ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
HIS HONOUR JUDGE McMULLEN QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE ELIAS
LORD JUSTICE PITCHFORD
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Ms Anya Palmer (instructed by Messrs Zatman and Co) for the Respondent
Hearing date : 5 October 2010
Crown Copyright ©
Lord Justice Elias :
"In terms of work, the Claimant was fully integrated as a manager in the Respondent organisation. He had a line manager to whom he was responsible. He had Respondent employees reporting to him. He worked Monday to Friday each week. He was authorized by his line manager to recruit staff including full time permanent employees. He was responsible for the business and operational aspects to his job. He was authorised by his line manager to discipline and dismiss permanent employees. He signed time sheets for permanent employees. He ordered materials for and on behalf of Alstom. He has represented the Respondent in negotiating contracts. He had a Respondent company phone, computer and network access. He had to apply to the line manager before taking annual leave. He had full access to technical information and operational reports. In terms of work, then, the relationship displayed all the characteristics of employment. He was not at liberty not to turn up to work or to field a substitute to replace himself at work."
When can a contract be implied?
"… correctly pointed out, at para 35, that, in order to imply a contract to give business reality to what was happening, the question was whether it was necessary to imply a contract of service between the worker and the end-user, the test being that laid down by Bingham LJ in The Aramis  1 Lloyd's Rep 213, 224:
"necessary . . . in order to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable obligations to exist."
As Bingham LJ went on to point out in the same case it was insufficient to imply a contract that the conduct of the parties was more consistent with an intention to contract than with an intention not to contract. It would be fatal to the implication of a contract that the parties would or might have acted exactly as they did in the absence of a contract."
" ..it is not enough to form the view that because the Claimant looked like an employee of the Trust, acted like an employee and was treated as an employee, the business reality is that he was an employee and the ET must therefore imply a contract of employment."
The contractual arrangements.
"Neither the company nor the client shall be entitled to or seek to exercise any supervision, direction or control over the contractor or the operatives in the manner or performance of the project."
The decision of the Employment Tribunal.
26. Is the contract documentation that there is genuine? I have come to the conclusion that it is not. Of course, the Claimant was not party to any of the contract documentation, although he knew he was regarded as an independent contractor. But even leaving that aside, I am compelled to the conclusion that the contract between Silversun and Morson is not a genuine reflection of the relationship between the parties by virtue not least of clause 3.1 which provided that 'Neither the Company nor the client shall be entitled to or seek to exercise any supervision, direction or control over the Contractor or the operatives in the manner or performance of the Project.' The purpose of that clause was to seek to negative the control element of the definition of employment apparent in for example the Ready Mixed Concrete case. But the clause is entirely bogus. The Claimant was subject to the supervision, direction or control of the Respondent. The contracts that did exist created no more than a mechanism for payment. The mechanism involved an attempt to engineer a structure that deflected the possibility of an interpretation of employment. Both the claimant (whether or not he knew the precise terms of the contract) and the respondent were party to that attempt principally for tax and cost reasons. But, as stated, the contract between Silversun and Morson was bogus. The person providing the work was the claimant and the person receiving it and paying for it was the respondent. This was a case where the respondent knew precisely how much the worker was being paid because it determined the hourly rate of pay. In this case it is senseless to describe Silversun as 'the Contractor' when all that company did was to sign the contract and pass on payment less a 3% service charge. It also, it seems to me, makes little sense to refer to the 'Project' as the 'Technician', namely the claimant.
27. Accordingly, the contract between Silversun and Morson may not be relied upon as genuinely determining or reflecting the relationship between the Claimant and the Respondent in this case. However, the Claimant was absorbed in the Respondent's organisation as described in paragraph 16 above and there is plainly a need to imply some sort of contract as regulating the relationship because the relationship was not gratuitous. …..The nature of the relationship was entirely consistent with employment within the Ready Mixed Concrete sense. The relationship was not consistent with the Claimant being in business on his own account. Accordingly, in my judgment it is necessary to imply a contract of employment as defining the relationship between the parties and giving business efficacy to it."
The decision of the Employment Appeal Tribunal.
"17. Also, significant, following the judgment of the Court of Appeal in Secretary of State for Business, Enterprise and Regulatory Reform v Neufeld  ICR 1183, is to examine the conduct of the parties after the relationship began to see how it reflects the would-be contract. In my judgment, two significant events occurred. These were the Claimant's flat refusals of invitations to join the Respondent's workforce. It is axiomatic that since the Respondent was offering a contract of employment, it was its view hitherto that the Claimant was not in the workforce, but it wanted him in. It also follows from the Claimant's refusal to join that he regarded himself as an independent contractor. As I indicated earlier, unusual in this case is the fact that the would-be employee has at all times asserted the opposite, with his eyes wide open and articulately understanding the advantages to be gained from remaining as an independent contractor.
18. Why should the law not give effect to the outlook of both Alstom and the Claimant as to what he was doing when he worked with them? The Claimant knew exactly what he was doing; so did Alstom. The Claimant did not wish to change. Alstom did, but knew of course that a change was required in status to bring the Claimant within the workforce and this never happened. Although there are indicia in this judgment which might on their own point to an employment relationship, such as integration into the organisation of Alstom, supervision and control, the starting point has to be what documents there are or are not, and then the conduct of the parties once the relationship had started. All of those point firmly against an employment relationship."
"The [employment] tribunal is not merely a fact-finding body, it is an industrial jury. That is not merely a phrase, but a concept that has to be taken seriously. It is only going to be in an extreme case, one that is very clear, that it is going to be possible for an appellate body properly to say that a jury would have inevitably reached the conclusion that the EAT reached, when in the original case, albeit proceeding upon an incorrect basis, the [employment] tribunal had come to a contrary conclusion. I do not think it is possible to say confidently in this case that if the matter is remitted on the basis that this court has indicated, it is inevitable that an industrial jury will consider that Mr Wilson was fairly dismissed."
The grounds of appeal.
Lord Justice Pitchford:
Lady Justice Arden: