United Kingdom Employment Appeal Tribunal

BAILII case number: [1996] UKEAT 958_95_2501

Appeal No. EAT/958/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 25 January 1996

HIS HONOUR JUDGE P CLARK

MR D J JENKINS MBE

MRS R A VICKERS

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CHRIWEND INVESTMENTS LTD          APPELLANTS

MR S RAYMOND          RESPONDENT

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MRS R DAVIES

(Director)

For the Respondent RESPONDENT IN PERSON


 


JUDGE CLARK: The issue in this appeal brought by the employer Chriwend Investments Ltd., is whether the Industrial Tribunal sitting at Cardiff, which heard Mr Raymond's complaint of unfair dismissal on 30 March 1995, had erred in law in concluding that he had been continuously employed by the company from 18 July 1990 until his dismissal on 3 October 1994. A preliminary point was taken by Mrs Davies on behalf of the company. She applied for an order under Rule 26 of the Employment Tribunal Rules debarring the Respondent from taking any further part in the appeal, on the grounds that he has failed to serve an answer within the time limited by the Rules, or at all. Mr Raymond appeared in person before us today and apologised for his failure to file an answer. He claimed ignorance, but told us that his answer would simply have relied upon the reasoning of the Industrial Tribunal. In these circumstances we exercised our powers under Rule 26, by limiting his argument to supporting the reasoning of the Industrial Tribunal. Mrs Davies did not oppose this course.

We turn now to the substantive appeal and the factual background. The Tribunal's findings of fact are set out in their full reasons dated 25 July 1995. On 18 July 1990, Mr Raymond started work as a mechanic/fitter with a company called Chriwend Cranes Ltd., whose business was hiring out cranes and drivers. Tax was deducted from his earnings under the PAYE system. From 6 October 1990 he was paid gross, without deduction of tax, accounting for his own tax on a self-employed basis to the Inland Revenue. No written agreement to reflect any change in his status was effected between the parties.

On 14 April 1993, Chriwend Cranes Ltd., and another company Machine Movements Ltd., operating from the same premises, went into liquidation. Prior to liquidation, both those companies had been under the control of their Managing Director, Mr Derek Davies. Following the liquidation the businesses of both companies continued in the same way through the Appellant company, whose Managing Director again was Mr Davies. Mr Raymond continued working for the new business in the same way as before. On 6 September 1993, a written agreement was entered into between the Appellant and the Respondent. Mr Davies signed it on behalf of the Appellant. That document is headed "Contract of Employment" and provides that Mr Raymond's employment as a manager with the Appellant commenced on 6 September 1993. On 15 September 1993, a Contributions Agency Inspector Mr J Conway, carried out a survey at the Appellants' business and as a result wrote to Mr Davies on 28 September advising him to include Mr Raymond as an employee of the company under the PAYE system with effect from 1 October 1993.

In his Originating Application to the Industrial Tribunal, Mr Raymond claimed continuous service from 18 July 1990 until 3 October 1994. By its Notice of Appearance the Appellant contended that the employment commenced on 6 September 1993, the date of the manager's contract. If that contention was correct, Mr Raymond had insufficient continuous service to found the Industrial Tribunal's jurisdiction to hear his complaint of unfair dismissal. Accordingly this issue was taken as a preliminary point by the Industrial Tribunal. Having recited the history, the Tribunal set out the relevant evidence at paragraphs 9 and 10 of their full reasons in this way:

"9. We are satisfied on the evidence that the reality is that he was employed despite his ceasing to pay tax PAYE. His evidence was that he did the same work as before, continued to be supplied with a company van, was subject to the same hours, was paid for sickness and two weeks' annual holidays, and took the same lunch and coffee breaks as all employees. He said although he had done a little "hobble" repairing a friend's car. He was not in a position to provide his services to other companies because he worked full-time and overtime for the respondents.

10. Mr Davies's evidence was that Mr Raymond would "start first thing" at the same time every day for a five day week, and that he carried out the same work as before. He did not dispute that Mr Raymond had the use of the van for which he did not pay hire. He said Mr Raymond worked for other firms but could not substantiate that assertion with any sort of evidence. He said he could not recall Mr Raymond being off sick in the "self-employed" period, and that he was not paid for holidays."

Insofar as there was any conflict between the accounts given by Mr Raymond and Mr Davies, it is clear from paragraph 30 of the reasons that the Industrial Tribunal preferred Mr Raymond's version.

In this appeal, Mrs Davies has helpfully summarised her submissions under four heads. Before setting them out, we should record that she also relies upon the judgment of MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, setting out the well-known test which appears at page 515 C-D of the report:

"I must now consider what is meant by a contract of service.

A contract of service exists if these 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."

Her first submission was that the Industrial Tribunal, in determining the status of the Respondent, did not satisfy itself or even apply the personal service test, which is shorthand for the first of the three conditions mentioned by MacKenna J in the Ready Mixed Concrete case. Secondly, she says the Industrial Tribunal did not sufficiently consider the whole of the three-fold test in that judgment. She says by not applying these tests, the Industrial Tribunal erred in law. Third, she refers to the invoice from an accountant submitted to Mr Raymond, for the years in which his accounts were prepared on a self-employed basis, which invoice was eventually paid by the Appellant. The way it is put is by reference to paragraph 29 of the Tribunal's reasons, that the Tribunal described the payment of those accountancy fees as an inducement. What, asked Mrs Davies rhetorically, is being induced? The answer is a change of status from self-employed to employed. It therefore follows that the Industrial Tribunal was there finding that Mr Raymond had in fact been self- employed up until 6 September 1993. Her fourth point is that the Industrial Tribunal wrongly concluded that the Respondent was an employee, due in large part to the letter from the Contributions Agency, which is dealt with at paragraphs 11 and 12 of the reasons. She points out that the survey carried out by Mr Conway took place on 15 September 1993, which was after the manager's contract had been signed on 6 September. The Contributions Agency's advice to Mr Davies to put Mr Raymond on to the PAYE payroll was not as a result of the position prior to 6 September, but the position as from that date. Therefore that factor should play no part in the Tribunal's consideration of what was his true status during the period October 1990 to September 1993.

We shall deal with each of those submissions, taking the first and second submissions together, because these submissions focus on the Industrial Tribunal's alleged failure to apply each stage of the three-fold test formulated by MacKenna J. In our judgment that is not a fair reading of this decision. At paragraphs 9 and 10 the Industrial Tribunal set out the evidence relevant to the indicia pointing for or against a contract of service. It was not disputed that between 18 July and 6 October 1990 the Respondent was an employee of the company. What then changed? Apart from his electing to treat himself as self-employed for tax purposes, nothing changed on the Tribunal's findings. He performed the same hours of work at the same premises, on the same type of work as before. He was paid during sickness and holidays. In finding that the reality was that the Respondent was employed despite his ceasing to pay tax under the PAYE system, the Tribunal were stating compendiously that in their view the tests laid down by Mr Justice MacKenna had been met and they plainly bore in mind that the label attached to the relationship between the parties is not necessarily conclusive. (See Ferguson & Dawson [1976] 1WLR 1213.)

We remind ourselves that the question of whether this is a contract of service or for services, is essentially one of fact for the Industrial Tribunal. We can only interfere if the conclusion is perverse, in the sense that no reasonable Tribunal properly directing itself, could come to the conclusion which this Tribunal reached. See O'Kelly v Trust House Forte [1983] ICR 728. Having considered the findings of fact here, we cannot accept Mrs Davies' submission that the Tribunal failed to apply the correct test and thus erred in law. We should add that during the course of submissions, it became clear that Mrs Davies wished to introduce matters of evidence which were not before the Industrial Tribunal, but might have been relevant had they been advanced during the Tribunal hearing. We made it clear that we are not a fact finding Tribunal. If the evidence is not placed before the Industrial Tribunal, it now too late to introduce it on appeal.

Her third point focuses on the Industrial Tribunal's reference to the inducement, as it was put in paragraph 29 of the reasons. Her submission that it must follow from that reading of paragraph 29 that the Tribunal had found that Mr Raymond was in fact self-employed prior to September 1993, is in our view misconceived. It may very well be that the Industrial Tribunal were saying that payment of his accountancy fees formed an inducement to Mr Raymond to surrender his self-employed tax status, in order to revert to PAYE status. However, that begs the question of his true status during the relevant period. The Tribunal decided that point in the Respondent's favour in paragraphs 8-15 of their reasons.

Finally, did the Industrial Tribunal place undue weight on the letter from the Contributions Agency of 28 September 1993. We think not. The Tribunal deal with this piece of evidence at paragraphs 11 and 12 of their reasons. We do not understand it to have played any or any significant part in their overall conclusion, which appears to be based primarily on the evidence recorded at paragraphs 9 and 10. In these circumstances, we have reached the conclusion that the Appellant has been unable to demonstrate any error of law in this Tribunal decision and the appeal must be dismissed. An application for costs by the Respondent is refused.