United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	DR T S KAYE Lecturer in Law University of Birmingham Edgbaston BIRMINGHAM B15 2TT
For the Respondent	MR GERARD CLARKE (of Counsel) Messrs Baker & McKenzie Solicitors 100 New Bridge Street London EC4V 6JA


 


JUDGE B HARGROVE QC: On 31 May 1995 there was a preliminary hearing on the issue of whether the Appellant was employed by the Respondent. The Tribunal held that he was not employed. Whether a person is employed or not, is essentially a question of fact and this Tribunal must be cautious in deciding to overturn such a decision. It is, of course, true that in reaching the conclusion of fact, the Industrial Tribunal must observe the guidance given in the various cases or manner in which that matter is to be decided.

The Appellant was a salesman of the Respondent's product. In that role he was described as a sales associate. He was offered a position with the Respondent on 24 March by a document of that date and the offer specifically said that he was appointed on a self-employed and commission-only basis. There were lengthy sales associate and financial manuals, as they were described. Among a welter of matters raised by the Appellant's skeleton argument, which runs to some 86 paragraphs and an initial bundle of documents, having some 80 pages, one element of criticism seems to stand out. namely, that the Industrial Tribunal misdirected itself on the question of control.

When one looks at how that was dealt with, at paragraph 14 of the extended reasons:

"That letter referred to 'the accompanying Sales Associate and Financial Manuals'. Those documents are lengthy. I say that because only extracts from them were included in the bundle... Happily, it is not necessary to refer to those manuals in any detail. It is clear that even in the case of a Sales Associate who is switching from Hill Samuel to the respondent, that some training would be required both to ensure that the applicant and other persons in his position were familiar with the particular requirements of the respondents and to ensure, to the satisfaction of the respondent, that the applicant was conversant with LAUTRO requirements. It may, perhaps, be convenient to mention, at this stage, Section.44(6) of the Financial Services Act 1986, on which Mr Younson [who appeared for the Respondent] strongly relied. The section reads:

'The principle of an appointed representative shall be responsible, to the same extent as if he had expressly authorised it, for anything said or done or omitted by the representative in carrying on the investment business for which he has accepted responsibility.'"

Paragraph 14 of the extended reasons:

"Since it is clear that the effect of that subsection is to place a substantial potential burden on the respondent, the respondent naturally wishes to ensure that any person engaged by it is entirely familiar both with its own procedures and LAUTRO regulations. The applicant contended that between April and September, he was almost entirely engaged on training and preparation for training. At certain times during his evidence he indicated that he was not able to carry out any sales activity whatsoever, but he resiled from that position by the conclusion of his evidence. I have to say, with regret, that his evidence was not at all reliable on that and other points. I do not believe that he was deliberately evasive but that manner in which he gave his evidence did not assist his case. The applicant sought to argue that it was only in September 1994 that he was able to commence earning a living. That evidence contrasted with that of Mr Roper, who had also been engaged with Hill Samuel and who had transferred to the respondent, and who indicated that he was able to earn commission with the respondent within 2 weeks of his transfer to that Company."

The further paragraph which deals with the question of control occurs at paragraph 31(iii), which is in these terms:

"On the question of control, I am satisfied that the degree of control which the respondents sought to exercise as 'employers' was minimal, if it existed at all. The controls that did exist were necessary primarily to comply with LAUTRO Regulations and the respondent's statutory obligations. In addition, the respondent had an interest in ensuring that the applicant did earn a realistic sum by way of commission, both so as to ensure that he could repay his financial obligations under the loan and because it is far more likely that a Sales Associate who is achieving a substantial level of business will continue to sell successfully. If he is concerned as to his own financial position, it is difficult to think that he can sell the respondent's products to third parties. Accordingly, I accept Mr Younson's submission that control has to be looked at in context."

The argument seems to be that the Tribunal ought only to have asked the question, was there control? If the answer was in the affirmative, the reason for that control was immaterial, hence any consideration of s.44 of the Financial Services Act was irrelevant. In our view that approach is wholly misconceived. The multi-factor approach, painting a picture from all various colours and stepping back to see the whole design has been accepted for some time in industrial law, Hall v Lorrimer [1994] IRLR 171, indicates the proper approach.

A simple illustration with demonstrate the absurdity of the Appellant's proposition. Suppose a number of musicians, who are all self-employed, agree to perform a concert under the auspices of the management of one of the orchestras of London. They are completely controlled as to what instruments they will play, what music they will perform, the time and place where they will perform, the clothes they will wear and a multitude of other measures of control during every second of their performance. It is not until one looks at the surrounding facts which explain the need for control, that is, that it is vital that the orchestra works from the same music at the same time in the same place and it would become apparent that the reason for the control subtracts from that element which at first sight it might have. It would have been wrong for the Chairman not to have considered the reason for some of the control was because the Financial Services Act imposed duties on the Respondent in respect of the selling of products to the public.

We are satisfied that there was no misdirection by the Tribunal in relation to that and the multifactorial approach which is set forth in the extended reasons is, indeed, a model of the way in which such an exercise should be carried out.

We are further invited to reassess the evidence and to consider the way in which various aspects of the factual matters have been decided. The only basis upon which one can do that is if there is either no evidence or the conclusion drawn is palpably wrong. We can take on fairly simple example, the question of delegation. Paragraph 22 of the reasons make this quite clear:

"Mr Younson made the point that a contract of employment is entirely personal and that it is not open to an employee, in the strict sense of that word, to delegate his responsibility to perform those services for which he is employed, to any other person. That is correct in law. I contrast that position with the situation of the various Sales Associates. Both as a matter of principle and in practice, sales associates can and do delegate their duties to others. They can trade in partnership and/or in the form of limited companies. It is quite clear that any limited company which enters into any form of arrangement with the respondent cannot possibly be an employee."

Criticisms were also made of the integration element which is put forward as being a matter which has not been properly considered. Integration is not, of itself, decisive, it is merely one of the aspects of the multifactorial approach. It is true that some Tribunals might, perhaps, emphasize the matter further but there is no necessity for any Tribunal to spell out in elaborate detail every single aspect of the matter. It is not proper to go through a decision of an Industrial Tribunal as though it were a statute seeking to find special meanings or special omissions from any particular paragraph or word. Similarly, there is criticism of the aspect of whether the Appellant was in business on his own. Again, if one looks at it in the clear light of day what was happening was that the Tribunal had looked carefully at Withers v Flackwell Heath Football Supporters Club [1981] IRLR 307. They took the question which was indicated by Bristow J. and it is applied in paragraph 31(ii). Furthermore, it seems to us that there is a degree of seeking through that aspect and being blind to the obvious and clear conclusions that the Tribunal have come to. One can see the process of reasoning of the Chairman and, indeed, that is all the extended reasons should do in that respect.

By paragraph 15 it is pointed that the Respondent paid the Appellants £750 a month but that sum was clawed back in commission. Commission was the only source of his income. Paragraph 16, that there are both statutory and commercial reasons for control. There was a form A4 which was used to indicate to the Appellant how he should best organize his day in order to maximise his earnings and, of course, incidentally, those of the Respondent. Subject to compliance with LAUTRO regulations and the Respondent's procedures, he could approach whatever customers he liked. While he received some services free from the Respondents - stationery and postage, so long as it was not a large mail shot, telephone, he received no car, he need not attend the office at any particular time or, indeed, on any particular day. He paid no tax or national insurance. He received no wages as such. In the light of these facts, it is hardly surprising that the Tribunal found that he was in business on his own account.

Criticism is made of the question of too much importance being given to the question of labelling. It seems to us that that is wholly misconceived. Even if there had been any ambiguity about the arrangements it is, in our view, clarified beyond doubt by the combination of the letter of offer, to which we have referred, and a letter which was sent on 21 October 1994 when the relationship between the parties was breaking down. It comes from the Appellant, it is headed "without prejudice". Nonetheless, it has been put in evidence and the material parts are in these terms. May I first sketch the background. There had been a degree of dissatisfaction by Mr Ferguson of the Respondents of the performance of the Appellant and he was requesting a tightening up by the Appellant of his techniques. At the foot of the first page he puts forward this view:

"In this instance, the two elements of consideration on my own part were

(a) that I should uphold the 'Allied Dunbar - Financial Planning Consultant Mission Statement and Code of Ethics' (see p 22 Sales Associate Manual) and

(b) that I 'must' attend training courses etc 'to be able to achieve Threshold Competence' (see p 31, Sales Associate Manual.

I have fulfilled both these obligations, not merely to the best of my abilities but entirely according to the terms stated in the manual. [And these were the relevant words] I, as a self-employed person, have devoted my own time and effort to attending the required courses, to studying and to passing all the required examinations, thereby very substantially reducing my own earning potential throughout that period."

That in itself is fairly significant but on the following page the Appellant returns to the charge. He says:

"As a Sales Associate of Allied Dunbar I am not an employee - I am self-employed and under no contractual obligation to produce a planned activity report, although good relations with my previous manager had always prompted me to do so in the past, and for you during the three weeks you have been Branch Sales Manager."

Of course, it has been trite law since Massey v Crown Life Insurance Co [1978] 2 All ER 576 that the label the parties care to put upon their arrangement is certainly not decisive. The position is that it is an element to be considered but once one reaches the conclusion that the parties have expressed their true intentions then at that stage labelling does become important. One need only quote a well-known passage from Massey at 581:

"In the present case there is a perfectly genuine agreement entered into at the instance of Mr Massey on the footing that he is 'self-employed'. He gets the benefit of it by avoiding tax deductions and getting his pension contributions returned. I do not see that he can come along afterwards and say it is something else in order to claim that he has been unfairly dismissed. Having made his bed as being 'self-employed', he must lie on it. He is not under a contract of service."

We have been asked to consider the letter that I have indicated on the basis that it was written by a layman who did not understand the legal position and was written in anger and, therefore, is of no validity. The Industrial Tribunal rejected that interpretation and so do we. There is nothing in any of the other points which have been put forward in this appeal. The appeal is wholly misconceived. It is unfortunate that the Appellant should have been encouraged to enter upon yet another futile exercise. The matter is dismissed.