United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	THE APPELLANT IN PERSON


 


MR JUSTICE KIRKWOOD: This is the preliminary hearing of an appeal by an applicant against a decision of an Industrial Tribunal Chairman sitting alone at Cardiff on 20th November 1996, that the applicant, Mr Evans, was not an employee within the meaning of s.230(1) of the Employment Rights Act 1996, and therefore not entitled to look to the Secretary of State for certain payments he claimed to be due to him.

The extended reasons of the Chairman, sent out on 9th December 1996, refer to s.230(1) and ss.160(2) and 122 of the 1996 Act. I rather think that the reference to s.122 is a typographical error and should be s.182.

At the time the application was made the relevant statute was the 1978 Act, the Employment Protection (Consolidation) Act 1978 and the relevant provisions are to be found in that Act. Nothing however in this appeal turns upon those points because the provisions in 1978 Act are in all material respects carried forward into the 1996 Act.

Mr Evans and a colleague, Mr Payne, were in business together. Latterly they operated under the umbrella of a company called Mid Valley Investments. Their business was the purchase of land on an investment basis and, as I understand, the buying and holding of property for letting out. The issued share capital of the company was £2. Mr Evans and Mr Payne had one share each. They were the two directors of the company and we have also been told that Mr Payne was the company secretary.

In November 1992 administrative receivers of the company were appointed on the instruction of Barclays Bank PLC, the main lenders.

Mr Evans has claimed a redundancy payment and has claimed arrears of wages and holiday pay. In the light of the company's insolvency, he has made his claim against the Secretary of State and that was the subject matter of his Originating Application to the Industrial Tribunal on 20th September 1996. He was saying in effect, that ever since the appointment of the receiver, some nearly four years earlier, he had not had any wages. His claim for outstanding wages and interest was itself alone in a sum in excess of £200,000.

The Secretary of State resisted the claim on the basis of putting Mr Evans to proof that he was an employee within the definition of s.153(1) of the 1978 Act.

That is the issue that the Industrial Tribunal Chairman tried.

In doing so, the Chairman considered the nature of Mr Evans's working relationship with the company. He found that Mr Evans was not an employee and that is the decision against which Mr Evans appeals.

In a letter to the Employment Appeal Tribunal dated 27th January 1997, Mr Evans made the following points:

(1) The Chairman had got himself confused about the whole affair and inaccurately recorded facts in the extended reasons.

(2) The tribunal Chairman was wrong to say that Mid Valley Investments was preceded by Bargoed Coal Co Ltd, that it was the other way about.

(3) The Chairman was wrong not to reflect in his reasons the circumstance that Mr Evans had been employed by the Bargoed Coal Co Ltd, and when that had gone into liquidation he claimed a redundancy payment from the Secretary of State and was paid.

(4) The Chairman did not reflect the fact that his contract of employment was then transferred to Mid Valley Investments.

(5) Mr Evans makes a point about the Chairman saying that neither company was a limited liability company.

(6) As to the Chairman's recital that two people were employed by the company, Mr Evans tells us that there were more.

(7) The Chairman was wrong not to find that the Mid Valley Investment Co was a very profitable land development company.

Going to the key issue of employment, Mr Evans alleges errors of finding of fact as to his pattern of work, his drawing of wages, his responsibility for the van, the use of the office, Mr Evans whereabouts (whether he had disappeared), the nature and purport of the document described as a contract of employment.

He complains too about being told that if he called one of the receivers, he would be bound by that witness's answers. Mr Evans asserts that he should have been allowed to cross-examine.

It may well be a point that Mr Evans does not appreciate, and why should he, that when one calls a witness in ones own cause, that witness gives his evidence and one is not allowed to challenge the evidence, and that is a rule and practice that operates in every jurisdiction of the courts that apply rules of procedure and evidence.

In his Notice of Appeal Mr Evans says that no evidence was given on behalf of the Secretary of State. He maintains that the extended reasons show that the Chairman relied upon a report to which he did not have a sight. I have to say that we have not been able to identify any such document for ourselves, except the questionnaire which is at page 28 and 29 of our bundle, nor are we driven by looking at the extended reasons to conclude that that assertion is right.

The Notice of Appeal then substantially repeats and properly repeats the points contained in the letters to which I have referred.

In the case of Lee v Chung [1990] IRLR 236, Her Majesty's Privy Council were considering the distinction between the status of employer and employee on an appeal from the Court of Appeal of Hong Kong. I should say in case Mr Evans does not appreciate it, that the Judicial Committee of the Privy Council is manned by judges who are also judges who sit in the appellate committee of the House of Lords, so they are judges of the very highest level in this country. In the course of the decision of the Privy Council, Lord Griffiths, one of the five judges who heard the appeal and the judge who gave the unanimous decision of the Judicial Committee, said this:

"What then is the standard to apply? This has proved to be most elusive question and despite a plethora of authorities the courts have not been able to devise a single test that will conclusively point to the distinction in all cases. Their Lordships agree with the Court of Appeal when they said that the matter has never been better put than by Cooke J at pp. 198 and 195 in Market Investigations v Minister of Social Security [1969] 2 QB 173:

'The fundamental test to be applied is this: "Is the person who has engaged himself to perform the services performing as a person in business on his own account?"

'If the answer to that question is "Yes", then the contract is a contract for services. If the answer is "No", then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will be no doubt have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such mattes as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.'

..."

That, it will be seen, indicates that a tribunal or judge deciding whether the reality is one of employment or not, has to consider a very wide range of considerations looking at the actual situation as it was on the ground, rather than the appearance that might be given from any particular documents.

I refer to one other decided case which is a decision of the Court of Appeal in O'Kelly and others v Trust House Forte [1983] ICR 728:

"... the question whether the applicants were "employees" under a "contract of employment" with section 153(1) of the Employment Protection (Consolidation) Act 1978 was a question of law but that answer involved questions of degree and fact which it was for the industrial tribunal to determine and the appeal tribunal was not entitled to interfere with the industrial tribunal's decision unless the industrial tribunal had misdirected itself in law or its decision was one which no tribunal properly directing itself on the relevant facts, could have reached."

Sir John Donaldson MR is noted as having added to that:

"An appellate court must loyally accept the conclusions of fact with which it is presented and, accepting those conclusions, it must be satisfied that there must have been a misdirection of a question of law before it can intervene. The appeal tribunal has no jurisdiction to consider any question of mixed fact and law until it has extracted a question of pure law."

In his helpful and careful argument to us today, Mr Evans took us through the extended reasons given by the Chairman, and pointed those areas in which he says the Chairman has made what are frankly errors of fact in his decision.

In paragraph 2 he says that the Chairman was wrong to find that neither Bargoed Coal nor Mid Valley Investments was a limited liability company; that he was wrong to find that Mr Evans and Mr Payne were the only two people working in Mid Valley Investments; that he was wrong to find in paragraph 6 that there was a time at which Mr Evans and Mr Payne had effectively disappeared. He was half wrong to say that Mr Evans did not draw wages on a regular basis. I say half wrong, because Mr Evans agrees that that is right, but he says that being a single man living a quiet and simple life, he did not need all the wages to which he was entitled all the time, and he would draw merely what he needed to live on and regarded leaving the rest of the money in the company as a form of saving. So the Chairman is right in the sense that he said that Mr Evans did not draw wages on a regular basis, but we are grateful to Mr Evans for the explanation he gave.

That matter apart, none of the findings to which I have referred and of which Mr Evans makes criticism, go in any sense directly to the questions that the Chairman had to address in deciding this single question: was he or was he not an employee?

The Chairman said in paragraph 6:

"Seemingly the Income Tax and National Insurance contributions are hopelessly arrears."

Mr Evans says well that is not true. But the significance of that is that the Chairman recognises that Income Tax and National Insurance contribution were addressed in respect of Mr Evans, and Mr Evans says that that is an indication that he was an employee.

The fact is, as a number of authorities show, that the Income Tax and National Insurance point are merely one of many of the factors that the tribunal has to look at in considering whether there is an employee situation in the overall picture.

The tribunal Chairman then addressed a document called "Contract of Employment" which purports to show Mr Evans beginning employment on 4th July 1991 at a gross weekly wage of £250, no specified hours of work, services to be provided as and when required from time to time, two weeks annual holiday, provisions for sickness payment, provisions for termination of a weeks' notice and so on.

In regard to that, the tribunal Chairman found the following:

"7 ... Contract of Employment ... clearly does not reflect the true position that existed between the parties. [The Chairman then sets out the history of how it came into existence, and continues:] ... It does not in my view assist the applicant in his case. A document purporting to be a Contract of Employment is not proof that the person named therein is an employee. One has to look at the facts surrounding the working relationship between the employer and the "employee"."

And there the Chairman, in our judgment, was applying just the right test as indicated in those previous decided cases to which I have referred.

The Chairman concluded with these words:

"8 In this case I am satisfied Mr Evans was not an employee. He was very much his own master; he was answerable to no-one; he was able to come and go as he pleased; if he did not feel like work he need no go and do anything; if something needed repairing or cleaning then he was in a position where he could send someone else to do the job. No-one in the company told him what to do or how to do it and he had no set hours of work. The financial arrangements which were loose in the extreme sit oddly with employee status as does the fact that for several years Mr Evans and Mr Payne did not speak and the office premises were abandoned. [The abandonment of the office is something which Mr Evans does not go along with fully.] Everything points to a partnership rather than an employee, employer relationship. I am quite satisfied that Mr Evans was not an employee within the definition in S.230(1) of the Employment Rights Act 1996 and is not entitled to claim against the Fund."

In the course of argument I drew that paragraph particularly to Mr Evans's attention for any comment he may wish to make upon it.

The conclusion we reach is that it is not in any sense demonstrated to us that the Chairman made an error of law. Indeed, we are quite satisfied that he did not. Nor is it demonstrated to us that he made significant error in the material findings of fact which go to the employer/employee question. For us to disturb a decision on the basis of the facts alone, we would need to be satisfied that the finding was both material, individually and in the totality of the picture, and also was a finding or findings which no tribunal could possibly have made in a reasonable way on the material before it. That is not in any way demonstrated to us, and so we reach the conclusion that there is not here a case arguable before a full hearing of the Employment Appeal Tribunal with both parties present. The result is that this appeal is dismissed at this stage.