United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS E SMITH (of Counsel) Messrs Irwin Mitchell Solicitors St Peter's House Hartshead Sheffield S1 2EL


 


JUDGE J HULL QC: This is an appeal to us by Mrs Theo Spring who was at all material times the editor of the Surrey County Magazine against a decision of the Industrial Tribunal sitting at Ashford, Kent, on 2 September of last year. She had complained to that Tribunal on 12 June 1997 that she had been unfairly dismissed, that she had been made redundant and wanted a redundancy payment, she also claimed that she was entitled to salary in lieu of notice.

The Respondents had been her employers. Their premises are at Maidstone in Kent and they are publishers of a large number of specialist journals, among other things. She had been their editor for purpose of editing this magazine. Her employment began on 3 November 1989 but the employers said that her employment as an employee had ended on 31 January 1995 when she became a freelance. They said that when her employment, using that in the most general sense, when her activity of editing the Surrey County Magazine ended on 17 March 1997 - which was the occasion on which she made her complaints - by then she was self-employed, had been self-employed for, indeed, more than two years, and accordingly she was not entitled to any of the relief which she sought, simply because she was not an employee within the meaning of the Employment Rights Act, or any of the other legislation relating to employees.

So that was the issue which the Tribunal had to determine. They were in the very satisfactory position of having counsel for both parties before them. Miss Smith, who appeared before us today, appeared at the Tribunal and the Respondents were also represented by Counsel. The Tribunal reached the unanimous conclusions that, indeed, Mrs Spring was not employed but was self-employed. They went through the facts, I am not going to lengthen our decision by going through all the facts, but they found a number of important matters; the Applicant was, of course, a journalist of experience, she had carried out her duties, so far as we know, in every way satisfactorily, from the Respondents point of view; and her duties did not take up all her time. They record that in the publishing trade in general about 75% of editors of magazines are freelance and self-employed and only about 25% of editors are employees and these tend, they said, to be the more junior editors. That was of some importance because it would be a matter of comment if most editors were employed persons and might lead them to doubt the reality of the transaction for that reason alone.

They say that:

"At the end of 1994, the Respondent" that is to say, the employers, "was engaged in changing their technology which necessitated editors having to spend less time on the job."

The Respondent had already changed the employment status of the editor of another magazine to freelance self-employed and they say they were looking to reduce their costs.

"At the beginning of January 1995, the Applicant" Mrs Spring "went to a meeting at the Respondent's offices... and she spoke to the Managing Director, Mr Kayani. He explained to her that the magazine was not doing very well and it was necessary to reduce her salary by £3,000 per annum. The Applicant was told that her "employee" status would cease, but that she could become a freelance editor on a self-employed basis. The Applicant took time to consider the offer and then informed Mr Kayani that she accepted."

She was given her salary under the PAYE system for January and was then given her P45 showing the leaving date as 31 January 1995.

The Tribunal go on to state what happened thereafter. They say that she submitted monthly invoices for her monthly fee. They say that she invested in a computer to help her and some specialist software, a total of more than £3,000. They say that

"The specialist software was for use only in connection with the magazine. [She] did ask Mr Chris Lethbridge, a manager with the Respondent, if the company would pay for the cost of the computer and accessories, but the company never agreed to do so."

On the face of it a point telling against her being an employed person. An employed person is usually entitled to indemnity from the employer for expenses necessarily incurred in and about the employment and would be expected not only to ask for such an indemnity but to consult an employer, if it were an employer, before engaging in the expense. But she did not do that. She was using her own initiative to do what she thought would help her in the task.

They record, and this is very important to us, that she

"regarded herself as self-employed for tax purposes and she submitted her 1996 tax return... showing her business as "journalist" and her business address as her private home address... [She] claimed various expenses, including the use of her home, lighting, heating, 10% [of the] telephone and other matters. [She] also claimed capital allowances in respect of her motor car and other equipment."

The Tribunal record that she was not obliged to work solely for the Respondent though most of her income in fact came from the Respondent. They explain how her retainer, if that is the right word as a self-employed person, came to an end. She was told that the figures did not 'stack up' and her editorship would be terminated. Then they set out the submissions which they received from each Counsel and they referred to cases, in particular Ready-Mix Concrete (SE) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497; a very important case on this part of the law.

Then they reach their findings. They say:

"13 What happened...was that the Respondent wished to change the nature of the relationship and wished for the Applicant to work as a freelance editor on a self-employed basis. The way in which the Applicant was paid was changed, in that the former salary of £15,000 per annum paid net monthly was changed to a monthly gross payment of £1,150 to include expenses. The Applicant agreed to become self-employed, although she has today insisted that this was only "for tax purposes". It is clear that the Applicant did enlist the help of professional accountants who thereafter dealt with her tax affairs and claimed expenses and capital allowances."

And they say:

"16 In this case, there are arguments to be made on both sides and, indeed, Miss Smith and Mr Tapsell have made their respective arguments admirably.

17 Having weighed up all the factors, we are unanimously of the view that after 31 January 1995 the Applicant was self-employed and not an employee of the Respondent. It follows that the Applicant's claims in the Originating Application can proceed no further."

Miss Smith has provided a very cogent Notice of Appeal and a very cogent skeleton argument, for which we are grateful.

The first matter on which Miss Smith insists is that here the Tribunal have not set out the grounds of their decision. They should, says Miss Smith, have identified those particular parts of the picture, those particular findings of fact (which, as she says, were not seriously in dispute) which they found conclusive. As it is, she says, in the result, Mrs Spring does not know why she lost. What was it? Was it the tax position and the way in which she instructed her accountant? Was it the way she worked at home? After all, she always had worked at home. Was it the change in her pay? Was it, one might have said with more force, the express agreement between two highly responsible parties, people able to act at arm's length? It might have been all sorts of things that they regarded as conclusive. In fact the Tribunal do not do that, they say "Here are the facts" and they set out a very large number of facts. "Here are the authorities which we have looked at and we have heard the arguments of Counsel" and we are sure that they were excellent arguments, they say so.

We ask ourselves, is this a valid point? The Tribunal might very well have set out the tests, or some of the tests, which those cases enjoined them to consider: Is the Applicant rightly to be regarded as being in a business of her own? Does she provide her own equipment? Is she free to work for others as well as the so-called employer? Is the employer able to control her activities by saying what her hours of work are to be, how she is to carry it out, how she is to be trained, is she to undergo training and further instruction? Are there to be limitations of policy placed on her? All those they could have set out. Instead what they did was to set out all these facts.

Now, looking at those facts it is perfectly possible, of course, that they could have arrived at one conclusion or another, but it is right to say that if they had said "No, she was not truly self-employed", they would have had to say "and we regard the purported agreement between the parties that she should be self-employed as a sham in the sense that the employer, perhaps, was exerting undue pressure on her she was in no position to resist and her conduct in making declarations to the Revenue and claiming allowances as a self-employed person was also a sham." They do not do that. They say, "Looking at all these matters as a whole, we have come to the conclusion unanimously that she was self-employed." Now, is that a sufficient statement of their reasons?

What Miss Smith has asked us to do is to say that they should have singled out particular matters as being particularly conclusive in their view. I suggested to Miss Smith that, in effect, that was a complaint that they were not setting up Aunt Sallys for her to say "Ah! Well now here they are concentrating, say, on the tax or national insurance position and totally ignoring" - I expect it would have become for the purposes of eloquence - "quite ignoring the importance of the fact that she only had one employer, in effect, and only did small jobs for other people." We think that that complaint, although a perfectly understandable and rational complaint, is not one which can avail the Applicant in law.

We think that if the Tribunal sets out all the factual matters on which they rely and then say what their conclusion is they are not bound to analyse it further and not, in particular, to go into the analytical exercise which Miss Smith envisaged and which, in a slightly different form, I have envisaged in giving our decision on this point. We do not think they are obliged to do that. They have shown quite adequately that they considered all the facts. They have shown quite adequately that they attended to the arguments of Counsel, indeed, they found them excellent and helpful. They referred to three of the leading decisions on this point. Tribunals are not supposed to act like the Court of Appeal or House of Lords and elucidate every case with glimpses of the fundamental jurisprudence on which they are acting. We think that the complaint is not a proper ground of appeal, although it is perfectly true to say that the Tribunal could, if they thought it necessary and right to do so, have gone on to analyse the position even more thoroughly than they did.

Then what is said is that this is a matter of perversity. There was only one conclusion which, on a true view, this Tribunal could have arrived it. To arrive at the conclusion which they did was perverse. It was a conclusion which no Tribunal correctly directing itself as to the law could have reached.

All we can say is that in the view of all of us it was a conclusion which this Tribunal was perfectly entitled to reach and the argument of perversity does not, in our view, avail this Applicant.

The third ground is that the Tribunal failed to take account of the Appellant's evidence of how she regarded her working relationship with the Respondents as well as their arrangements as to expenses and other matters, failed to take account of evidence as to their own finding, at paragraph 5(10), that she was told that her status of "employee" would cease at the end of January 1995.

Well they have set it out: how can it be that they have failed to take account of these matters? They heard her evidence. It is not suggested that they were high-handed and said they would not listen to any evidence or that they regarded it as totally irrelevant. In truth, if they said they looked at the whole picture and set out the whole picture we ask, rhetorically, how can it be said that they have not done their duty?

We think that what is being asked here is not merely for the Tribunal to be told "you must tell the Applicant why she lost by setting out your reasons," but the submissions to us really amount to this: "you must set out each and every intellectual process which you went through in reaching that conclusion". We think that is making far too high a demand on any tribunal and especially a tribunal of first instance which is charged to deal in a summary and common sense way with the evidence. We think that this is a perfectly well reasoned decision and we think that no grounds are made out on which we could say this was a fairly arguable appeal.

In those circumstances it falls to be dismissed at this stage rather than being allowed to continue to a full hearing.