United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR G PRICHARD (of Counsel) Messrs Bevans Solicitors 155 Whiteladies Road Bristol BS8 2RF
For the Respondents	MR J WALTERS (of Counsel) Messrs Derek James & Vaux Solicitors 119/121 Chepstow Road Maindee Square Newport NP9 8XG


 


JUDGE PETER CLARK: This matter comes before us for a full appeal hearing, following a preliminary hearing before a division of this Tribunal presided over by Kirkwood J, sitting on 5 February 1998 at which the scope of the present hearing was carefully limited.

The background is as follows. By an Originating Application dated 17 July 1997 Mr Simmons alleged that he had been dismissed by the Respondent, Celtic Technologies Ltd, on 18 April 1997 both unfairly and in breach of contract. By their Notice of Appearance the Respondent contended, inter alia, that the Appellant had never been their employee, but had provided his accountancy services to them on a self-employed basis.

The preliminary issue as to whether the Appellant was an employee within section 230 of the Employment Rights Act 1996 came before an Industrial Tribunal chaired by Dr Rachel Davies on 11 September 1997. On that day the Appellant gave his evidence and was cross-examined. At the close of his case, late in the afternoon, the Tribunal invited submissions from his Counsel, Mr Prichard, as to why the claim should not be struck out on the basis that, on his own evidence he had failed to show that he was employed by the Respondent. Having heard those submissions the Tribunal concluded that he had not made out his case on this issue and without hearing evidence from the Respondent they struck out the claim.

There has been some discussion before us as to the use of the expression "struck out". We are satisfied that what was intended was a decision that the claim should be dismissed on the basis that there was no case for the Respondent to answer.

On the Tribunal's findings, contained in their extended reasons, it appears that from 1993 the Appellant provided the Respondent with accounting services including wages and an annual audit. In July 1994, which is the month in which the Appellant alleged that his employment began, it was agreed between the Appellant and Mr Rees, the Respondent's Managing Director, that he should work more closely with the company. On 12 July Mr Rees wrote to the Appellant saying "as agreed I would like you to join us and progress the accounts ... you can spend as many days with us as you think appropriate". He said the Appellant's experience and skills would be "a considerable asset" to the company and that the company looked forward to having him work 'with' them. The Appellant interpreted this as a contract of employment. The Industrial Tribunal record at paragraph 3 of their reasons:

"Mr Rees said the purpose was merely to confirm a closer association with the company and the provision of more services."

Thereafter, the Appellant's commitment to the company increased. On the company's organisation chart sent to clients he was named as "Finance Manager". He attended the company's offices two or three times a week and towards the end of 1996 increased that to three or four times a week. It was the Appellant's evidence that he worked for no-one else and felt constrained by considerations of confidentiality not to provide his services elsewhere. The Tribunal added; at paragraph 4 of their reasons:

"There was however no agreement to that effect and the respondent's evidence was that he was free to work elsewhere. They pointed out that the organisational chart included a Mr Gorder as Project Manager and a Mr S Cole who were involved in research, neither of whom was an employee."

The Industrial Tribunal drew attention to the fact that the Appellant paid tax on a Schedule D (self employed) basis throughout and then dealt with certain differences between the treatment of the Appellant and those regarded by the Respondent as their employees.

On 24 April 1997 the Respondent wrote to the Appellant to say that the company "no longer have a requirement for accounting and systems consultation services as previously provided by your business". The Appellant interpreted that as a dismissal and presented his complaint of unfair dismissal. The Respondents asserted that he was not an employee and could therefore not have been dismissed. They say they were simply terminating his consultancy services, as the Tribunal put it.

The Tribunal then carried out a balancing exercise and found two potential factors pointing to a contract of service. The first was the letter of 12 July which they thought was capable of interpretation as welcoming the Appellant as an employee and secondly, the description of the Appellant as 'manager' on the organisation chart. They then listed 10 factors which they regarded as pointing to self-employed status. Overall, they found that the Appellant was not employed by the Respondent under a contract of service and consequently, had no jurisdiction to entertain his complaints.

The points on which the matter was permitted to proceed to a full appeal hearing were identified by Kirkwood J at page 3 F - H of his judgment in this way:

"What worries us, however, is that the Industrial Tribunal seemed to have relied in at least one instance on an assertion attributed to Mr Rees, and in two instances reached interpretation of facts assuming the interpretation of the employer without evidence of it. The narrow point, therefore, is whether it is arguable that the Industrial Tribunal erred in that having taken the point of no case of its own motion, it disallowed the Applicant the opportunity to ask questions of Mr Rees, the Respondent's Managing Director, or indeed erred in relying on any material from Mr Rees without having oral evidence from him. It is on that narrow point and that point alone that we intend to allow this case to go to a full hearing."

In opening this appeal Mr Prichard identified the following four references in the Tribunal's reasons in support of the proposition stated by Kirkwood J. We shall simply quote the passages from the extended reasons:

(1) Mr Rees said the purpose was merely to confirm a closer association with the company and the provision of more services.

(2) He, the Appellant, said he worked for no-one else and felt constrained by considerations of confidentiality not to provide his services elsewhere. There was however, no agreement to that effect and the Respondent's evidence was that he was free to work elsewhere.

(3) They pointed out that the organisational chart included a Mr Gorder as Project Manager and a Mr S. Cole who were involved in research, neither of whom was an employee.

(4) They, the Respondent, say they were simply terminating his consultancy services.

The difficulty with that submission is that on a proper analysis the Industrial Tribunal was not in fact making findings based on evidence which had not been given on behalf of the Respondent. We deal with each of the four references in turn.

(1) Mr Rees said the purpose was merely to confirm a closer association with the company and the provision of more services. It appears that that was a proposition put to the Appellant in cross-examination and simply represented the nature of the Respondent's case.

(2) The Respondent's evidence was that he was free to work elsewhere. Again, that point appears to have been put to the Appellant in cross-examination and that is how the matter came to be set out in the reasons.

(3) We are told that the Appellant accepted the proposition put to him in relation to Mr Gorder and Mr Cole and

(4) is a reference to the nature of the Respondent's pleaded case. That is that there was no employment and that their letter of 24 April 1997 simply terminated his consultancy services.

The question is whether the Industrial Tribunal was entitled to reach the conclusions which are set out at paragraph 14 of their reasons, where they say this:

"The hearing of evidence for Mr Simmons took an entire day. He struck us as an honest witness and we had no reason to disbelieve him. The facts that he stated in his evidence were not in any material respect challenged by the respondent. At 5.30 pm, having heard his case in full, and having given his representative an opportunity to address the tribunal we concluded that he had no prospect of satisfying the burden of establishing that he was an employee. His own evidence had established that he was not. There was no reason to suppose that his case would be strengthened in any way were the respondents to put their case. In our view it would have been wrong to subject the respondents or Mr Simmons to the further time and expense of an adjourned hearing. We therefore struck out the originating application at this stage in the interests of justice to both parties on the ground that there was no case to answer."

There is no difference between Counsel as to the correct principle of law to be applied by an Industrial Tribunal in considering, either on application by a party or, as here, of its own motion, whether to stop a case at the close of the first party's evidence in circumstances where the onus of establishing the case rests on that party. That cause will only be appropriate in a case which is hopeless, in the sense that additional evidence from the opposing party will not add materially to what is before the Industrial Tribunal at the half-way stage. If cross-examination of the Respondent's witnesses may assist the Appellant it would be wrong to stop the case before hearing both sides. Further, the losing party should not be left with the impression that an injustice has been done. We are confident that this experienced Industrial Tribunal Chairman had those principles well in mind.

We revert to the specific issue in this appeal. In our judgment the grounds on which the matter was allowed to proceed to this full hearing have simply not been made out. On the basis of the Appellant's case, which would not have been improved by hearing the Respondent's witnesses, or having them cross-examined, the Appellant failed to make out employment status. In that sense it was hopeless at the half-way stage. The Industrial Tribunal was entitled to so find. No error of law is made out. Accordingly the appeal is dismissed.

We emphasise that we have reached our conclusion strictly on the circumstances of this case. Nothing we have said is intended to dilute the principles clearly set out in the line of authority beginning with Ridley v GCE Machines [1978] 13 ITR 195, and most recently considered in Hackney London Borough Council v Usher [1997] ICR 705.