United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 969_95_0512

Appeal No. EAT/969/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 5 December 1995

Before

HIS HONOUR JUDGE H J BYRT QC

LORD GLADWIN OF CLEE CBE JP

MISS D WHITTINGHAM

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MR S KOKSAL          APPELLANT

COLONIAL MUTUAL GROUP (UK HOLDINGS) LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


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APPEARANCES

For the Appellant IN PERSON


 


JUDGE BYRT QC: This is an appeal from a decision promulgated on 21 July 1995 by the London (South) Industrial Tribunal on a preliminary point. By that decision they unanimously decided that the Applicant (now the Appellant) was not an employee of the Respondents.

The facts found by the Industrial Tribunal are broadly as follows. That the Appellant's employment with the Respondents began by an offer, made on 19 September 1990, which was accepted by the Appellant on 24 September and the Tribunal found that, at that particular stage, there was clearly an employer/employee relationship.

Something occurred at the beginning of October which brought about a discussion between the Appellant, and one of his managers, a Mr Hickman. In the Industrial Tribunal decision, it is said that in early October the Appellant became dissatisfied once he realised exactly what the full terms of employment were, that it did not include all the incentives he had been led to expect and, as a result, there was this discussion with Mr Hickman. The date of that discussion was 8 October and the Industrial Tribunal came to their finding of fact that, on that particular occasion, it was agreed between the Appellant and Mr Hickman that he, the Appellant, should become self-employed.

The Appellant says, "At all times when I agreed this with Mr Hickman, I knew that all that was being changed was the label and this was being done for the benefit of tax purposes". The Respondents, throughout their case in front of the Industrial Tribunal, said "No, this was a change of substance" and the Industrial Tribunal found, as a fact, that this was the issue between the parties and it was this that they investigated throughout the rest of the hearing.

Matters progressed to 10 December, when an agreement was drawn up which stated quite clearly in Clause 3(5) that the parties, acknowledged the Appellant carried on a trade on his own account, and that he was not an employee of any member of the group and it was understood that the Appellant would accept that agreement in those terms. In due course the Appellant signed this agreement on 11 January 1991.

In anticipation of that event, it would appear from a number of the internal memoranda before the Industrial Tribunal, that the Appellant's remuneration was, from an accounting point of view, been put on a new footing. Thus, for instance, there was a memorandum from a woman called Madeleine Bina to the effect that, as from the commencement of January, there were to be no deductions for tax, National Insurance or car allowance, and there were further directions that the Appellant's P45 should be made up to 31 December 1990, thereby concluding his status as an employee.

The Appellant, who has argued this case in front of us, has said that these documents were a sham because, in effect, no wages had ever been paid to him. He was on commission only but at that stage he was earning no commission. So there was nothing of any significance to put on a P45 and, indeed, there was no tax to be deducted. For all that, the Industrial Tribunal had before it this internal memorandum which was circulating in the Respondents' administrative offices.

As we have indicated, the Appellant signed the agreement on 11 January. When the matter was before the Industrial Tribunal the issue was, as it had been from the beginning of October, whether the parties intended a mere change in the Appellant's label or a change in his status which was genuine and of substance.

When the Industrial Tribunal came to expressing their findings about the significance of the Appellant's signature on 11 January, they stated that that was the issue, and that they found the Appellant knew quite well that the change in status was one of substance affecting his status. Before us today, the Appellant has argued that he signed that agreement dated 10 December because he felt that he had no option. In other words, he signed it under duress. The employers put it in front of him. He never even read it, and was told he either had to sign it or get out. This formulation of his case represents a shift in that which was put forward to the Industrial Tribunal. Nonetheless, the above finding of the Industrial Tribunal is an important one, and in reading it, they were assisted by a number of marginal indications which directed them to the same conclusion. The Industrial Tribunal, in their reasons, recite a number of them and we shall consider them in turn taking into account the points upon which the Appellant has addressed us today.

The first point the Industrial Tribunal noted was that the Appellant devised notepaper for his business use at the top of which, in large letters, was placed his name so as to indicate to anybody with whom he had business dealings, that he was dealing with him personally. At the bottom of the page there was printed a logo personal to the Appellant.

The Tribunal attached some importance to the fact that in June 1992, the writing paper had the Appellant's own personal home address. However, at the same time, they did note that other writing paper, namely the writing paper used in March and April had, instead of the personal address of the Appellant, the address of the Respondents' business premises. In addition to that, the Appellant has been able to tell us today that this writing paper, was paid for by the Respondents. Then there were advertisements in newspapers which, once more, signified that the Appellant was the agent with which people were to deal. However, the address given in such advertisements was that of the Respondents. There was a calendar, written up, I think, in Turkish, which also advertised the Appellant's business. Again, this document showed the business address of the Respondents.

There was another matter to which the Industrial Tribunal obviously attached some significance. This was the evidence of a Branch Manager, a Mr Lal, to the effect that although the Appellant had access to the Respondents' office premises, he had no permanent base or desk there and, indeed, he only rarely came to the office. The Appellant disputed this before the Industrial Tribunal and, at the end of it, the Industrial Tribunal rejected the Appellant's evidence and preferred that of Mr Lal. In arguing this point before us, the Appellant has produced a letter from a Mr Dibble the IFA Manager, dated 19 November, and obtained for the purpose of this appeal within the last fortnight. The Appellant secured it having traced Mr Dibble's address (not knowing it before) through some mutual acquaintances or contact. Our view is that the letter is not admissible on the basis of new evidence because there seems no good reason why, had the Appellant made the appropriate efforts before the Industrial Tribunal hearing, Mr Dibble could not have been contacted and the evidence secured before that time. In that letter, Mr Dibble confirms that the Appellant habitually used the same desk although it was not specifically allocated to him as such. It was regarded as his, in that he was allowed to keep his own personal items within one of the drawers. Upon it there was a telephone which was known as the Appellant's own extension. However as that evidence was not before the Tribunal it cannot be blamed for coming to the conclusion they did on this limited point on the strength of their assessment of the credibility of the witnesses before them.

Then there is the point of control. Control is an important test by which one assesses whether a person is an employee or self-employed. Was the employer the person who tells the employee what to do, how to do it and when to do it. There was some evidence to the effect that the Appellant was required to go in to the Respondents' premises on Mondays each week for a meeting, the purpose of which was to bring the self-employed people, as the Respondents would say, up-to-date with the Respondents' products and also to enable them to take part in some training to meet the requirements of the Financial Services Act and LAUTRO. The evidence was that the Appellant was a poor attender, that Mr Lal could do nothing about it because the Appellant was self-employed and therefore he had no disciplinary sanctions he could apply to him. To counter the impact of that evidence the Appellant has drawn our attention to certain documentation for which Mr Lal is responsible and in particular, a letter followed by certain documentation dated February 1992, in which Mr Lal writes to the Appellant in directory terms, more akin to the relationship of an employer and employee. As those documents were before the Tribunal, we have no doubt that the parties would have addressed the Industrial Tribunal upon them and they would have had their relevance in mind at the time when they deliberated their decision.

The Industrial Tribunal also noticed and paid attention to the fact that there was evidence to the effect that self-employed persons like the Appellant was not paid holiday pay. Mr Koksal has addressed us upon that and indicated that none of the employees as such, was paid holiday pay. He told us they were paid something equivalent to a bonus which enabled them to go abroad on holidays and so on. One knows not the evidence upon which the Tribunal relied in deciding that no holiday pay was paid to the Appellant and that this was of some significance, but that typifies the difficulty sometimes experienced by an Appeal Tribunal when it is not fully acquainted with all the evidence which was adduced at the lower hearing.

Then there was the factor that, by reason of being self-employed, there would have been a difference in the rate of commission paid to the Appellant as opposed to that of an employed person. The Appellant, in addressing us, has indicated that throughout the time that he worked for the Respondents, they reduced the rate of commission paid him. One can understand that they would do so, having regard to the impact of the recession, but the point remains that there was a disparity in commission between that paid to self-employed people and employees.

At the end of the day, we in this Tribunal, have considerable sympathy, first of all with the parties who had to argue this case of some subtlety but more especially for the Industrial Tribunal who had before them a mass of facts, documents and evidence upon which to decide this comparatively simple point as to whether the Appellant was employed or self-employed. Amongst that mass of evidence, as happens in almost every case of this sort, there is some evidence which it is difficult to reconcile with another part of the evidence. It happens in the oral evidence of witnesses; inevitably it happens also in the documentation, but that does not mean that the Tribunal is absolved of the responsibility, at the end of the day, of doing its best to come to a decision which does justice between the parties on the evidence before it. Their conclusion was that the Appellant knew there was a genuine change in his status at the end of 1990 and they rejected his evidence that he had no such intention to effect such a change. They pointed out that the only evidence of control was that of the meetings on Mondays which Mr Lal had talked about and, at the end of the day, they came to the firm conclusion that the Appellant was self-employed.

There is a decision to which the Tribunal directed themselves, and they cited it in their reasons. There is the case of Hall (Inspector of Taxes) v Lorimer [1994] ICR 218 in which guidance was afforded the Industrial Tribunals by Nolan LJ, citing with approval, a decision by Mummery J. That was set out that paragraph 11 of the reasons and I think it would bear being quoted in this case:

"In order to decide whether a person carries business on his own account it is necessary to consider many different aspects of that person's work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. 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. ..."

The Industrial Tribunal, faced with the difficulties it had in reconciling conflicting evidence, found the guidance afforded by that decision useful and helpful. Accordingly one has to begin on the premise that guided by that authority, the Tribunal directed itself correctly on the important question of law which had to be applied. The only other consideration is whether the Industrial Tribunal went wrong in its factual conclusions in any particular respect, so badly wrong that its decision was one which no reasonable Tribunal could have come to.

The Appellant has addressed us at length today with courtesy, with persistence and doing the best that he could to sort through the mass of evidence which was before the Industrial Tribunal. Having listened to his submissions, we do not see that the Industrial Tribunal came to any obvious errors of fact which would have substantially affected their decision.

The Applicant must appreciate the limited role that this Appeal Tribunal has. It is not for us to decide what are the facts in any particular case. It is not for us to decide or question the Industrial Tribunal's judgment in deciding which witness to prefer and which to reject. They have the incomparable advantage of having seen the witnesses in the witness box, and of having heard them give their evidence. We are here solely to consider whether the Tribunal below have gone wrong on a point of law. We have come to the conclusion that there is no error in law in this case and that their decision on facts are ones that a reasonable Tribunal could have come to. In those circumstances, we cannot disturb this Industrial Tribunal's finding. Accordingly the appeal be dismissed.