United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS P HUGHES (Solicitor) Harehills and Chapeltown Law Centre 263 Roundhay Road Leeds LS8 4HS
For the Respondents	MR R SMITH (Representative)


 


JUDGE J HULL QC: This is an appeal to us by Marie Middleton. She is a sales representative or was, at all material times. She was first (if I can use a usual word) retained by the Respondents, The Photographer Ltd, whose headquarters apparently are in Gloucester, as a sales representative, to sell their product or service, which was the provision of photographs to schools, group photographs, apparently presented very attractively and it was a service or product which had to be sold. We do not need to go into the details for the moment.

She was first retained in September 1993 and she, for some time, was according to the Respondents, self-employed. She was a freelance. Work was found for her which she would go to. The work consisted essentially, of particular schools, having been found through the telephoning, not by her. She would visit them and she would take with her certain materials to show the schools what was on offer and, if she was successful then the school would ask the Respondents to provide the school with the photographic services.

There came a time when, according again to the Respondents, she ceased to be self-employed and became employed. That was on 12 September 1995. Then on 28 August 1997 her employment ended. She complained to the Industrial Tribunal that she had been unfairly dismissed and that there had been unlawful deductions from her wages. The response of the Respondents was that she had not been dismissed (this is the vital matter for our purposes); that she had been employed as an employed person for less than two years and thus under section 180 of the Act, of course, did not qualify to complain of unfair dismissal.

That issue was tried by the Industrial Tribunal sitting at Bristol. Mr Sara, the Chairman, sat alone and we cannot do better, it seems to us, than refer to the facts which Mr Sara found and the reasons which he gave for his decision. He came to the conclusion that Mrs Middleton did not have the full two year period because, he said, she had been self-employed at first and was not employed until September 1995.

The Chairman started by quoting from the Act and stating the common ground; that her employment had ended on 28 August and concerning the other period he said this, in paragraph 3:

"In 1993 the applicant was engaged by the respondents as a commission agent selling the respondents' school photography service to schools in the North West of England. She was supplied with a portfolio. This was an important sales tool. Normally she did not go cold calling; she worked to appointments made by the respondents' telesales operation. She visited schools, obtained orders and was paid commission on those orders. She was not provided with any telephone and I find that she was not provided with any telephone expenses unless she went out of her area. She was often given an advance at the beginning of the month, but that was subsequently deducted from her commission. She worked from home. Initially she worked two days a week as she was working part-time for a catering company. This rose to three days and then up to five days a week and then, because of some tragic personal circumstances she went back to do more work for the catering company. During early Summer 1995 she was doing very little work for the respondents.

It is clear to me that the work with the respondents was essentially flexible with no precise hours and a varying number of days work. Although she was taxed as employed by the catering company she was also taxed as self-employed under Schedule D in respect of her commission earnings with the respondents, and she paid her own National Insurance [we regard that as being of some importance]."

She must have declared to the Revenue and the National Insurance authorities and they must have accepted that she was, so far as the Respondents were concerned, self-employed.

Ms Hughes now says to us, quite rightly, the label does not matter. The Tribunal must look at the reality. We accept of course that that is so, but if a person like this, a person with a commercial business or carrying on a commercial life, chooses (and it must be her choice) to say that she is self-employed and to make returns on that basis and to pay tax and claim allowances on that basis, then one would have thought that any Tribunal of fact would want to know how that was. Is it alleged that this is all sham? Is the Applicant saying, "I'm afraid I was dishonest about this. I said one thing to the tax man and I'm saying another thing to you", or is it a case of a mistake, wrong advice given, something of that sort? The Tribunal would want to look into that, but with a person in a commercial position, apparently carrying on more than one activity at this time, commercially, one would have thought that that was something which required explanation if it was to be said that that was quite wrong, which of course the Applicant did.

The Chairman went on, at paragraph 4:

"4 This situation continued until in July 1995 when she was offered what was described as employment by the respondents. She obtained a P.45 from the catering company which showed date of ending of employment 11 August 1995. She wrote a letter on 11 September 1995 to the respondents saying 'I will be controlled by being employed'. ..."

The fact was, as we understand that there had been some friction between her and the Respondents and what she wrote on 11 September 1995, is worth quoting (page 13 of our second bundle). She wrote to the (I think) Finance Director, the person responsible at any rate:

"I would like to thank you very much for giving me the opportunity of once again working for the Photographer, and I assure you that I will not let you down. Like you say I will be controlled by being employed. I also confirm I will work for no other, including all school holidays.

I am sure that this will be a long happy successful transition."

Saying in terms that what was to happen in the future (from that date in 1995) was to be different from what had gone before. Again, a matter which fell to be explained, one would have thought if one were looking into the facts as, of course, the Chairman was.

The Chairman went on:

"...Thereafter she was taxed on PAYE and received regular pay slips. In March 1997 she signed a contract which showed her employment starting date as being September 1995. There is no dispute that from 11 September 1995 until 28 August 1997 she was employed. Unless she can show that she was employed for the period before that she will not be entitled to make a claim for unfair dismissal."

He went on to say:

"It is clear to me that the applicant was a standard commission agent. If the sole test [he is now applying the law] is whether she was in business on her own account there must be some question about this. She was working for the respondents, she did not act as a commission agent for anyone else, and it is clear to me that she was expected to do this work herself and not to provide a substitute. I have been referred to the recent case of Lane v Shire Roofing [1995] IRLR 493, where a building worker was engaged on a one-off job for which he was paid a lump sum. When he was injured it was held that he was employed during that time and therefore that the injury occurred during the course of his employment. There are differences from the present case. That case was a case where the plaintiff was described as being in effect 'on the lump' engaged only for his labour. He did not have the degree of independence enjoyed by the applicant."

Now that was indeed, a different case. A case in the Court of Appeal and among the things that were said in that case, that there were policy reasons in the Safety at Work field, to look carefully, if the employee label was used. Was it self-employed? Was it employment under a contract of service? - and, among other things, that was a case as the learned Chairman said, in which a small sub-contractor, one man business, was invited to do some work and was injured and the Court of Appeal said, among other things, (and I am looking at the judgment of Henry LJ). He said:

"The next question is whether the respondents owed to the plaintiff the common law or statutory duty of an employer to his employees, or whether the appellant when doing that job was acting as an independent contractor. When it comes to the question of safety at work, there is a real public interest in recognising the employer/employee relationship when it exists, because of the responsibilities that the common law and statutes such as the Employers' Liability (Compulsory Insurance) Act 1969 places on the employer."

And after referring to a number of very important authorities, which are not in any way doubted by the Court of Appeal, he goes on to say:

"That line of authority shows that there are many factors to be taken into account in answering this question, and, with different priority being given to those factors in different cases, all depends on the facts of each individual case. Certain principles relevant to this case, however, emerge.

First, the element of control will be important; who lays down what is to be done, the way in which it is to be done, the means by which it is to be done, and the time when it is done? Who provides (ie hires and fires) the team by which it is to be done, and who provides the material, plant and machinery and tools used?

But it is recognised that the control test may not be decisive - for instance, in the case of skilled employees, with discretion to decide how their work should be done. In such cases the question is broadened to whose business was it? Was the workman carrying on his own business, or was he carrying on that of his employers? [and then he cited from an American case]."

The Court of Appeal eventually concluded in that case that it was a case where the so-called sub-contractor was, indeed, an employee. That case was referred to when this appeal was first brought and there was also a reference to a case which is now reported, a very recent case: Clark v Oxfordshire Health Authority [1998] IRLR 125. That was a case of a nurse who was working in a somewhat freelance way, as being a person who belonged to a "nurse-bank" as a staff nurse. It was a case in which this Employment Appeal Tribunal allowed an appeal from the Industrial Tribunal and the Court of Appeal held that we should not have done so. The Court of Appeal made a number of important observations and it is a case, of course, which depends in part at any rate, on its own facts. I cite only one of the matters of principle which the Court of Appeal asserted:

"In the ordinary case, where the determination of whether a person is 'employed' under a 'contract of employment' depends not only on reference to written documents but also on an investigation and evaluation the factual circumstances in which the work is performed, the responsibility of determining and evaluating all the relevant admissible evidence is that of the tribunal at first instance."

After saying that the Industrial Tribunal had discharged that task the Court of Appeal said that therefore, the Employment Appeal Tribunal had no right to go any further into those matters which were determined by the Industrial Tribunal. That case is of particular importance in the sense of the principle of law (which I have just mentioned which was endorsed) not of course, for the first time by the Court of Appeal. In this case, because what the learned Chairman was doing with regard to the period from 1993 to 1995 was applying his mind essentially to an undocumented contract. It was a case of looking at the facts; to look at the reality and, of course therefore, Mr Sara, the Chairman was being the judge of those facts and he went on, in his Decision, as follows:

"My view is that if I do find the applicant to be employed then all commission agents in sales forces must be employed people and that would be a far reaching decision. She worked from home, she did not work from the office; she received no retainer during the period up to September 1995; she had no set hours although she was expected to meet her appointments; she had no paid holidays or sickness payments; she had no pension and she regarded herself as self-employed for tax purposes and indeed she signed a document which accepted in effect that her employment began 1995 and not 1993. In those circumstances I consider the applicant was not an employee until 11 September 1995 and therefore she is not entitled to make a claim for unfair dismissal."

One asks what is wrong with that? Here was the Chairman who had heard the facts, setting them out and saying that he founded his decision upon them. Is it said that he had no right to do that, in view of the many times in which those all have been said to be material factors, and in view of the dictum which I have cited from the Court of Appeal in Clark. Clearly it seems to us, he would be entitled to find on those facts that she was self-employed, though it would certainly not become as to say that he could reach no other conclusion. He would, of course, be the judge of the facts, the only person who could say what conclusion he was driven to by the evidence which he had heard.

Miss Hughes, possibly accepting that position it seems to us, in the light of these authorities, is not mounting any general challenge of that sort. She says that, here there are grounds for believing that the learned Chairman approached the matter by misapplying the law. She says he, himself, in paragraph 5, applying the test about whether she was in business on her own account there must be some question about this; that he was considering one of these important tests and saying that there was some doubt about it. He, like any other Tribunal of fact, is entitled to say "I have some doubt about a particular test" and if he does have some particular doubt, then it is especially necessary for him to go on and consider other tests and that is exactly what he did. He cannot be criticised for having doubts about one particular test and so he went on. What else is said by Miss Hughes? She says that on a number of occasions during the hearing the learned Chairman said "If I hold that this lady was employed, then it means that all commission agents are employed" or words to that effect.

We are not prepared to accept that remarks which fall from the Chairmen of Industrial Tribunals or indeed, from our own bench or any other bench in the course of argument, are to be regarded as indicative of the state of mind of the Tribunal when it comes to give its reasons and its judgment. Remarks which are made in the course of the hearing are intended to clarify the mind of the person who makes them. They are not intended to indicate any set attitude and if a remark does show, or seems to show, on the part of the Judge / Chairman that he is mistaken, either as to facts or law, it is of course the duty and privilege of the advocate to put him right at once, so that instead of waiting until the end for a mistake to be made, a mistake could be put right about that. That is one of the great advantages of our system of advocacy. It cannot possibly found an appeal to say that the Chairman made a remark which indicated that his mind was moving in an erroneous direction in the course of the hearing.

But it does not stop there, because Miss Hughes is able to say and she points to paragraph 6 and here is Mr Sara saying "My view is that if I do find the applicant to be employed then all commission agents in sales forces must be employed people and that would be a far reaching decision". So she says that shows an erroneous approach because the Chairman there was trying in effect (so to speak) to legislate on a class of people, all commission agents, and saying that he was not prepared to make a decision which would affect them all. But Miss Hughes also deployed an argument which, it seemed to me at any rate, destroyed that approach if accepted, because she said that the Court of Appeal and other Courts have said that there is really a long spectrum (if you like) between the person who is undoubtedly employed and a person who is undoubtedly self-employed. Between them there are all sorts of intermediate situations and what you often have to do is to look and see somebody, perhaps rather near the middle, some doubt about whether he is employed or not employed. You look at the indications which tell one way and the indications which tell the other.

It seems to us that all the Chairman was doing there was saying, "Well this is a fairly extreme case. This lady had a great many prerogatives, freedoms and so forth, which indicate to me that she was self-employed. Can one imagine a much more extreme case? It would follow (and this, he says, by way so to speak, of argument, illustration of this thought processes) "That a great majority of commission agents would be employed if I were to be give effect to this argument, if not all of them" and he naturally regarded that as a persuasive argument because it is well known that many commission agents are self-employed people, of course. That was only one of his ways of looking at it.

It is, of course, a short decision but it seems to us that this experienced Chairman did apply the correct tests, having found one test a rather doubtful quantity. He then went on to apply all the other facts in the case. It is not suggested he omitted a vital fact. Exactly what weight he gave to each factor he was certainly not obliged to say. What he was obliged to do was to look at the whole picture in the round as he saw it. Basing ourselves, of course, on authority, we think that he is not to be found in error in what he did. Indeed, the authorities show that that is the way in which he is to do it.

We reject the suggestion which was apparently made when this appeal was first brought, that the decision in Lane v Shire Roofing has in some way altered the law, altered the way in which Chairmen should approach their duties; and we think that the case of Clark v Oxfordshire Health Authority shows the Court of Appeal is reasserting what we have always understood to be the position, namely that insofar as the question depends on oral evidence, the Industrial Tribunal must be the Tribunal to find the facts and when the Tribunal has found the facts, we cannot interfere unless we can find quite clearly an error of law.

We cannot find an error of law here and we think, therefore, that this appeal must be dismissed.