Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REF: 9405/03

APPLICANT: Peter J Agnew

RESPONDENTS: 1. Board of Governors, Newbridge Integrated College

2. Department of Education

DECISION

The unanimous decision of the tribunal is that the second-named respondent be dismissed from the suit.

Appearances:

The applicant was represented by Mr M Potter, Barrister-at-Law, instructed by O'Reilly Stewart, Solicitors.

The first respondent was represented by Mr M Brown, Solicitor to the Education & Library Boards.

The second respondent was represented by Mr B Flanagan, instructed by The Departmental Solicitor's Office.

EXTENDED REASONS

1. As the tribunal left to retire at the conclusion of the hearing one of the panel members was approached and engaged in conversation by one of the persons attending the proceedings as a witness with the applicant. On behalf of the second respondent it was proposed that, in view of this, the panel member concerned should take no part in the decision but that the decision should be taken by a two member panel. In putting forward this proposal it was made clear that no impropriety was suggested. However, in the absence of consent to this proposal, the application was then withdrawn. The tribunal, being satisfied that nothing untoward had occurred, accepted this withdrawal.
2. The matter came before the tribunal as a preliminary issue. The originating application in the case, claiming unlawful deduction from wages under Article 45 of the Employment Rights (Northern Ireland) Order 1996, had been brought against the first respondent. Following correspondence from the first respondent ('the Governors') the second respondent ('the Department) was joined as a party. The issue for the tribunal was whether the Department should be dismissed from the proceedings. At the outset of the hearing the Governors made clear that they did not resist the application itself and that they were agreeable to the Department being dismissed from the suit. The Governors took no further part in the proceedings.
3. The Department's application to be dismissed from the proceedings was resisted by the applicant. Both the applicant and the Department had prepared skeleton arguments in relation to the preliminary issue. After some discussion it was agreed that the parties would proceed to hand in their skeleton arguments, to speak to them, and to put forward any evidence which might be required in relation to them. It was accepted throughout by both parties that proceedings under Article 45 can only be brought against an employer and that, therefore, an employment relationship had to be established between the applicant and the Department if the Department's application to be dismissed from the proceedings was to be resisted.
4. On behalf of the Department it was submitted that the question of whether or not the Department was the applicant's employer had to be determined by means of a mixed or multiple test, including the nature of any contractual relationship between the parties, the extent of control exercisable by the employer, and any statutory provisions relevant to the relationship. It was suggested that the contract which had been produced in the matter, made 9 June 2004 between the first respondent and the applicant, purporting to cover his employment from 1 September 1995 plainly showed that the Governors were the applicant's employer. The contract provided that the applicant should serve as principal "under the direction of the employment authority" and further provided that nothing in the agreement should affect "the power of the employing authority to discipline … or to dismiss any teacher". The agreement also provided that the applicant should be remunerated in accordance with the provisions of Departmental regulations and the Department conceded that it provided funding and issued payment to teaching staff pursuant to its statutory duty. That duty was imposed by Article 71 of the Education (Northern Ireland) Order 1998 and required the Department to make payment of the salaries and allowances of teachers employed by the Boards of Governors on behalf of the Boards of Governors. That phrase and others contained in other legislative provisions, such as Article 69 of the Education and Libraries (Northern Ireland) Order 1986, which refers to the Department paying the salaries and allowances of teachers employed by the Boards of Governors of a grant maintained integrated school (such as the applicant's school), plainly showed parliament's consistent intention that teachers like the applicant were not to be employees of Boards of Governors. It was suggested that this appeared to have been the original understanding of the applicant, who had issued the originating application against the Governors alone. It was only after the Governors had written to the tribunal, indicating that the Department had been involved in the matter, and requesting that they be joined, that the Department became a party. The Department did not seek to deny that it was involved but in order to be an employer there had to be more than mere involvement. The fact that the Department actually paid the applicant could not be relied on to demonstrate that the Department was his employer because the parliamentary intention was so readily discernible and so over-arching in its effect. The Department had also issued the applicant with a Form P60 showing the deductions for tax and National Insurance made during the course of the financial year. The Department's name appeared in the box entitled 'Employers full name and address'. The evidence given on behalf of the Department was that the form was issued and designed by the Inland Revenue who, for ease of administration, did not wish to have a multiplicity of codings to identify the various employers of teachers, preferring to deal with the Department. All P60s for teachers, even those teachers who were specifically defined by statute as being in the employment of the Education & Library Boards, referred in that box to the Department which acted as a payroll bureau for the employing authorities. This was only for ease of administration for the Inland Revenue and was subject to the over-arching statutory position.

If there was a dispute about the applicant's wages it was open to the applicant to bring unlawful deduction proceedings against the Governors. If the Governors believed that their assessment of the applicant's wages had been correct and in accordance with Departmental guidelines they could bring judicial review proceedings against the Department. If they did not do so then they could pay the applicant.

5. On behalf of the applicant it was submitted that the right to do work and to be paid for it could be the most important term of any employment law relationship. The core of the mutuality of obligation focused on who pays the wages. In this case, it was submitted, the Department ultimately paid the wages. It was not just doing what it was told by the Governors, but was exercising control over what the wages should be. This was the conduct of an employer. An employee had the right to enforce his contract of employment in the Industrial Tribunal and wages were a fundamental part of that contract. Under Article 69 of the Education and Libraries (Northern Ireland) Order 1993 (as amended) the Department had the power to determine the terms and conditions of employment. This suggested a parental role for the Department and a three-way relationship involving the Department, the applicant and the Governors. While it was accepted that the Governors were one employer of the applicant they were not the only employer. They were given powers, but control over those powers lay with the parent Department which said that while the Governors had the power to determine wages they must do so in accordance with the Department's guidance. On this aspect of the matter the wage slip, which was produced without objection, showing payments to the applicant, was issued by the Department and was obvious evidence as to who was paying the wages. Furthermore, in issuing the applicant's P60, setting out the tax and National Insurance deductions made from the applicant's salary throughout the year, the Department included itself as the applicant's employer in the relevant section of the form.

School budgets were divided into two portions, salaries and the rest. The Department paid the salaries; the school held the money for the rest. If the school made inappropriate awards of salaries the Department would not approve and would not pay. It was accepted that the Department was entitled not to pay in the above circumstances. The only way the Department could be required to pay was if there was a lawful determination of the salary. If there was not a lawful determination then the Governors would not have the power to make it. If this occurred the school would be liable to pay insofar as it was part of the employment relationship but it would not just be a question of taking money from another part of the budget to make such a payment. The monies held by the school were tightly controlled. Even if the school had free money it would have to use such monies for proper purposes. It would not be a proper use of these funds to apply them to salaries which had been awarded by the Governors inappropriately. A teacher should be in a position to enforce payment of the wages because the Department was the paymaster.

Agreement as to pay and conditions for teachers was arrived at by negotiations involving the various teaching unions and a number of managers including the Department. It was suggested in submission that the Department was included on the management 'side'. However no document identifying the Department as being on any 'side' or as being an employer representative was produced. There was, however, no question but that the Department was a party to the negotiations by reason of its statutory right to determine terms and conditions. The terms of the agreement, when reached, were then enshrined in legislation.

Article 3 of the Education Reform (Northern Ireland) Order 1989 imposed a duty on the Department to promote the education of the people of Northern Ireland and to secure the effective execution by Boards, and other bodies on which, or persons on whom, powers were conferred or duties imposed under the Education Orders in relation to the provision of the education service. This Article, it was submitted, showed the parental role, a direct relationship with the Boards. Some employers functions were delegated but ultimate employer control rested with the Department. Similarly, Articles 65 and 66 of the same Order provided for the delegation of certain management and control functions but imposed a duty on the Department to make such payments in respect of expenditure incurred or to be incurred in carrying on the school as were required. Article 101 of the same Order, as amended, gave a power to the Department to give directions to any relevant authority as to the exercise by that authority of any power conferred on that authority by the Education Orders. This provision was clearly to retain control, a relevant factor according to the case law. It was not just as simple as that, however. In relation to salary determination, so long as the school acted in accordance with the guidelines the Department was obliged to pay.

In the instant case the Department had offered a number of reasons for non-payment and had engaged with the delegated authority on the issue and had chosen not to pay. They had the power to do so. However, the individual concerned, the applicant, should be able to come to the tribunal to compel the Department, as his employer, to honour the commitment. In such a situation the wrong was suffered by the employee who should be able to avail of the Industrial Tribunal machinery to secure his contractual rights without the risk of costs. It had been suggested by the Department that the applicant could enforce his rights against the Governors. However, the applicant had no effective right of enforcement due to lack of funding, salaries being dealt with by the Department, and the use of free money, if any, being inappropriate. The applicant himself should not have to take judicial review proceedings against the Department in relation to any dispute; nor should he have to rely on the Governors taking such proceedings.

The contract agreed between the applicant and the school dated 9 June 2004 made clear that the Department was integral to the contract in that it referred to the teachers' duties being such as were in accordance with … "the Regulations made from time to time by the Department …" and in that it also referred back to the recognised negotiating machinery which involved the Department. Furthermore the original letter offering the applicant his position was an offer "conditional on the full approval" by the Department. This suggested an exercise of control even on the appointment of a headmaster.

The case law suggested that the question of control was important in considering whether or not there was employment, as was the mutuality of obligation which could be taken to be the payment of a wage in return for work. While the principal (the applicant) was working for the Governors he was also working for the Department in enabling the Department's duty to educate the public to be discharged. He was doing his work in return for a wage which was paid by the Department and his terms and conditions of employment were controlled by the Department which described itself as the employer in his P60. There were other provisions consistent with there being a contract involving the Department. The matter should be looked at to determine whether the elements considered as a whole spelled out the relationship of employer and employee. A Government Department could be an employer, possibly even if some agency with functional control were interposed. In the applicant's submission control lay with the Department and the applicant had the power to enforce his wages against it before the tribunal.

The applicant had no effective right to enforce payment of wages against the Governors since the only money available to the Governors was for things other than teachers' salaries. The right of recovery should be against the person who was statutorily required to pay, whose duty it was to pay, namely the Department.

6. The tribunal noted that it would be necessary, if the applicant were to succeed, to find that the applicant had two employers. Indeed, this was specifically stated in the applicant's submission. The tribunal enquired whether there was any authority to indicate that this was a recognised situation. No direct authority was quoted but it was suggested that there were such instances in the private sector. Certainly there had been a number of cases dealing with the triangular relationships which arise in the case of contract workers. Whether such arrangements were wholly analogous to that prevailing in the instant case the tribunal was not wholly sure. However, the tribunal considered it appropriate to consider first whether the relationship of employer and employee could be spelt out from the circumstances prevailing between the applicant and the Department and then, if such a relationship could be spelt out, consider whether the necessary finding that the applicant had two employers presented any problems.
7. The tribunal also noted the suggestion, put forward on behalf of the applicant, that, if the applicant could not bring a claim against the Department before the tribunal, he would have no effective remedy. The tribunal was not convinced by this argument. The applicant initiated the proceedings against the Governors, not against the Department. The Governors, at the outset of the hearing, made it clear that they did not propose to resist the applicant's application. It would seem, therefore, that the Governors were prepared to contemplate a decision against them and in the applicant's favour. That decision would be enforceable through the County Court. The applicant has said that this would be of little help since all the money the Governors have is required for other things. That is something which could be said by many employers or, indeed, by many debtors. It would not, however, relieve them of their obligation to pay sums which might properly be due by them. It may be true that the Department has more money than the Governors, but that is not the same thing as saying that the Governors have none. In any event, even on the applicant's own arguments, the situation could readily arise whereby he would have no claim against the Department and would have to enforce his rights against the Governors. It was conceded in putting forward the applicant's case that, if the Governors were to make an award or undertake a liability which went beyond or outside the Department's guidelines, they would be liable to pay insofar as that was part of the employment relationship but, at the same time, the Department would be entitled to refuse to pay it. The tribunal cannot see why, if the Governors have made him an enforceable promise, the applicant cannot take proceedings against the Governors on foot of that promise. If they believe they have the right to obtain payment for that promise from someone else that would seem to be a matter for them.

However, the availability or otherwise of an effective remedy against the Governors is not conclusive in determining whether or not an employment relationship exists between the applicant and the Department and it is to that issue that the tribunal now turns.

8. In considering whether an employment relationship exists the matter has to be looked at in the round. No single factor will be conclusive. In this case the applicant is a teacher, a head teacher, in fact. The applicant's case, in effect, is that, as a teacher, his terms and conditions are, in the last analysis, determined by the Department; his original offer of his current employment was made subject to the Department's approval; his immediate employers' powers are circumscribed by the Department; in carrying out his work he is enabling the Department to carry out its statutory function; for carrying out that work he receives payment which is regularly made by the Department; and in issuing the applicant's P60 the Department characterises itself as his employer. This, it was submitted for the applicant, clearly amounts to an employer/employee relationship.

On closer examination the argument is not quite so compelling as it seems. The only formal contract relating to the applicant's employment as principal of the school run by the Governors was entered into between the applicant and the Governors. There was no indication or suggestion that the Department was involved in, asked about, or even aware of its creation. It does refer to the relationship being affected by matters within the control of the Department, and there is no doubt that the Department is heavily involved in many matters which have a significant impact on teachers' lives. That this is so is in no way surprising. Where education is provided by the State, one would expect the State to take a close interest in all aspects of it. Much has been made on behalf of the applicant of the involvement of the Department in paying the applicant's wages and allowing itself as his employer on his P60. The payment of wages is always a significant factor to be taken into account but it is not conclusive as is shown in Dacas v Brook Street Bureau (UK) Ltd 2004 IRLR 358, a case which was cited to the tribunal on behalf of the applicant. Nor would the description of itself by the Department as the applicant's employer on his P60 be conclusive, even if the tribunal did not accept, as it does, the Department's evidence that that was more as a matter of administrative convenience and nothing more. In all cases the totality of the relationship has to be considered. The applicant's cases hangs on the Department's involvement with and control of the applicant. All the instances of involvement and control which were cited to the tribunal on behalf of the applicant arose under the various Orders and Regulations relating to the provision of education. What one might refer to as the statutory framework. Indeed, the most basic piece of evidence, the payment of wages by the Department, arises under the statutory framework as well. In that particular instance, the payment of wages, the Department is required to make payment of the wages 'on behalf of' the employing authority. In the tribunal's view, this carries a clear implication of a relationship of an employer on the one hand and the Department in a position analogous to that of an agent, on the other. The position, in schools of this type, of the Board of Governors as the employer or the 'employment' or 'employing authority' is referred to in many of the Orders and Regulations cited to the tribunal. No instance of the Department being described or defined as an employer in relation to schools of this kind was cited to the tribunal. The applicant is arguing that an employment relationship is necessarily created by reason of the powers which are exercisable by the Department, but where those powers are conferred by statute then it is necessary to look also at what the statute says about the relationships involved. In the tribunal's view the relationship between the various parties is provided for in the statutory framework and defined by it. The statutory framework envisages the Governors as the employer and the applicant as the employee. The Department is outside that relationship though it has a variety of powers which will effect that relationship. In the instant case it would seem that the Governors have made commitments to the applicant. The applicant is entitled to seek to enforce those commitments in this tribunal. If the Governors have a quarrel with the Department about the matter that is between the Governors and the Department. There is no reason for the applicant to be affected. The Governors, on the basis of what was said at the outset of the hearing, are prepared to accept an Order requiring them to honour their promises. The tribunal sees no basis on which the Department can be compelled by this tribunal to honour the promises made by the Governors. It may be that, had the applicant sought to bring a civil claim in the Courts for breach of contract, the Department might have been brought in as third parties in the same manner they were brought into the proceedings here. The considerations which the tribunal considers require it to dismiss the Department from these proceedings would not apply in the Civil Courts.

Chairman:

Date and place of hearing: 20 December 2004, Belfast

Date decision recorded in register and issued to parties: