Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REF: 2684/04

3025/04

CLAIMANTS: Denise Major Wendy Williams RESPONDENT: Help The Aged (mail order) Limited DECISION ON A PRE HEARING REVIEW

The decision of the tribunal is that the claimants were not employees of the respondent for the purposes of Article 3 of the Employment Rights (Northern Ireland) Order 1996 and that therefore the claims of unfair dismissal and breach of contract/wrongful dismissal are dismissed.

Constitution of Tribunal:

Chairman: Mr N. Kelly

Appearances:

The claimants were represented by Ms N. Murnaghan, Barrister-at-Law, instructed by Murray McCourt Kelly, Solicitors.

The respondent was represented by Mr S. Ritchie, Barrister-at-Law, instructed by Cleaver Fulton & Rankin, Solicitors.

ISSUE

1. This was a Pre-Hearing Review before a Chairman sitting alone under Rule 18(2)(a) of Schedule 1 to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005 to determine the following preliminary matter which was agreed by the parties:-

"Whether the claimants were employees of the respondent for the purposes of Article 3 of the Employment Rights (Northern Ireland) Order 1996 – i.e., whether they were self employed contractors engaged on contracts for services or employees of the respondent engaged on contracts of service".

FINDINGS OF FACT

DENISE MAJOR

2. The first named claimant, Denise Major, commenced work for an organisation known as Sharing the Caring (STC) in 1996. She worked initially from her garage at her home address in an office equipped by STC. STC was subsequently taken over by Help the Aged and for the purposes of this Decision, I refer to both as the respondent. Her duties involved the development of payroll deductions to charities and fundraising on behalf of various charities.
3. .1 The claimant allocated fundraising duties to a team of fundraisers all of whom were engaged, at least on paper, on a self employed basis.
4. .2 The claimant signed initially and continued to sign on an annual basis a document which purported to be a contract for her services i.e., a self employed contract (the Agreement). The respondent opened an office in Bangor approximately twelve months after the claimant commenced work. A Roberta Fitzsimmons was engaged as an employee and was based at those offices. She was the only individual expressly engaged on a contract of service in Northern Ireland. All other employees were based in England.
5. .3 The claimant was paid a daily fee for development work, latterly for three days per week on average. She was paid commission/bonuses for fundraising and the level of commission/bonuses depended on certain targets being met. She worked on average five days a week for the respondent. All payments were made on foot of invoices submitted by the claimant on standard forms which were supplied by the respondent.

2.4 The claimant received no holiday pay, sick pay or pension provision.

6. .5 She operated a diary system whereby she notified the respondent on which days she would be available for work and on the two occasions when she was off sick she notified the respondent that she would be absent.
7. .6 The respondent paid for and equipped the offices initially in her private garage and then at Hamilton Road in Bangor. The claimant had the principal use of an office in Hamilton Road. However, she was not required as a condition of the Agreement to use that office and could have worked from home and in client's premises. Senior staff from England would also use her office during their visits.
8. .7 There was no disciplinary code or procedure applicable to the claimants or to the other 'self employed' workers.
9. .8 An incident occurred when one of the fundraisers was accused of falsifying claim forms. The Chief Executive based in Great Britain wanted to suspend the fundraiser. The claimant argued against that and the fundraiser was not

suspended. The tribunal accepts that the decision on whether or not to suspend the fundraiser remained with the Chief Executive and that the claimant had no power to suspend or to make any decision regarding the fundraiser's continued contract with the respondent.

10. .9 The claimant was required to comply with the Codes of Conduct set out by the Association of Payroll Giving Professional Fundraiser's Association. Those Codes provided that she was not permitted to work for a competing organisation but she could have worked for unrelated employers.
11. 10 The Agreement stated that it could be terminated at any time without notice.
12. 11 The claimant received reimbursement of travel and hotel costs and also received fixed payments for telephone and petrol expenditure. Those fixed payments were calculated on the basis of the previous year's expenditure and were not guaranteed to meet the actual expenditure of the current year.
13. .12 The claimant said in unchallenged evidence that she had been advised by Alison Allington, an employee of the respondent based in England that it was not necessary to take legal advice on the agreement. It was suggested that it was not a legal document. Nevertheless it was a document in plain English. The claimant is an intelligent capable individual who had read it and clearly understood what it meant.
14. .13 There was a conflict in evidence as to whether Roberta Fitzsimmons was employed as a personal assistant to the claimant. No documentary evidence was produced to support this claim and I conclude that on the balance of probabilities she was not so employed.

2.14 On 9 May 2003, the claimant stated in an e-mail to Alison Allington:-

"I would like to remind the Company that as I am self employed the hours I work on (days other than development work) is at my discretion".

I conclude that this assertion was not simply 'in the heat of the moment' as stated by the claimant in her evidence. It issued at 4.15 pm on Monday 12 May 2003 in response to an e-mail issued the previous Friday at 5.49 pm. In any event it indicates the claimant accepted and indeed sought to rely on self employed status.

15. .15 Tax Returns and NIC payments were made by the claimant on a self employed basis and substantial expenses were set against gross income.
16. 16 Income fluctuated to a substantial extent from month to month.
17. 17 The agreement could not guarantee any level of work and did not oblige the claimant to accept any work.
18. 18 The claimant held weekly meetings with the fundraisers but received no payment for such meetings. Payment in respect of fundraising was entirely by bonus or commission.

WENDY WILLIAMS

19. The second claimant, Wendy Williams, joined the respondent in July 1999 initially as a fundraiser and on an agreement whose written terms were the same as those applicable to the first claimant. She spent between three and four days per week on fundraising. She took on additional duties as a support officer to fundraisers for approximately one day per week and in relation to public relations again for approximately one day per week. There was, in addition, some training work on an irregular basis.
20. .1 As with the first claimant, Mrs Williams completed diary sheets indicating on which days she was available for work. No sick pay or holiday pay or pension provision was provided and there was no disciplinary Code of Procedure.
21. .2 She consulted a solicitor about the terms of the agreement and proceeded to sign it on an annual basis. In evidence she accepted that she was self employed in respect of fundraising duties but asserted that she regarded herself as an employee in respect of the other duties which she undertook on behalf of the respondent but gave no reason why this should be the case.
22. .3 All work was paid for by invoices as with the first claimant. Tax Returns and NIC contributions were made on a self employed basis and substantial expenses were set against earnings.

THE LAW

23. The test to be applied in determining whether an individual is an employee of a respondent for the purposes of the Employment Rights (Northern Ireland) Order 1996 and considering the position of an individual who, on paper, is a self employed contractor is helpfully and most recently set out in the decision of the EAT in Scotland in the case of Levy McCallum Limited -v- Brian David Middleton (Transcript 9 August 2005). That decision repeats the tests set by MacKenna J in the case of Ready Mix Concrete (South East) Limited –v- Minister of Pensions and National Insurance (1968) 2QB 497 i.e., that "a contract of service exists if these three conditions are fulfilled".

"(i) The servant agrees that, in consideration of a wage or a remuneration, he will provide his own work and skill in the performance of some service for his master.

(ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the others control to a sufficient degree to make that other master.

(iii) The other provisions of the contract are consistent with it being a contract of service".

The first condition can be referred to as mutuality of obligation, and the second as the control test.

The EAT referred to the decision of Young and Woods Limited –v- West (1980) IRLR 2001 in which the Court of Appeal stated that "it is by now well settled that the label which the parties choose to use to describe their relationship cannot alter or

decide their true relationship; but, in deciding what that relationship is, the expression by them of their true intention is relevant, but not conclusive. Its importance may vary according to the facts of this case".

The EAT also referred to the decision in Hall (HM Inspector of Taxes) –v- Lorimer (1994) IRLR 171 which the Court of Appeal stated; "the object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another".

DECISION

24. DENISE MAJOR

(i) In relation to the first test set out in Ready Mix Concrete, i.e., mutuality of

obligation, the agreement stated that the respondent would endeavour to provide work for the claimant and the operation of the diary system indicated that on paper at least there was no obligation on her part to undertake all or any of the work offered to her. However, no evidence was offered that this ever occurred in practice and the reality of the arrangement was that the claimant carried out the duties put forward by the respondent in exchange for payment. The tribunal finds that the first test was satisfied.

(ii) In relation to the second test, i.e., control, the claimant was expected to carry out her duties in accordance with the relevant professional codes but was not subject to any substantial degree of day-to-day control or supervision to the extent that you would expect to see in an employment situation. The tribunal therefore conclude that the second test is not satisfied.

(ii) In relation to the third test, and bearing in mind the requirement set out in Lorimer the tribunal would regard, in the circumstances of this case, the intention of the parties as particularly relevant. The claimant is an intelligent and capable individual who the tribunal concluded read and fully understood the implications of the agreement. She signed that agreement each year in succession and similarly each year in succession represented to the Inland Revenue that she was self employed. She claimed substantial deductions against tax. In the 2003/2004 return she claimed £10,667.00 and in the previous year £11,317.00. This was not the type of case where an individual in a different type of work might claim little by way of expenses and therefore derive comparatively little benefit from self employed status. The tribunal is satisfied that the claimant intended to be self employed and gained substantial benefit from that status. Of course the intention of the parties to the agreement is a relevant factor to be considered in a multi-factor approach but it is not conclusive on its own. Other factors which lead me to the conclusion that the claimant was self employed when examining the picture as a whole are:

(a) The absence of any holiday pay; after the introduction of the Working

Time Regulations, if the claimant had as she stated in evidence regarded herself employed and if she was in fact employed, the tibunal would have expected her as an intelligent individual to have asserted her rights. No complaint was ever made by her.

(b) No sick pay was payable.

(c) No pension arrangements were in existence. The claimant did state that at her age this was not important but given that the agreement commenced when she was in her late forties, the tribunal is not find that convincing.

(d) The claimant's clear assertion in May 2003 that she was self employed.

(e) The claimant's income fluctuated from month to month and she undertook work that was not remunerated i.e., the regular meetings with fundraisers and incurred expenses which may not be fully recouped.

(f) There was no disciplinary code of procedures applicable to the claimant and no evidence that she was integrated in the management structure of the respondent. She was the principal user of an office in Hamilton Road but that appears to have been more for her convenience than a requirement of the respondent.

WENDY WILLIAMS

(i) In relation to her activities as a fundraiser, support officer, public relations and the intermittent training duties, the tribunal is satisfied that there was a degree of mutuality of obligation.

(ii) The tribunal is not satisfied that there was any significant degree of control in relation to fundraising, the role of support officer or the training duties other than the general requirement to observe professional guidance. The position regarding the public relations work is less clear and I accept that there must have been a degree of control in relation to that part of her work which took up on average one day per week.

(iii) Looking at the picture as a whole, the tribunal again obliged to conclude that the claimant who in this case took legal advice before signing the agreement, knew exactly what the agreement meant and that she signed it thereafter on a regular basis in that knowledge. As with the first claimant she represented repeatedly to the Inland Revenue that she was self employed and claimed substantial reductions in relation to expenses. Other relevant factors are:

(a) The absence of holiday pay.

(b) The absence of pension provision.

(c) The absence of sick pay.

(d) The fluctuation in income.

(e) The claimant's acceptance in evidence that she was self employed in relation to fundraising and her inability to point to any factor which would indicate why the position would be different in relation to the other services she agreed to provide for the respondent.

25. In relation to both claimants I conclude that they were throughout the relevant period engaged as self employed contractors providing services to the respondent and that the proceedings should be dismissed pursuant to Rule 18(5).

Chairman:

Date and place of hearing: 24 and 25 October 2005, Belfast.

Date decision recorded in register and issued to parties: