United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	THOMAS KIBLING (of Counsel) Messrs Lancasters Solicitors 486 Chiswick High Street London W4 5TT


 


MR JUSTICE KEENE: This is a preliminary hearing for the appellant to show that there is an arguable point of law which justifies allowing this appeal to proceed further to a full hearing.

The tribunal below found that the appellant had not been an employee of either of the respondents, but had been self employed retained on a fee paying basis. In short, it found that his was a contract for services and not a contract of service.

In the Notice of Appeal the single ground raised was that that finding is one which no reasonable tribunal properly directing itself could have come to. The Notice of Appeal then seeks to canvass at some length the evidence said by the appellant to have been given before the tribunal during the course of an eight day hearing.

The matter has proceeded on a somewhat different basis today before this appeal tribunal. Nonetheless, we make it clear that we are in no position to substitute our judgment of the witnesses heard by the tribunal below over those days for that tribunal's judgment. It is clear from the reading of the decision that that tribunal took a critical view of a number of those witnesses, including the appellant himself, and one of those called by him, a Mr Snowden. The latter was described by the tribunal as "not a very credible witness", and as "evasive in his answers". We have to proceed on the basis of the primary facts as found by the tribunal.

The appellant had been involved in the advertising world in the north of England. In 1993 he held the position of Northern Sales Manager with a company in Chester, but in late 1993 that company ceased trading. The appellant was then approached by another company based in Chester called Axys Ltd. Discussions took place with a view to him joining that company on the basis of a salary of some £30-35,000 per annum plus a car, health insurance and a pension.

The two respondents were London based advertising businesses engaged in the field of computer advertising. Both were run by Mr Geoffrey Smith and his wife, who used her maiden name of Mary Tattan. Mr Smith invited the appellant down to London for discussions and a meeting took place at a restaurant. According to the appellant this resulted in a basis for his employment by the respondent Tattan Smith Associates ["TSA"]. This was that he would have a salary of £3,400 per month gross, £2,500 per month net, with a car and out of pocket expenses, that initially he would receive only £1,200 per month gross because of cash flow problems, but that in a few month he would be paid his full salary and arrears. His impression, according to him, was that he was to be an employee with his employer being responsible for his tax and National Insurance contributions.

According to Mr Smith that was not what was agreed as the contract. His evidence was that the appellant was to come up with advertising ideas, sell them to customers, and thereby create opportunities which TSA would be able to make use of. The tribunal summarised Mr Smith's evidence as to TSA's offer as being that a fee of £1,200 per month would be paid gross, that Mr McEvoy would be responsible for his own tax and National Insurance, and his own car and expenses, but that if and when any of the ideas which it was anticipated would be introduced came on stream, then a commission package would be put together.

The tribunal preferred Mr Smith's version of what had been agreed, and it subsequently concluded that the appellant was to be self employed. In its decision it refers to a number of considerations pointing in that direction.

First of all, so far as the contractual terms were concerned, it noted that the appellant had to leave his wife and home in Chester and stay in London, and the tribunal found this unlikely if he was to be an employee on the sort of salary about which he gave evidence, that is to say about £40,000 per annum gross, but only £1,200 per month gross for the first few months because of cash flow problems. In the tribunal's judgment this did not provide much incentive to leave Chester when he had a substantial package on offer in that town from Axys Ltd. The tribunal concluded that it was the prospect of commission, as Mr Smith had described, which made sense of the move. Therefore, they saw that as being the contractual basis for the arrangement.

Secondly, apparently, the appellant failed to raise the issue of payment with Mr Smith after three months on only £1,200 gross per month, even though the appellant and his wife were by then getting into financial difficulties. On his version of the agreement, £1,200 per month was only to be his salary for a few months, and so it was to be anticipated that he would raise the matter after that initial period. Thirdly, there was no evidence, said the tribunal, of TSA having cash flow problems, and yet that was the explanation advanced by the appellant for why he was only receiving £1,200 per month. Fourthly, there was evidence that other senior people were engaged on a monthly fee and commission basis. Fifthly, the appellant was constantly being asked to produce invoices so as obtain payment. Sixthly, there was evidence that the respondent, TSA, did not control the appellant's activities, but left him to find the openings and opportunities. That is a matter which is dealt with in particular half way through paragraph 6 of the tribunal's decision.

The appellant had relied on that fact that the Inland Revenue treated him as an employee. The tribunal pointed out that that was only one factor amongst many. He also referred to a number of other considerations as to the arrangements under which he worked in London, and we shall return to those when we deal with the arguments which have been advanced today on his behalf by Mr Kibling.

At paragraph 7 of the tribunal's decision, the tribunal quoted the view of Mummery J, as he then was, in this appeal tribunal in the case of Hall v Lorimer which was endorsed by the Court of Appeal in that case at [1994] IRLR 171. The learned judge had said this in dealing with issues such as we are currently concerned with:

"The object of the exercise is to paint a picture from the accumulation of detail. It is a matter of evaluation of the overall effect of the detail."

No criticism is advanced in the Notice of Appeal or today of that approach, as a matter of law, to this issue. We bear in mind also that the emphasis in that passage from Hall v Lorimer was on the need to stand back from the detail so as to make an appreciation of the whole picture. The tribunal itself having quoted that passage went on to say:

"From the wealth of evidence put before us we are drawn irresistibly to the conclusion that Mr McEvoy operated under a contract for services, and not a contract of services."

On behalf of the appellant, Mr Kibling has somewhat altered the nature of the challenge. He places less emphasis upon perversity of the decision, and more upon the particular approach, which in his submission the tribunal adopted. He emphasises that the appellant was regarded by the Inland Revenue and indeed other government agencies as an employee for their purposes, so that he was treated as an employee for the purpose of, to take one example, sickness benefit. It is submitted that the relevant factors, in trying to arrive at a decision on the status of a person such as Mr McEvoy, are such things as the obligation to work particular hours of work, the fact that pay is fixed in consideration of the person's willingness and ability to work, the performance of a personal service, and whether the individual is subject to the command and control of the employer. Mr Kibling submits, and we agree, that the mere fact that the label given by the parties suggests one answer or another does not itself prove the true nature of the relationship.

He submits that the tribunal failed to give proper consideration to a number of matters: first of all, that his work was (it is said) directed and supervised by Geoffrey Smith; secondly, that the appellant was provided at his work place in London with equipment such as a desk and telephone by the respondent company; thirdly, that the appellant kept office hours and was required to be at work at 9.30 a.m.; fourthly, that he had a personal assistant paid and controlled by the respondent; fifthly, that there is a reference to the appellant being described as a Minister without portfolio; and sixthly, the determination by the Inland Revenue that he was engaged under a contract of services. In essence, Mr Kibling is arguing that the tribunal failed to take into account those considerations.

We begin by emphasising that it is important to recognise the distinction between the decision on what the terms of the contract between the appellant and TSA, or for that matter TKH, were and the decision whether the appellant was an employee or self employed under that contract. The contract itself was never reduced to writing. Its terms remained ones orally agreed. The tribunal heard from those present at the time when it was agreed. We can see no basis upon which this appeal tribunal could interfere with the tribunal's decision that it preferred Mr Smith's version of the contractual terms to that of the appellant, and in fairness Mr Kibling has not sought to contend otherwise. That means that he was to be paid a monthly amount by way of a fee plus commission. That does not automatically determine the other issue of whether he was an employee or self-employed. Even so it may be a pointer.

There were other pointers as the tribunal has indicated. There was evidence, apparently accepted by the tribunal, that the appellant's activities were not controlled by the respondents. Thus one finds that, though it was alleged by the appellant that his work was directed and supervised by Mr Smith who told him what to do and how to do it, the tribunal found that that was not the relationship. They accepted evidence from another witness that Mr McEvoy would open the doors, Mr Smith would do the presentation, and that Mr Smith did not tell Mr McEvoy where to go. The tribunal referred to the relationship as being in a sense more of a partnership. Thus, that very important consideration is one where the tribunal's conclusion was contrary to what is now advanced on behalf of the appellant.

Certainly, the first of the matters said to have been left out of account was very clearly taken into account by the tribunal below. The tribunal also expressly deals in its reasoning with the sixth matter raised, that is to say, the approach of the Inland Revenue. The other matters, which it is alleged the tribunal left out of account, are not repeated by the tribunal later in its decision when it comes to deal with its conclusions. Nonetheless, in so far as those matters were raised, it does seem to us to have taken them into account. It sets them out in paragraph 6 of its decision. We say in passing that we do find anywhere in the decision a requirement that the appellant had to be at work at 9.30 a.m., as is asserted on his behalf today. What is referred to by the tribunal is evidence that the appellant kept office hours from 9.30 a.m. until well into the evening, and that he frequently worked at weekends. There is no indication there of any finding that those hours were imposed on him. Indeed the very reference to the fact that he frequently worked at weekends would tend to suggest a degree of flexibility in respect of that.

But the references to the appointment of a personal assistant to help him, to the fact that a desk and a telephone were provided for him at the London office and indeed a computer as well, and reference to him being a Minister without portfolio, were matters which the tribunal make reference to when they deal with his case. We cannot see that it can sensibly be argued on any further hearing that the tribunal left those matters out of account.

We bear in mind that any such decision is to be read as a whole and is to be read in a broad sensible way without taking a fine toothcomb to it. It seems to us clear from the structure of this decision that the tribunal below took the view that those factors to which we have referred, in so far as they were valid ones, were outweighed by other factors set out in its decision; such as the financial arrangements as it found those to be; and the lack of control by the respondents over the appellant's work. The weight to be attached to those factors is a matter for the tribunal, and it has to arrive at a judgment as to how it balances one set against another. Unless its decision was perverse in that respect, and we shall come to that argument in a moment, the weight that it attaches to those factors does not give rise to any issue of law. We cannot see that any argument that the tribunal failed to take these considerations into account has any prospect of success at a fuller hearing of this matter.

As for perversity, the appellant's argument amounts to asserting that it was not open to the tribunal to find that he was self employed. That amounts to saying that the only rational conclusion which could be arrived at was that he was an employee. We can see no basis for such an argument. There were pointers in different directions in this case. On the evidence there was therefore a genuine judgment to be exercised by the tribunal below, a choice open to it, which the tribunal could properly make between two conclusions as to his status. They made that choice and it is not one where we can see any arguable point arising which is likely to have any chance of success at a full hearing.

For these reasons we propose to dismiss this appeal at this stage.