England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN EMPLOYMENT APPEAL TRIBUNAL
(His Honour Judge Wilcox)

		Royal Courts of Justice Strand London WC2 Thursday, 22nd February 2001

Thursday, 22nd February 2001

J U D G M E N T
1. LORD JUSTICE MUMMERY: This is an application for permission to appeal. It arises in these circumstances.
2. The applicants, Ross Newton Associates Ltd, are an employment agency. Mr Frederick Iles was on the books of the agency. For the period from 19th December 1994 until 19th February 1998 he was in fact working as a drawing office clerk for GEC Alsthom Metro Cammell. On 19th February 1998 GEC ended the contract without reference to Ross Newton. Mr Iles then made a claim in the Employment Tribunal, on 20th March 1998, in which he claimed redundancy payment and money in lieu of notice. He named as his employer Ross Newton Associates. He gave as the address of the place where he worked GEC Alsthom Metro Cammell, Washwood Heath, Birmingham.
3. What Mr Isles said in the details of his complaint was this:

"I worked for GEC Alsthom Metro Cammell, as a drawing office clerk, and I was paid through Ross Newton Recruitment Agency. I have worked for them continuously for three years doing the same job.

I was given a weeks notice of dismissal, due to the Company terminating the contract for European Night Stock Carriages.

I believe I am entitled to three weeks notice of termination of my employment, and a redundancy payment having worked there for over three years. I received nothing on leaving on 19.2.98.

I believe either Ross Newton or GEC Alsthom are responsible for these payments."

4. The claim was heard by the Employment Tribunal at Birmingham on 2nd July 1998. They gave extended reasons on 12th March 1999 for their unanimous decision that Mr Iles' claim should be dismissed. His claim was dismissed on the basis that he was not an employee of Ross Newton Associates Ltd and he was not, therefore, entitled to a redundancy payment or to pay in lieu of notice.
5. Mr Iles then appealed to the Employment Appeal Tribunal. They came to a different conclusion. They heard the appeal on 12th July last year. His Honour Judge Wilcox, who gave the judgment on behalf of the Appeal Tribunal, said that the Employment Tribunal had not applied the correct test to determine whether Mr Iles was an employee of Ross Newton Associates or not. They found that he was an employee of the agency under a contract of service, They allowed Mr Iles' appeal and they refused permission to appeal to this court.
6. Permission is required. It is only normally allowed if there is a real prospect of the appeal succeeding; and it can only succeed if there is an error of law on the part of the Employment Tribunal in its decision. There is no appeal against decisions on questions of fact.
7. On the hearing of the application today Mr Newton, a director of the agency, has put forward arguments as to why Mr Iles was not an employee of his agency. He has made various points on the importance of the question raised in this case as a precedent for the whole industry. The points which he has made in his written submissions, as supplemented this morning, are these. He says Mr Iles worked solely for GEC for the period 19th December 1994 to 19th February 1998. He had been contracted by the agency to GEC. It was GEC for whom he did the work. It was GEC who dismissed him without reference to the agency, which had no control over that decision. He says it is the Employment Appeal Tribunal, not the Employment Tribunal, that made an error in this case. The Appeal Tribunal failed to consider the implications of the relevant legislation contained in the Employment Rights Act 1996, in the Employment Agencies Act 1976 and in the regulations made under that Act. He argues that agency workers are not normally regarded as employees of the agency.
8. As for the case of McMeechan, which was referred to in both the decisions of the Employment Tribunal and the Appeal Tribunal, Mr Newton's contention is that the relevant contract here is different from the contract in McMeechan, which was held to create an employment relationship in relation to a particular engagement. He emphasised that this case is about liability for redundancy payments and money in lieu of notice. It is not about liability for unpaid wages, as in McMeechan. This point, particularly on the redundancy payments, gives rise to a consideration not only of the terms of the particular engagement of Mr Iles by GEC but of the terms of the general engagement of Mr Iles by the agency. This case, he emphasised, is about the effect of the terms of the general engagement and is not, like McMeechan, a case about the contract governing a single engagement.
9. I see the force of those points, but it has to be said that there are arguments on the other side. The terms and conditions of service in this case describe it as a contract of service, which is normally the label put on an employment relationship. It is the fact that Mr Iles was paid wages, not by GEC, but by the agency. He was paid wages after deduction of PAYE and National Insurance. There are also in the general conditions a number of duties which are normally associated with an employment relationship between the person to whom the duties are owed and the person who owes the duties. I also have to say that, in my view, the statutory provisions which Mr Newton refers to regarding employment agencies are not relevant to the issue whether there is or is not a contract of employment. Whether or not there is a contract of employment is determined by ordinary contractual principles and not by the special provisions of the 1976 legislation.
10. Notwithstanding those contrary arguments, I am of the view that this is a case which should go forward to a full hearing. Accordingly I grant permission to appeal.
11. There are aspects of this case which are not covered by the reasoning of this court in McMeechan. Further clarification is required on the interaction between a general engagement and a specific engagement in the context of the determination of liability for redundancy on the ending of the specific engagement. I must not be understood as saying that Mr Newton's case will succeed. There are difficulties in it of the kind which I have pointed out in the contrary arguments. Nevertheless, I have formed the view that it does have a real prospect of succeeding. There is also a compelling reason why this matter should be also further investigated in order to clarify this area of the law, which affects not only Mr Newton's agency but many other agencies involved in supplying workers on these terms.
12. For those reasons, I will grant permission to appeal.
13. Mr Newton has told me that there is a pending hearing on 6th March in the Employment Tribunal, dealing with the question of redundancy pay. When I suggested to him that that might be adjourned, he expressed the view that he would prefer the matter to remain as fixed in the Employment Tribunal, because that is a question he would wish to have determined quite apart from the preliminary issue of whether there is a contract of employment. I make no directions about that. That is a matter for the Employment Tribunal, for Mr Newton and for the advisers of Mr Iles. I can quite well see the advantages of proceedings with that hearing to determine the redundancy point.
14. I have also pointed out to Mr Newton that the position on costs in this court is not the same as the practice of the Employment Tribunals and the Appeal Tribunal, where the normal practice is that no order for costs are made. I have pointed out to him that in this court the normal order for costs is that the person losing the appeal must pay the costs of the appeal. I am sure he has that point well in mind in considering how to proceed with the appeal.
Order:Application allowed. Notice of appeal to be lodged within 28 days. (ORDER DOES NOT FORM PART OF APPROVED JUDGMENT)