United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 575_95_1406

Appeal No. EAT/575/95

EAT/679/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 14 June 1996

HIS HONOUR JUDGE PETER CLARK

MR R N STRAKER

MS E C SYMONS

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MR M STEWART          APPELLANT

OWNER DRIVERS RADIO TAXI SERVICES LTD T/A DIAL - A - CAB          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant MR B PATTEN

(of Counsel)

Messrs Russell Jones & Walker

Solicitors

Swinton House

324 Gray's Inn Road

London

WC1X 8DH

For the Respondents MR D BEAN

(of Counsel)

Messrs Fladgate Fielder

Solicitors

Heron Place

3 George Street

London

W1H 6AD


 


JUDGE PETER CLARK: By an Originating Application presented to the Central Office of Industrial Tribunals on 6 October 1994 Mr Stewart complained of constructive unfair dismissal by the Respondent, Owner Drivers Radio Taxi Services Ltd T/A Dial - A - Cab. He contended that he was employed by the Respondent in the capacity of Member of the Board of Management, Welfare Officer, Insurance Administrator etc. He gave as the dates of his employment August 1987 to March 1994 (suspended without pay).

In response to the complaint the Respondent took the following points:

(1) he was not an employee

(2) that his complaint was out of time

(3) in the alternative, that if he was an employee, had been dismissed and had presented his complaint within time, then the dismissal was fair.

A preliminary hearing was arranged before the Stratford Industrial Tribunal sitting on 27 February 1995 to determine two of the issues raised which went to the Industrial Tribunal's jurisdiction, namely was the Appellant an employee and had he presented his complaint in time? In the notice of hearing those two issues are placed in reverse order.

The nature of the Respondent, its organisation and the Appellant's role in that organisation since his election as a member of the Board of Management in 1987 is described in the form IT3 in this way:

"i) The Respondent is a Friendly Society of some 40 years standing which is registered under the Industrial and Provident Societies Act 1965 to 1975 (registration number 14421R). Its membership comprises of approximately 1,500 self-employed licensed owners and operators of black London taxi-cabs. Its principal object is to operate a two-way radio/data despatch system and each member is required to have his cab fitted with a receiving and transmitting radio unit to enable that member to participate in the radio service.

ii) Under the registered rules of the Society its business is superintended and conducted by a Board of Management which comprises of a Chairman, a Secretary, a Treasurer and 6 Board members. Other than the Secretary who is a full-time employee, all the remaining Board members are elected annually by the membership at its Annual General Meeting which is traditionally held on the last Sunday in November in each year. Each year each member of the Board of Management must offer himself/herself for re-election and may be replaced if the membership so resolves. The appointment to the Board of Management is not a full-time appointment although in practice several positions namely Chairman, Treasurer and Sales and Marketing Executive do entail a full-time involvement. The Board members are not and never have been paid a salary but are compensated on an hourly basis for the time they spend on the Society's affairs. The amount of this compensation is fixed from time to time and is equivalent to what the members would have earned had they been driving their cabs. The current rate of compensation is £12 per hour. If Board members do not spend time on the Society's affairs they do not receive compensation nor do they receive compensation if they are absent due to illness or on holiday. While Tax is deducted from the member's compensation under PAYE it is submitted that this does not make them employees. This method of Tax deduction was agreed with the Revenue many years ago. Those Board members who continue to drive their cabs on a part-time basis pay Tax on such earnings under Schedule D."

Mr Patten, on behalf of the Appellant, subject to the argument about whether or not there was a contract of service, broadly accepts that summary of the Respondent's organisation.

On 10 March 1994 the Appellant's female assistant made a complaint of sexual harassment against him. That complaint was investigated by an independent tribunal convened by the Respondent. The panel sat for five days. It concluded that the complaint was well-founded.

As a result, the Appellant was relieved of his welfare duties on 21 March 1994. He remained a member of the Board, but on 4 May was suspended as a board member. He remained a member of the Society.

Thereafter correspondence passed between the parties with a view to setting up an internal appeal hearing. In the event no such hearing took place.

In late September 1994 the Appellant resigned from the board and on 6 October he presented his claim of unfair dismissal.

The Industrial Tribunal approached the preliminary hearing in this way. It assumed that the Appellant was an employee of the Respondent and went on to consider and determine only the question of whether or not he had presented his complaint within time.

It reminded itself of the provisions of section 67(2) of the Employment Protection (Consolidation) Act 1978 and the observations of Lord Denning, Master of the Rolls in Dedman v British Building and Engineering Appliances Ltd [1974] ITR 100. It then expressed its conclusion in this way:

"In this case the Applicant was relieved of his welfare portfolio on 21 March. He was suspended from the Board on 4 May. He was being advised by solicitors and his main interest at that time was in setting up an appeal hearing against the action which had been taken against him by the Respondent. He did not present his originating application until October. We are satisfied that this was presented out of time and that it was reasonably practicable for the Applicant to have presented it in time. In the circumstances, the question as to whether the Applicant was an employee does not now need to be considered and the application is accordingly dismissed."

Following receipt of the original decision the Appellant applied for a review on 28 March 1995. That application was summarily dismissed by the Chairman under his powers contained in rule 11(5) of the 1993 Industrial Tribunals Rules of Procedure. The review decision is dated 12 April 1995.

Against both the original decision and the review decision the Appellant now appeals. We shall deal first with the appeal against the original decision. Rule 10(3) of the Rules of Procedure 1993 requires Industrial Tribunals to give reasons for their decisions. That does not mean a full judgment on all the issues of fact and the legal arguments presented to it, but there must be a summary of the Tribunal's basic factual conclusions and a statement of the reasons which have led them to their conclusions. The parties are entitled to know why they have won or lost. Meek v City of Birmingham District Council [1987] IRLR 250.

Over the years a practice of holding preliminary hearings has grown up in Industrial Tribunals. That practice is now formalised in rule 6(1) introduced for the first time in the 1993 rules.

The Employment Appeal Tribunal has drawn attention on a number of occasions recently to the dangers of using the preliminary hearing procedure as a perceived short cut to a result in a case. See for example Secretary of State for Education & Science v Birchall [1994] IRLR 630 and National Union of Teachers v Governing Body of St Mary's Church of England Aided Junior School [1995] ICR 317.

In our judgment this Industrial Tribunal fell into error in taking solely the question of limitation, upon the assumption that the Appellant was an employee, and in failing to make the necessary findings to allow it to reach a proper conclusion on that issue.

If this was an employment relationship, it was an unusual one. It is unclear as to precisely what assumption the Industrial Tribunal was making in this respect. The Industrial Tribunal appear also to have assumed that there was a dismissal. But there is no finding as to the form which that dismissal took. Consequently, there is no finding as to what was the effective date of termination.

In our judgment, the correct approach for the Industrial Tribunal was to ask itself the following questions:

(1) Was the Appellant employed by the Respondent under a contract of employment? If not, the complaint fails.

(2) If he was employed, what was the nature of the employment relationship? Does it arise simply from his membership of the Respondent's Board, or from his welfare and other duties, or a combination of some or all of these aspects? What were the material terms of the contract?

(3) Was he dismissed? If not, then the complaint fails on this ground. If he was dismissed, what form did the dismissal take? Was it an actual dismissal under section 55(2)(a) of the Act, or was it a constructive dismissal under section 55(2)(c)? If the latter, what was the repudiatory breach on the part of the employer? When was that breach accepted by the employee and how was it accepted?

(4) What was the effective date of termination of the contract, based on the Industrial Tribunal's findings under (3) above.

(5) Was the complaint presented within time? If not is it reasonable to extend time under section 67(2).

In these circumstances we shall allow the first appeal and remit to a fresh Industrial Tribunal the preliminary issues identified in the Industrial Tribunal's Notice of Hearing dated 10 January 1995. We have set out what we regard as the correct approach to those issues above.

It follows that having allowed the first appeal the second appeal is redundant. We make no order on that appeal, subject to any question of costs.

Finally, before leaving this case, we should deal with Mr Bean's strictures against showing undue sympathy for an Applicant who did not have professional representation below. This is not the basis of our decision. All parties before Industrial Tribunals are entitled to have their cases properly considered and determined. On this occasion we are not satisfied that this result has been achieved. This may be a pyrrhic victory for Mr Stewart, but he has, in our view, a legitimate complaint about the way in which the original Industrial Tribunal reached its conclusion in his case.