United Kingdom Employment Appeal Tribunal

BAILII case number: [1993] UKEAT 104_93_2704

Appeal No. EAT/104/93

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 27 April 1993

Before

HIS HONOUR JUDGE J PEPPITT QC

MISS C HOLROYD

MRS T MARSLAND

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BASIL WYATT & SONS LTD          APPELLANTS

(1) MR M MCCARTHY (2) MR J MCCARTHY          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MR D F STOPFORD

(LAY REPRESENTATIVE)

Building Employers Confederation

82 New Cavendish Street

London W1M 8AD

For the Respondents MR A WOODS

(UNION OFFICIAL)

Union of Construction Allied Trades & Technicians

54 Henstead Road

Southampton

Hants S01 2DD


 


JUDGE PEPPITT QC: This is an appeal by employers Basil Wyatt and Sons Ltd from a decision of the Reading Industrial Tribunal made on 4 September 1992. The Tribunal's decision was on a preliminary issue namely whether the two applicants, Mr M McCarthy and his son Mr J McCarthy, were employees of Basil Wyatt and Sons for the purpose of their claim for redundancy payments. The Tribunal held that the applicants were indeed employees of the Appellants before us and it is against that holding that the Appellants now appeal.

Whether or not in any particular case a person is an employee of another depends upon whether he is employed under a contract of service in which case he is an employee, or a contract for services in which case he is an independent contractor. In modern industrial conditions it is often very difficult for a Tribunal to assess precisely where the dividing line between the two lies. In such a case the Tribunal is required to undertake a balancing exercise weighing up all the relevant factors before coming to a conclusion whether the applicant in question is or is not an employee in the sense that he is employed under a contract of service. No single fact is decisive, nor is it decisive that the parties themselves might have agreed that their relationship falls into one or other of the categories.

Mr Stopford on behalf of the Appellants has referred to the well known case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions & National Insurance [1968] 1 ALL ENGLAND REPORTS P433. That case concerned issues of national insurance which might raise somewhat different considerations from those raised by applications under the Employment Protection (Consolidation) Act but having said that, we have reminded ourselves of Mr Justice MacKenna's definition of a contract of service which appears at page 439(H). Mr Justice MacKenna said:

"I must now consider what is meant by a contract of service. A contract of service exists if the following three conditions are fulfilled: (i) The servant agrees that in consideration of a wage or other 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 other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service."

It was against that background that the Tribunal came to the conclusion that the McCarthys were indeed employees of the Appellants. That question we are of the view was a question of fact for the Tribunal to decide.

In Lee Ting Sang v Chung Chi-Keung and Another [1990] ICR 409 the Privy Council reached the conclusion that the application of the various tests in order to answer the question of whether or not a particular individual was or was not an employee, was essentially a question of fact. It was put in this way:

"Whether or not a person is employed under a contract of service is often said in the authorities to be a mixed question of fact and law. Exceptionally, if the relationship is dependent solely upon the true construction of a written document it is regarded as a question of law; see Davies v Presbyterian Church of Wales [1986] ICR 280. But where, as in the present case, the relationship has to be determined by an investigation and evaluation of the factual circumstances in which the work is performed, it must now be taken to be firmly established that the question of whether or not the work was performed in the capacity of an employee or as an independent contractor is to be regarded by an appellate court as a question of fact to be determined by the trial court. At first sight it seems rather strange that this should be so, for whether or not a certain set of facts should be classified under one legal head rather than another would appear to be a question of law. However, no doubt because of the difficulty of devising a conclusive test to resolve the question and the threat of the appellate courts being crushed by the weight of appeals if the many borderline cases were considered to be questions of law, it was held in a series of decisions in the Court of Appeal and in the House of Lords under the English Workmen's Compensation Acts 1906 and 1925 that a finding by a county court judge that a workman was, or was not, employed under a contract of service was a question of fact with which an appellate court could only interfere if there was no evidence to support his finding."

That decision was followed by the Court of Appeal in Clifford v Union of Democratic Mine Workers 1991 IRLR 518 and accordingly binds us in the determination of this appeal.

What we have to consider therefore is whether, in reaching its conclusion that the McCarthys were employees of the Appellants, the Tribunal's finding was perverse in the sense that it was one which could not have been reached by any reasonable Tribunal. The Tribunal in its Reasons considered and weighed up the conflicting considerations as a prelude to its answering of the question posed before it. Mr Michael McCarthy and his son Mr James McCarthy both worked for the Appellants as carpenters. They had no capital at risk in the business. They worked for no-one other than the Appellants. They were supervised and directed in their work by or on behalf of the Appellants. They worked the regular hours which the Appellants required of them. They supplied their own tools but because they were carpenters the tools were only those ordinarily used by carpenters and no plant was involved. Mr McCarthy senior was paid a gross sum to cover both his and his son's remuneration and the facts alleged in the Applicants' complaints indicated that the gross sum was divided equally between them. Both McCarthys were treated and designated by the Appellants as being self-employed. Neither was paid for any periods of holiday which they took. Mr McCarthy senior accepted that he was not entitled to receive notice terminating his employment and that he received no sick pay. There was no written contract.

The evidence before the Tribunal was that the McCarthys had worked for the Appellants and only for the Appellants for some five and a half years. Against that background and in the light of those findings the Tribunal held that Mr McCarthy was an employee of the Appellants. They then went on to consider the position of Mr McCarthy's son. It was argued before the Tribunal that because the Appellants never made any direct payments to Mr McCarthy junior, there was no contractual relationship between them, still less a contractual arrangement consisting in a contract of service. The Tribunal having found that Mr McCarthy senior was an employee and not an independent contractor came to the conclusion that the sum paid by the Appellants to Mr McCarthy senior was by way of remuneration for both himself and his son and that the part which was payable to his son was paid to Mr McCarthy senior as the Appellants' agents for onward transmission to the son. That was an inference which in our judgment the Tribunal was entitled to draw from the facts which it found. The Tribunal thereupon came to the conclusion that Mr J McCarthy as well as his father was an employee of the Appellants.

The question we have to ask ourselves is not whether or not the Tribunal was right in arriving at that conclusion but whether the conclusion was perverse in the sense which I have described. In our unanimous view there was evidence before the Tribunal which entitled it to come to the conclusion which it did and that the submission which Mr Stopford made, and made powerfully, that its decision was perverse, therefore fails.

It follows that our unanimous view is that this appeal must be dismissed.