment Appeal Tribunal against the Industrial Tribunal’s dismissal of her case against Harrods. In the Notice of Appeal the agency contentions were repeated. But, in the alternative, reliance was placed on section 7 of the 1976 Act.

The Employment Appeal Tribunal allowed the section 7 point to be taken on Mrs Elmi’s behalf notwithstanding that it had not been taken below.

In the event, therefore, each of the three appeals raised the question whether, on the footing that Harrods had unlawfully discriminated against the complainants, the case could be brought under section 7. In Mrs Elmi’s case, the fact of discrimination had been established. In Mrs Seeley’s case and Mrs Remick’s case, the facts had not yet been determined. The three appeals were heard together.

The Employment Appeal Tribunal dismissed Harrods’ appeal and allowed Mrs Elmi’s appeal. They held in Mrs Seeley’s case and Mrs Remick’s case that the Industrial Tribunal had come to a correct conclusion on the preliminary point. In Mrs Elmi’s case, the Employment Appeal Tribunal upheld the Industrial Tribunal’s conclusion that there was no agency relationship between Harrods and Moyses Stevens and that Harrods was not an employment agency. Those contentions have not been persisted in before us and have now only the historical relevance of explaining why it was that Mrs Elmi failed against Harrods before the Industrial Tribunal. On the section 7 point, the Employment Appeal Tribunal held that section 7 covered her case. Harrods has appealed. The only point at issue is whether section 7 of the 1976 Act can apply to the allegations of unlawful discrimination made by the three complainants against Harrods.

Section 7 provides as follows:-

“(1) This section applies to any work for a person (´the principal’) which is available for doing by individuals (´contract workers’) who are employed not by the principal himself but by another person who supplies them under a contract made with the principal.

(2) It is unlawful for the principal, in relation to work to which this section applies, to discriminate against a contract worker -

.....

(b) by not allowing him to do it or continue to do it.

...”.

I need not set out the rest of section 7. The issue whether section 7 applies to the respective cases of Mrs Seeley, Mrs Remick and Mrs Elmi against Harrods raises the following questions:-

(i) Is the work done by individuals in the position of Mrs Seeley, Mrs Remick and Mrs Elmi at the Harrods’ Departments “work done for [Harrods]” for section 7 purposes?

(ii) Are individuals such as Mrs Seeley, Mrs Remick and Mrs Elmi persons each of whom the respective employer “supplies ... under a contract made with [Harrods]”?

Each of these questions depends to some extent on the terms of the contractual arrangements between Harrods and the employer, or prospective employer, of each of the three ladies. In the case of Mrs Remick’s employer, Shaeffer Pens (UK) Ltd, there does not seem to have been a written contract with Harrods. The papers relating to Mrs Seeley’s case include, however, a sample contract between Harrods and a “Licensee”. This sample contract was, I imagine, intended to indicate the nature of the contractual arrangement between Harrods and Mrs Seeley’s employer, Brigade International Ltd. In the case of Mrs Elmi there is a contract dated 23 October 1992 signed on behalf of Harrods and Moyses Stevens Ltd. This signed contract sets out with precision the contractual arrangements between Harrods and Moyses Stevens. It is reasonable to regard it as constituting also a reliable indication of the nature of the contractual arrangements between Harrods and Shaeffer Pens and between Harrods and Brigade International.

In the Moyses Stevens Agreement the expression “the Department” is defined as “the business of the retail sale of the Goods to be conducted by the Licensee from the Allocated Area ...” In paragraph 2 Harrods agrees to “allocate to the Licensee ...” a specified area of floor space “for the purposes of the demonstration and sale of the Goods to Customers and for no other purpose”. In paragraph 3, the Licensee, i.e., Moyses Stevens, agrees to “operate the Department as an integral part of the business of the store under the ´Harrods’ name ...” and agrees also not to inform or imply to anyone that the Department is operated otherwise than by Harrods.

Paragraph 8 of the Agreement sets out “Obligations of the Licensee” and obliges the Licensee to “operate the Department solely for the demonstration and sale of Goods to Customers” and to “use its best endeavours to promote the sale of the Goods in the Department ...” Paragraph 9, under the heading “Staff”, requires the Licensee to “ensure that the Department is adequately staffed with suitable qualified employees ... who shall be employed by the Licensee and not by Harrods ...” but provides that “Harrods may object to the presence of any person as a member of staff in the Department ...”. The Agreement is a fairly lengthy one, covering twenty pages, but I have I think referred to sufficient of its contents to enable the two questions to which I have referred to be answered.

It is plain that work is available to be done at Harrods by members of a Licensee’s “Staff”. The question, however, is whether, for section 7 purposes, the work available to be done by them is “work for [Harrods]”. The Employment Appeal Tribunal held that it was, and I have no doubt that they were right. The work would, of course, also be work for the Licensee, the employer. But it is implicit in the section that the “work” to which sub-section (1) is referring will not only be work done for the employer, in that it is work done pursuant to the contract of employment, but will also be work done for the principal. Under Harrods’ contractual arrangements with its Licensees the members of staff will be selling goods that at the moment of sale belong to Harrods. They will be receiving from Customers the price for the goods. The gross sums they receive will be paid over to Harrods, leaving Harrods to account to the Licensee after deducting its commission. All of this work of selling Harrods’ goods and of receiving the purchase money for the goods is work required by Harrods, under its contractual arrangements with the Licensees, to be done by staff employed by Licensees. And the contractual arrangements entitle Harrods to impose rules and regulations governing the conduct of staff members in the course of carrying out this work. Against this background, the work done by the staff members can, in the ordinary use of language, properly be described as “work for” Harrods.

Mr Hepple Q.C., counsel for Harrods, submitted that the section 7 concept of “work for ... the principal” required that those doing the work should be under the managerial power or control of the principal. He pointed out that the contractual arrangements do not involve the delegation by the Licensee/employer to Harrods of the employer’s managerial authority over its employees. It is not enough, he submitted, that the work being done should be work for the benefit of Harrods; the section required an employment test, rather than a commercial test, to be applied to the work in order to answer the question whether it was “work for” Harrods. Moreover, he submitted, it was not enough that work should be available to be done at the store by employees of a Licensee. For section 7 purposes the work had to be made available to the individuals in question by the principal. In the present cases, the work at Harrods was made available to the three complainants by their respective employers, not by Harrods. This point, too, is based on the underlying proposition that the “work” to which section 7 applies must be work in respect of which managerial powers are exercised by the “principal”.

I am unable to accept these submissions for two reasons. First, they require a reading into section 7(1) of words that are not there. The statutory language, “any work for a person (´the principal’) which is available for doing by individuals ...”, does not in terms limit the “work” to work in respect of which the principal has managerial powers. Second, the proposed approach to construction would leave a person in the position of these complainants without a remedy in the event of discrimination against him or her by the “principal”. Mr Hepple pointed out that the principal’s unlawful discrimination would seem to be caught by section 30 or section 31 of the Act even if it were not caught by section 7. I agree that that is so. But proceedings in respect of a contravention of sections 30 and 31 can only be brought by the Commission of Racial Equality and can lead only to a declaration or an injunction. A personal remedy for the person discriminated against is not available. In Showboat Entertainment Centre Ltd -v- Owens [1984] ICR 65 Browne-Wilkinson J, as he then was, referred to the Commission’s right to enforce section 30 and commented that “there is no reason why the individual’s right to complain of the wrong done to him and the Commission’s right to stop unlawful action generally by injunction should not co-exist” (p.71). I respectfully agree. Paragraph 25 of the Government’s White Paper on Racial Discrimination, presented to Parliament in September 1975 and which led to the enactment of the 1976 Act, made the following comment about legislation in the discrimination field:-

“Legislation, however, is not, and can never be, a sufficient condition for effective progress towards equality of opportunity. A wide range of administrative and voluntary measures are needed to give practical effect to the objectives of the law. But the legislative framework must be right. It must be comprehensive in its scope, and its enforcement provisions must not only be capable of providing redress for the victim of individual injustice but also of detecting, and eliminating unfair discriminatory practices”.

Mrs Elmi has been found to have been the victim of discrimination by Harrods. Mrs Seeley and Mrs Remick may succeed in obtaining similar findings in respect of themselves. If Mr Hepple’s approach to the construction of section 7 is right, these ladies will be victims of injustice without redress. The legislation will have failed to achieve the purpose set for it by paragraph 25 of the White Paper. In Jones -v- Tower Boot Co Ltd [1997] ICR 254, the Court of Appeal adopted a purposive construction of section 32 of the 1976 Act. Lord Justice Waite noted that: “Consistently with the broad front on which it operates, the legislation has traditionally been given a wide interpretation”.

He cited Templeman LJ’s comment on the 1976 Act that:-

“... the Act was brought in to remedy a very great evil. It is expressed in very wide terms, and I would be slow to find that the effect of something which is humiliatingly discriminatory in racial matters falls outside the ambit of the Act”. ( Savjani -v- Inland Revenue Commissioners [1981] Q.B. 458 at 466 to 467).

Accordingly, in approaching the construction of section 7(1) we should, in my judgment, give a construction to the statutory language that is not only consistent with the actual words used but also would achieve the statutory purpose of providing a remedy to victims of discrimination who would otherwise be without one.

The second question is whether the individuals who comprise the “Staff” of Harrods’ Licensees are persons who their employer “supplies under a contract made with [Harrods]”. Mr Hepple’s point on this issue was that the primary obligation imposed by the contractual arrangements between Harrods and the Licensees was an obligation to market goods, not an obligation to supply labour. Section 7(1) requires, he submitted, that the supply of workers should be the primary purpose, or the dominant purpose, of the contract made between the principal and the employer. Here, too, I can see no justification for reading into the section restrictive words that are not there. If, under a contract, there is a contractual obligation to supply individuals to do work that can properly be described as “work for” the principal, the section, in my judgment, applies. I can see no justification for an exercise under which primary and secondary or dominant and subordinate obligations are sought to be identified. If the supply of the worker or workers is pursuant to an obligation under a contract, that, in my judgment, will do.

Under the contractual arrangements with Harrods, each of the Licensees has an obligation to “operate” the Department for the demonstration and sale of goods and to “ensure that the Department is adequately staffed with suitable qualified employees”. Accordingly, in my judgment, a Harrods Licensee whose employees work at its Harrods Department is, for section 7 purposes, supplying them under its contract with Harrods.

In my judgment the Employment Appeal Tribunal came to the right conclusion in these three cases. I would dismiss Harrods’ appeal.

LORD JUSTICE WAITE :

I agree.

LORD JUSTICE WARD :

I also agree.

Order: Appeal dismissed with costs, and leave to appeal was refused.