United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR DAMIAN BROWN (of Counsel) Messrs Thompsons Solicitors Congress House Great Russell Street London WC1B 3LW
For the Respondents	MR STUART CATCHPOLE (of Counsel) Mr Peter Whitehurst The Treasury Solicitors Queen Anne's Chambers 28 Broadway London SW1H 9JS


 


JUDGE PUGSLEY: This is an appeal against the decision of a Chairman sitting alone that the appellant was not an employee and therefore was not within the protection of the employment protection legislation. The parties have not argued the issue of whether the Chairman sitting alone had jurisdiction to decide the issue.

The factual background may be briefly outlined. The appellant had joined the Coastguard Auxiliary Service in May of 1990. She was discharged in November of 1995. There is an issue as to whether she was dismissed or discharged by mutual agreement.

The appellant's Notice of Appeal contains a number of grounds but they can be distilled into the following contentions:

(a) that the Chairman failed to appreciate the significance of the fact that the issue in this case was not whether the contract was a contract of service, or a contract for services, but whether the applicant was an employee or a volunteer;

(b) that in reaching his decision the Chairman failed to analyse the provisions in the Coastguards manual;

(c) that the Chairman adopted a subjective approach of asking what the parties believed the status of an auxiliary to be rather than analysing what the true nature of the relationship was;

(d) that the Chairman adopted the rigid and mechanistic approach of looking at the one case O'Kelly v Trust House Forte [1983] IRLR 369, which concerned the distinction between the status of an employee or being self-employed as though the criteria enunciated in that case were exhaustive and determinative of a case in which the issue was whether the applicant was a volunteer or employee.

There is are incentives for an employer to ensure that as few as possible of the workforce are in law regarded as employees. This relieves an employer of the responsibility of having to pay national insurance deductions, deduct income tax, pay holiday or sickness pay, make a redundancy payment and removes the risk of being sued for unfair dismissal. Yet employers often wish to retain their power of controlling and supervising the work of those whom they for other reasons wish to designate as self-employed. A plethora of cases have been reported. Faced with the myriad complexity of the arrangements which may be made the recent trend has been to accept that the relationship cannot be precisely defined and that the decision which will be reached by an assessment of an accumulation of relevant factors which it is best left to the court or tribunal of first instance to determine. The modern approach is perhaps most clearly exemplified by the judgment of Mummery J in Hall v Lorimer [1994] ICR 218 at 244, which was approved by the Court of Appeal:

"The object of the exercise is to paint a picture from the overall 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 making an informed, qualitative appreciation of the whole. It is the evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one individual. The process involves painting a picture in each individual case."

We have before us a copy of the Coastguard Manual and the tribunal found that the appellant signed the standard form application contained therein.

Paragraph 1.1. of that manual states as follows:

"The Coastguard Auxiliary Service is a volunteer public service undertaken by members of the public who have a concern for the interest in safety of life at sea. The CAS assist HM Coastguard to fulfil its responsibilities effectively and efficiently."

Paragraph 1.2 states:

"It is important to note that membership of the Coastguard Auxiliary Service is not to be treated as a form of employment by the Department of Transport. Auxiliary Coastguards are not Civil Servants but volunteers who, except for Reporting members, are paid accordingly to the service they give. The Department cannot commit itself to offer any Auxiliary a particular pattern of service. it is for local management to enrol, use and discharge individual Auxiliaries in accordance with the requirements of HM Coastguard. No Auxiliary is to undertake more than 16 hours paid work per week on a 'regular' basis. 'Regular' in this context means [not] more than 16 hours of paid work per week on average over a period of one month."

We hope that we are not being unduly cynical in saying that this paragraph was drafted by an employer alive to the provisions of the Employment Protection (Consolidation) Act 1978, as amended (now the Employment Rights Act 1996). We suspect the reference to 16 hours is clearly not coincidental as it refers to the old bench mark which divided part-time from full-time employment. Whilst a tribunal will give weight to the status that the parties agree between themselves the label by which the parties choose to describe their relationship cannot alter or determine the true nature of the relationship. A party cannot be estopped from asserting that he is an employee even if he has deliberately and openly accepted the classification since this would deny him the right to the benefit pass for his protection (see the judgment of Stephenson LJ in the Court of Appeal case Young & Woods Ltd v West [1980] IRLR 201 at 207) and would infringe what is now section 203 of the 1996 Act.

In his decision, the learned Chairman recites various aspects of evidence that he has heard, and at paragraph 17 he states as follows:

"17. I have been given a very helpful indication as to how I should decide that issue. That arises from the case of O'Kelly -v- Trusthouse Forte Plc (document R3) reported at IRLR (1983) page 369, and Mr Smyth in his submission went through the various facts that the Tribunal found in that case to assist them in coming to the conclusion that on that occasion the applicants were not working under an employment contract. The conditions applicable and evidence in respect of the present case compared to the facts from O'Kelly appear to show that paragraphs (a) to (f) could be said to apply to the present applicant. Paragraphs (g), (h) and (i) would not necessarily apply in the case of the applicant. Paragraphs (j) to (p) certainly do apply in the same way to the applicant and in accordance with the evidence I heard. As to (r) it deals with the custom and practice of the industry. The evidence I had in regard to that was Mr Harding's from his knowledge over many years of being involved in the respondents as a full time employee and a senior executive. He had found that it was accepted by the very great majority of the persons working under a similar contract as to that of the applicant that they were volunteers and not employees, and he could not really remember anyone taking the line that they were an employee."

At paragraph 18 the tribunal goes on to say this:

"18. In such circumstances it seems reasonable to me to come to the view that it is also the custom and practice of the coast guard service that volunteers are taken on to do certain tasks and that they are volunteers, they are not employees. Looking at the rest of the paragraph I consider that there was mutuality of obligation."

The Chairman continued at paragraph 22:

"22. Looking therefore in the round at this matter and trying to loot at it not only from a legal situation but a logical and sensible interpretation of the position held by the applicant and those who sign up under the same contract and as volunteers in the auxiliary service of the respondents, I am bound to the conclusion that in these situations they are not employees and in those circumstances I have to find against the applicant in this case and find the applicant is not an employee in these circumstances, and that the Tribunal has no jurisdiction to hear this matter."

We have some difficulty in finding consistency in the learned Chairman's reasoning. In paragraph 13 the learned Chairman sets out the evidence of Mr Harding, called by the respondent employer. Mr Harding said "that people who became part of the respondents had a very high sense of duty and attitude towards that service, and accepted that they were not bound to attend their duties or keep any particular regular hours, but they did so out of attitude towards the job they had taken on and the responsibilities they had taken on." The learned Chairman went on in paragraph 14 to say that the appellant fell within the category of an individual who has a high moral attitude towards the responsibilities she had taken on when she undertook the task of an administrative assistant. In paragraph 18 the Chairman stated "Looking at the rest of the paragraph I consider that there was mutuality of obligation."

We are troubled by the finding in paragraph 18 that there was mutuality of obligation and by the concept enunciated in paragraph 22 of signing up under a contract ... as volunteers. We consider there is force in the appellant's submissions that there is a failure in the decision to analyse, amongst others, the significance of the provisions in the manual concerning:

(a) the limit of hours that could be worked;

(b) the requirement that individuals should be physically fit;

(c) the method of calculating reckonable service;

(d) the provisions for discharge;

(e) the provisions for tax and National Insurance contributions.

The most crucial provision is the existence of a disciplinary and grievance procedure and the tribunal makes no attempt to analyse the relevance of this in considering the status of the appellant and whether it is consistent with being a volunteer.

We consider that the proper approach is to determine whether there was a contract between the parties. In order to determine whether there was a contract the tribunal will have to make precise findings of fact, including findings as to that part of the owner's manual which they find to be relevant, as to the whether there was an obligation upon the appellant to attend work and whether that obligation arose as a result of a contractual obligation. We do not consider that it is conclusive that the appellant was motivated by a desire to serve the public and that she was paid less that the going rate for that type of work. Whilst the general perception of the status of volunteers is a matter to be weighed in the balance the label of volunteer is not conclusive. Whether or not a volunteer could maintain an action if not paid, as the respondents appeared to concede, is also a relevant consideration. If it is determined that there is a contract then the tribunal must determine whether it is a contract of service. We do not consider that it is necessary to set out the numerous cases in which that matter has been considered. Perhaps the most pithy test is that post by Bristow J in Withers v Flackwell Heath Football Supporters Club [1981] IRLR 307 when he asked what would be the applicant's honest answer to the question 'Are you your own boss?'

There is a body of case law as to whether the decision as to the status of the applicant is one of fact or law. We do not intend to advert to the authorities to which we have been referred. In our view this decision is flawed in that the tribunal adopted a mechanistic approach by looking at one authority as though that would yield the answer rather than carrying out the balancing act of the overall position. It made no attempt to analyse the provisions in the Coastguard Manual. It failed to direct itself that the perception of the nature of the relationship was only one matter to be considered and that its task was to decide whether what was the true nature of the relationship. There is no recognition in the decision that the parties cannot contract out of the provisions of the Act. The tribunal failed to identify the proper test which was whether there was a contract and, if so, whether it was a contract of service. Whether a tribunal has applied the correct test is in our view clearly a matter of law. We direct that the appeal be allowed and the matter be reheard by another tribunal. We do not consider it is open to us to carry out the balancing exercise which is necessary. That is a matter for the Industrial Tribunal in the light of its findings of fact about the significance of provisions of the Coastguard Manual in the context of the factual matrix of the working practices as found by the tribunal.