Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF:  04773/09

 

 

CLAIMANT:                      Martin Bonner

 

RESPONDENT:                Joseph McDermot

 

DECISION

 

The unanimous decision of the Tribunal is that the claimant was an employee of the respondent and that respondent dismissed the claimant by reason of redundancy and orders the respondent to pay the claimant £180.

 

 

 

Constitution of Tribunal:

 

Chairman:              Ms Petra Sheils

 

Panel Members:     Mr Bobby Hanna

                              Mr Noel Jones

 

 

Appearances:

 

The claimant appeared and represented himself.

 

The respondent was represented by Mr Rory Fee, of counsel, instructed by Meyler and McGuigan, Solicitors.

 

 

 

THE CLAIM AND THE DEFENCE

 

1.             The claimant alleged that he had been unfairly dismissed by the respondent. 

 

2.             The respondent denied that the claimant was an employee and in the alternative denied that he had been unfairly dismissed.

 

THE ISSUES IN THE CASE

 

3.       The issues in the case were:-

 

(1)      Was the claimant an employee of the respondent?

 

(2)            If the claimant was an employee of the respondent had the respondent unfairly dismissed him?

 

SOURCES OF EVIDENCE

 

4.       Witnesses

 

            The Tribunal heard evidence from the claimant and the respondent. 

 

Documents

 

          Letter from the claimant to Mr Peter McDermot dated 20 January 2009.

 

          Submissions

 

          The Tribunal heard submissions from Mr Fee and from Mr Bonner.

 

          At the outset of the hearing the title of the respondent was changed from (1) Peter McDermot and (2) Joseph McDermot to read Joseph McDermot.

 

 

FINDINGS OF FACT

 

Having considered the oral evidence before it the Tribunal found the following facts either admitted or proved on the balance of probabilities:

 

5.              The respondent Mr Joseph McDermot is the proprietor of a bus company.  The respondent bought it off his father, Mr Peter McDermot in 2002. The respondent stated that he had one full time employee and that he also employed his father on a minimal basis in the company for example taking vans to get fixed.  The Tribunal saw no documentary evidence in relation to the ownership of the bus company nor any formal letter heading or other documents indicating its ownership.

 

6.       There was very little agreement between the claimant and the respondent on any of the facts in the case and in particular concerning the working arrangement between the claimant and the respondent. 

 

7.       The claimant stated that he was a mechanic by trade, working full time for the Department of Agriculture and Rural Development. In March 2006 he had been contacted by Peter McDermot and advised that Peter McDermot, due to his own unfortunate circumstances, needed someone to do four bus runs over three nights, Monday, Wednesday and Thursday. The claimant initially stated that he would be reluctant to commit himself to working three nights but that Peter McDermot had assured him that, if he agreed, that he would ‘look after him favourably.’  They reached an arrangement whereby the claimant was telephoned by Peter McDermot on a Monday night to confirm the availability of the work in the in-coming week and that the claimant was paid £20 per night for these three nights including £10 instead of a free book at bingo and was paid in cash directly by Peter McDermot. 

 

 

8.       The claimant stated that Peter McDermot had taken a copy of his national insurance number and his licence and that he had said that he, Peter McDermot, would ‘sort out the tax end of things’. The respondent accepted that the claimant had not been paid ‘through the books’, that he had not paid tax for the claimant and that he did not keep a record of any arrangement between the firm and the claimant nor any record of any monies paid to the claimant.

 

9.       The claimant stated that he had contacted the Enniskillen tax office himself for advice and was told that the tax code he was on allowed him to earn up to £2,500 without having to declare the income. He denied that he had done so because he knew that he was to be responsible for his own tax arrangements. He stated that he had taken this step to ensure that, as a full time worker, his additional working for Peter McDermot would not attract additional tax. The claimant also stated that he was prompted to take this precaution in view of his anxiety about Peter McDermot whom he described as ‘hooky’ and of his fear that he would be left to face paying a big tax bill.

 

The claimant also stated that his wife, Mrs Nuala Bonner, also owned a bus driver’s licence and did some bus runs if the claimant was not available. The claimant accepted that he carried out bus runs for another firm but only on a Saturday and not at the times he was contracted to do the work for the respondent.

 

          For his part the respondent stated that the claimant, who owned a bus driving licence, did specific evening bus runs for his firm on Monday, Wednesday and Thursdays nights on an as and when required basis and that these were occasionally done by Mrs Bonner; was free to work for and did work for other bus companies; was paid £15 per night plus an additional free book at bingo to the value of £10. It was accepted that the claimant was paid by Peter McDermot on a Thursday night.

 

10.     The claimant stated that he had received a telephone call from Peter McDermot on the 7 January 2009 in which Peter McDermot advised the claimant that he did not want the claimant to work for him any longer because he was giving the work to another driver who needed the money.

 

11.     The claimant wrote to Peter McDermot 20 January 2009 stating that he had been advised by the Labour Relations Agency that, as no statutory dismissal procedure had been followed, that the claimant’s job was still in existence and had been given to someone else that he, the claimant, had been unfairly dismissed.  The claimant received no reply to this letter.  

 

12.     The respondent stated that he had been advised that due to a fall in attendance at the bingo there was talk of cancelling it and therefore also cancelling the contract with the firm for the bus runs. On hearing this Joseph McDermot told his father Peter McDermot to contact the claimant and tell him that he, Joseph, would do the bus runs until the contract finally ended. Joseph McDermot stated that he had taken over the bus runs at that stage to try to retrieve the situation but that the bus runs were eventually cancelled.

 

13.     What was common case between the parties was that the claimant had no written contract of employment between himself and either Peter McDermot or Joseph McDermot; that there were no documentary records of the arrangement between the firm and the claimant; that he was paid in cash by Peter McDermot at the Thursday night bingo; that there were no records of any payments made to the claimant and that, on occasion, Mrs Bonner carried out some of the bus runs. It was also accepted that it had been Peter McDermot who had contacted the claimant to tell him that he was no longer required.

 

14.     In the absence of any documentary or other evidence to the contrary the Tribunal accepted that the claimant had been taken on by Peter McDermot on the basis and on the terms as stated by the claimant and that he had been contacted by Peter McDermot in January 2009 who advised him that he was giving the work to another man who needed the money.

 

15.     The Tribunal also concluded that the claimant had contacted the tax office for the reason that he stated, namely to ensure that his additional earnings would not incur additional tax. However the Tribunal noted that although claimant had an anxiety that Peter McDermot might not pay his tax the claimant made no enquiry to that effect.

 

THE APPLICABLE LAW

 

16.     For the purposes of bringing a claim under the Employment Rights (Northern Ireland) Order 1996 the claimant must bring himself within the definition of employee under Article 3 of that Order. The provisions of that Article are –

 

(1)      In this Order 'employee' means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.

 

(2)      In this Order 'contract of employment' means a contract of service or apprenticeship whether or express or implied and (if it is express) whether oral or in writing.

 

17.     As there was no written contract of service or a contract of employment between the claimant and the respondent it was for the Tribunal to consider the facts in the case to decide if an employment contract existed between the parties.

 

18.     There is no statutory definition of 'a contract of employment' and therefore where the question arises as to whether a claimant has a contract of employment becomes a matter to be distilled from the legal principles set out in relevant case law and applied to the facts in the case . What is required is that there should be a contract of service between the parties as opposed to a contract for services.

 

CASE LAW

 

19.           The Tribunal read the relevant case law including;

 

Brooke Street Bureau (UK) Limited v Patricia Dacas 2004 IRLR 358.

 

Consistent Group Ltd v Kalwak 2007 IRLR 566.

 

City of East London FHS Authority v Durcan EAT 721/96.

 

James v London Borough of Greenwich 2008 IRLR 302.

 

Autocleanz Ltd v Belchers and Others 2009 EWCA.

 

Protectacoat Firthglow Ltd v Szilagyi 2009 IRLR 365.

 

20.     These cases conclude that a worker will only come within the statutory definition of employee where there is a contract of service between himself and the employer. In order to decide if such a contract of service exists it is for the Tribunal to consider the facts of the case in light of a number of ‘tests’ arising from the case law including –

 

(a)      mutuality of obligation as between employer and employee;

 

(b)      the control of the employee by the employer;

 

(c)      the ‘organisational’ test; and

 

(d)      the ‘economic reality’ test.

 

SUBMISSIONS

 

21.     The Tribunal heard legal submissions from the respondent’s representative, Mr Rory Fee, in relation to what he described was the most significant element in the case which was whether or not the claimant was an employee.

 

22.     Mr Fee submitted that the most appropriate way of considering this matter and concluding on it would be to adopt a multi-factorial approach as  set out in City of East London FHS Authority  v  Durcan EAT 721/96.  Mr Fee submitted that the correct approach would be to look at the relationship between the parties as a whole and apply a number of factors to consider the question whether the claimant was an employee or was in fact self-employed.  Mr Fee submitted that there were 13 such factors or provisions set out in the text of that case and were to be applied in the circumstances of this case thus:-

 

(i)              The contractual provisions themselves

 

                    Mr Fee submitted that there was no contract of employment as such between the claimant and the respondent.  Instead there was a loose arrangement whereby, with his own skills, experience and driving licence the claimant undertook work for the respondent on an “as and when” basis.  The arrangement between the parties was that the claimant got a telephone call from the respondent indicating what work was available for the coming week and that either the claimant or his wife carried out the work in question.  Mr Fee submitted that the fact that the respondent was happy that either the claimant or his wife carried out the work indicates that there was no contract of employment between the respondent and the claimant but that the contract was for the work to be carried out, either by the claimant or by someone else if necessary.  However Mr Fee did accept that in general it was the claimant who carried out these bus runs provided by the respondent. 

 

(ii)             Control exercised by the employer

 

                    Mr Fee submitted that in the arrangement as existed here it was the respondent who contacted the claimant offering work for the incoming week. 

 

(iii)            Obligation on the employer to provide work

 

Mr Fee submitted that in the arrangement between the parties the claimant was not under any obligation to provide the work that, although he was offered the work and regularly took it, he was not under any obligation to do the work.  Mr Fee submitted that the claimant was not under a contract of employment whereby he continued under that contract to be paid at times when he was not working for example like holidays or sickness.  The claimant was only paid per job and this was accepted by the claimant.

 

                    Mr Fee submitted that the claimant was someone who offers his services as a bus driver which were taken up by the respondent.  Mr Fee directed the Tribunal’s attention to the fact that it was agreed that the claimant also did work from time to time for other bus companies in Omagh. 

 

(iv)           The duty of public service

 

                    Mr Fee indicated that he had no specific submission on this point, that it did not arise.

 

(v)             The provision of equipment

 

Mr Fee submitted that, although the respondent accepted that he provided the bus with fuel, this point alone did not confirm the claimant’s status as an employee.

 

(vi)           The arrangements made for tax, national insurance, VAT and statutory sick pay

 

                    Mr Fee submitted that this was a significant point to consider in light of the facts in this case.  As it was accepted that the claimant was paid by the job in cash the claimant was not in the position an employee would be whose income was deducted for tax at source.  Mr Fee submitted that the claimant had been fully aware from the outset that there would be no provision made by the respondent for tax or insurance from his and that the claimant had known that this was because he was not an employee of the firm.

 

(vii)     The opportunity for work for other employers

 

                    Mr Fee submitted that the claimant was available for and accepted work from rival bus companies in Omagh and that if he had been an employee he would not have been in a position to do this. 

 

          (viii)    Other contractual provisions including holiday pay, sick pay, notice fees, expenses, etc

 

                    Mr Fee submitted that another significant fact the Tribunal should take into account was that there had never been any provision made by the respondent for the claimant for holiday pay, sick pay, notice fees, expenses, etc, that the claimant had been aware of this and that this further indicated that the claimant was not an employee of the respondent.

 

          (ix)      Degree of financial risk and responsibility for investment and management

 

                    Mr Fee submitted that under this factor the higher the percentage of financial risk borne by a party indicated that party’s employment status.  Mr Fee submitted that in this case the claimant took 100% of the financial risk in the use of his time and the use of his licence.

 

          (x)      Whether the relationship of being employed is a genuine one or whether there is an attempt to avoid modern protective legislation

 

                    Mr Fee submitted that this factor did not arise in this case.

 

          (xi)      The number of assignments, duration of engagement and the risk of running bad debts

 

                    Mr Fee submitted that in this case a number of assignments was limited to begin with to four bus runs and was then reduced to two and if the claimant were to be regarded as an employee the number of assignments would have been the greater and would be on a much more formal basis.

 

(xii)          The presence or absence of mutuality of obligation to provide or do the work

 

Mr Fee submitted that there was an absence of mutuality of obligation between the parties in this case.

 

Mr Fee submitted that the important factors for the Tribunal to consider were:-

 

          -         The informality of the arrangement between the parties.

 

-                  The fact that the claimant was able to undertake work for other companies and did so.

 

                              -         The fact that none of the claimant’s payments were subject to national insurance/income tax to which a formal employee would have been subject.

 

                    In relation to the question of whether the arrangement between the parties amounted to a contract that could be void for a legality Mr Fee submitted that there was no contract between the parties to be illegal Mr Fee submitted that all necessary tax and other obligations that the respondent had in his business had been compiled with.

 

 

 

 

 

THE TRIBUNAL'S CONCLUSIONS

 

23.     The contractual provisions themselves

 

The Tribunal concluded that although there was no written contract between the claimant and the respondent and that there was only a loose arrangement between the parties this was not conclusive of there being no contract of employment between them.  The Tribunal noted that the claimant had been offered work by Peter McDermot for the same days and at the same times weekly, that he would be paid to do this work and that the availability of the work would be confirmed to the claimant at the beginning of each week.  The Tribunal also noted that the claimant agreed to this arrangement, that he thereafter had an expectation of this work and that he agreed to carry out the work on these terms.  The Tribunal concluded that this arrangement between the parties amounted to a contract between them; the issue for the Tribunal was whether this contract was a contract of employment, that is a contract of service or a contract for services.

 

24.     Control

 

The Tribunal concluded that in the arrangement between the claimant and the respondent, the respondent retained the control of the work and directed the claimant to do it every week.  The Tribunal also noted that the respondent retained the control of the bus, its upkeep and fuel, and provided this to the claimant to carry out the work. 

 

25.     Mutuality of obligation

 

This test is the analysis of the concept of mutuality of obligation between the parties, the obligation on the employer (respondent) to provide work and the obligation on the employee (claimant) to do the work.  The Tribunal rejected Mr Fee’s submission that the respondent was not under any obligation to provide the work and that although the claimant was offered the work and readily took it that he was not under any obligation to do the work.  The Tribunal accepted that there had been an offer of this work made to the claimant by Peter McDermot that included the understanding that the work would be available and that the claimant would be agreeable to do it.  The Tribunal noted that Peter McDermot had approached the claimant at a time when the firm needed a driver, that he offered this regular work to the claimant and that the claimant in accepting the offer of work had an expectation that the work would be made available to him. 

 

The Tribunal also found that although the claimant’s wife did occasionally do some of the bus runs for the claimant that this arrangement was not sufficient to lead the Tribunal to the conclusion that the contract between the claimant and the respondent was a contract for services.  See McFarland v Glasgow City Council and City & East London FHS Authority v Durkin.  The Tribunal concluded that this was a domestic arrangement between Mr Bonner and his wife and that it did not amount to “right of substitution” in the usual sense.  

 

 

 

 

 

26.     The opportunity for work for other employers

         

The Tribunal did not accept that the fact that the claimant was available for and accepted work from rival bus companies in Omagh precluded the claimant from being an employee of the respondent.  The Tribunal noted that the claimant also had a full-time job but noted the legal and factual possibility that a worker may be an employee of more than one person.    The Tribunal accepted that although there were no provisions for holiday pay, sick pay, notice fees and expenses usually consequent on a contract of employment, the Tribunal did not conclude that their absence was determinative of there being no contract of employment.  In reaching this conclusion the Tribunal took into consideration the case of City & East London FHS Authority v Durkin and noted its conclusions that the absence of arrangements for holiday pay and sick pay etc are not conclusive that the arrangement between the respondent and the claimant was not a contract of employment.

 

27.     Degree of financial risk and responsibility for investment and management

 

          The Tribunal did not accept that in this case the claimant took 100% of the financial risk in the use of his time and the use of his bus licence.  The Tribunal did not find that the claimant was running a business for himself, providing services as a bus driver.  In his agreement to carry out this work the claimant was giving his time and his licence in return for payment.

 

          The Tribunal concluded that the claimant was an employee of the respondent. The Tribunal went on to consider its findings of fact in light of the appropriate law, namely Article 126 of the Employment Rights (Northern Ireland) Order 1996. This gives an employee the right not to be unfairly dismissed by his employer.  Article 130 of the same Order states that if the reason for the dismissal is within that Article it will be a fair dismissal and paragraph (2) (c) one of those fair reasons is that the employee was redundant.

 

Article 130A of the same order inserts provisions made by the Employment (Northern Ireland) Order 2003 (dismissal and disciplinary procedures) and states that:

 

(1)      An employee who is dismissed shall be regarded for the purposes of this part as unfairly dismissed if-

 

(a)           one of the procedures set out in Part 1 of Schedule 1 to the Employment (Northern Ireland) Order 2003 dismissal and disciplinary procedures applies in relation to the dismissal;

 

(b)           the procedure has not been completed; and

 

(c)            the non-completion of the procedure is wholly or mainly attributable to the failure by the employer to comply with its requirements.

 

Accordingly, in light of its findings of fact, the Tribunal concluded that the respondent dismissed the claimant by reason of redundancy.

 

 

The Tribunal also concluded that the respondent had failed to comply with the statutory procedures. In accordance with the Order the Tribunal must increase the claimant’s award by at least 10% and has discretion to do so up to a maximum of 50%. In this case the Tribunal decided to increase the claimant’s award by 20%.

 

Therefore the Tribunal orders the respondent to pay the claimant:

 

£60  x  1½  x  1       =        £90

 

plus £30  x  1  x  1   =        £60

 

uplifted by 20%       =        £180

 

28.           This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

 

 

 

 

Chairman:

 

 

Date and place of hearing:         28 August 2009, Omagh.

 

 

Date decision recorded in register and issued to parties: