United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR M BARKLEM (OF COUNSEL) MR B ADAMS MESSRS HERBERT SMITH SOLICITORS EXCHANGE HOUSE PRIMROSE STREET LONDON EC2A 2HS
For the Respondent	MRS E ANDREW (OF COUNSEL) MR S E THOMAS MESSRS EATON EVANS & MORRIS SOLICITORS 12 HIGH STREET HAVERFORDWEST PEMBROKESHIRE SA61 2DB


 


JUDGE SMITH:

1. This is an appeal by Gulf Oil against the decision of an Industrial Tribunal held at Cardiff as long ago as the 2nd of July 1998, of which Extended Reasons were sent to the parties on 23^rd July 1998, whereby the Tribunal held that the Applicant before them, Mr Dyas, the Respondent for this appeal, was entitled to receive a payment from Gulf on the basis that he had been an employee with Gulf with at least two years of continuous employment.
2. As appears from the Notice of Appeal and the grounds relied upon and indeed the skeleton argument and oral submissions that have been made by Mr Barklem, Counsel for the Appellant, it is rightly accepted that in order to succeed on the appeal it is necessary for Gulf Oil to establish that the decision by the Tribunal was perverse in some way, that is to say it is plainly and obviously wrong, before Gulf can succeed on this appeal.
3. It is now clear, if it was not clear before, that where the intention of the parties objectively ascertained has to be gathered partly from documents but also from oral exchanges, and from the conduct for the parties, the question as to whether there is a contract of service or a contract for services is a question of fact for the Tribunal to decide, see Carmichael v National Power [1999] ICR 1226, House of Lords, particularly as per the speech of Lord Hoffman at page 1233 at (b) and (c).
4. This decision, (and all this is trite law) only serves to re-emphasise the need for an appellate tribunal such as the Employment Appeal Tribunal to follow the guidance of the Privacy Council in Lee T Sung v Chung Chee Kung [1990] ICR 409 and in particular the guidance in Lord Griffiths' speech in that case from which it is clear that unless the first instance court or tribunal has reached a conclusion of fact which is one which no reasonable tribunal properly directing itself as to the relevant factors could have arrived at, the Appeal Tribunal should not interfere.
5. This does not mean of course that the Appeal Tribunal abdicates its responsibility for examining the decision. Nevertheless, the guiding principle is that the Tribunal's interpretation of the set of circumstances is a question of fact for them to decide which is not open to appeal unless it involves some error of law by way of self misdirection of some kind, or a perverse or demonstrably wrong finding, either not based on any evidence or on a total misconstruction or misunderstanding of the evidence before the Tribunal. We thought it right just to set out those well known principles, since we must bear those principles in mind when considering the submissions placed before us by Mr Barklem and by Mrs Elizabeth Andrew, Counsel on behalf of Mr Dyas.
6. Before we express our conclusions on this appeal in the light of the submissions made to us concisely this morning, we must summarise the decision of the Tribunal at least to the extent that it is necessary for us properly to deal with the submissions made to us. The Tribunal made their findings of fact in paragraphs 7 to 21 of the decision. In our judgment it is apparent that they took care in reaching those findings to make a comprehensive evaluation of the considerable body of oral and documentary evidence which was adduced before them on each side.
7. Their findings do not admit easily of summary and reference should be made to the relevant paragraphs for the full terms and effect of their findings of fact. In brief, they found that Mr Dyas, a civil engineer, had returned to the UK in 1989 and sought work in the engineering field. He had registered with an employment agency who had found a job for him on the Riverside Development which was conditional on his forming a limited company through which his services would be provided. So it was that Banbeck Limited was formed and the Industrial Tribunal made an important finding at the end of paragraph 7 of its decision:-

"In reality the Applicant personally provided professional services as it he were an employee. Banbeck had two directors, the Applicant and his wife and had no other employees."

8. The Tribunal went on to find as a fact in paragraph 8 that in all respects Mr Dyas was seeking work as an individual, not as a business enterprise. They found that with effect from September 1989, Mr Dyas was offered work by Gulf Oil at their Milford Haven refinery as supervisor of a building project on the site. The initial period was to be 12 to 18 months. It was a condition of the offer, on the findings of the Tribunal, that Mr Dyas should be paid through RSD Technology Limited, an Employment Agency used by Gulf. In paragraph 10 the Tribunal set out the terms of Mr Dyas's engagement as confirmed by letter from RSD:-

"….the commencement of your services as Civil Engineer…..operating through a Limited Company…..from Monday 2^nd October 1989 until further notice."

9. It turned out, on the findings of the Employment Tribunal, that due to further investment by Gulf's US parent company at Milford Haven further contracts were let by Gulf which required Mr Dyas's continued and continuous supervision. So it was that on the 18^th April 1991 RSD wrote to Mr Dyas confirming that:-

"the continuation of your services as a civil engineer at Gulf Oil operating through a limited company from Saturday 30^st March 1991until further notice."

10. The Tribunal then made very important findings of fact in paragraph 12 which we do not need to read in full. They conclude at the end of the paragraph:-

"from that time we find the applicant effectively became an employee of the respondent."

11. In paragraphs 13 to 15 and paragraph 19 of the decision, the Tribunal made a close analysis of how the relationship between Mr Dyas and Gulf Oil evolved by conduct as time went on. They found that Mr Dyas undertook a range of duties in Gulf Oil's engineering department and specifically its technical support division. They found that although he did not enjoy holiday or sick pay, and his earnings were paid gross to Banbeck, on the other hand he reported to the head of department and was not required to have public liability insurance but was indemnified by Gulf Oil who in this context expressly treated him as a quasi-employee working for Gulf Oil. He took instructions from Gulf employees, particularly Mr John Seal to whom he reported in his work. The Tribunal found that as the years went by from 1991 to 1997 Mr Dyas supervised the work of a number of different contractors being described under various job titles and that to all outward appearances he was an employee of Gulf Oil.
12. In paragraph 15 the Tribunal described in detail the equipment work-wear and transport provided to him and they make other important findings in that paragraph. In paragraph 19 they found as a fact that Mr Dyas was subject to disciplinary and management procedures and that at one stage he took a personal grievance as though he were an employee against Mr Seal and that he was subject to routine discipline by Mr Seal as his immediate line manager.
13. In paragraphs 16 to 18 the Tribunal made findings as to various changes which took place with regard to the administration of his working arrangements. Thus, on 1^st May 1995 RSD dropped out and a staff agency agreement was entered into engaging Mr Dyas as Civil Projects Co-ordinator to 5^th May 1996, terminable by 4 weeks notice on each side through the agency of Banbeck.
14. There followed, in November 1995, the signing of a professional services contract dated 25^th November 1995 showing Banbeck as a consultant and referring to the consulting services of Mr Dyas as directed by the mechanical superintendent. The Tribunal found as a fact that one of the purposes of this agreement was to secure Mr Dyas's exclusive services to Gulf since a corporate audit had shown that Mr Dyas had carried out some external work for Austwel Limited, one of the contractors whom he supervised for Gulf. It was this contract, as extended, which remained in force until it was terminated by Gulf with effect from 31^st August 1997.
15. In paragraph 18, the Tribunal made findings which, as they are strongly criticised by Mr Barklem, we should read, and which relate to a letter written by Mr Dyas to Mr May, the head of Gulf's technical division, in June 1996. The Tribunal's findings read as follows:-

"18. On 7^th June 1996, the applicant had written to Simon May, the head of the technical services division, enquiring as to his precise status for Inland Revenue purposes (Document A1/12). The applicant we find clearly had self-interest at heart, in wishing to minimise his tax liability. However, we also accept that he was looking to the respondent to say one way or another which category it sought to place him in. Though there may have been a marginal tax advantage to the applicant in contractor status, equally there would be particular advantages to him of employee status if the respondent confirmed that to be his status. No established civil engineering post had been advertised by the respondent, but we find that, de facto, the applicant was fulfilling the role of an employee without many of the employee benefits."

16. Then finally at paragraphs 20 and 21, the Tribunal made findings relating to the events between May and August 1997, which led to the termination of the contract due to the breakdown of the merger talks between Gulf and Elf Oil and the consequent decision to cease work at the Milford Haven refinery.
17. The Tribunal referred in paragraphs 24 and 25 to the detailed submissions made to them by the representatives in front of them and to many of the leading cases which were cited to them by counsel and the solicitor who appeared for Gulf, and then they expressed their conclusions at paragraph 26 of their decision as follows:-

"26. Each case of this sort must be looked at on its own facts. The tribunal concludes, having considered the totality of the arrangements by which the applicant provided his work at the Milford Haven refinery, that the applicant's status was that of an employee providing work under a contract of service. The tribunal accepts the submission of both parties that it must step back and look at the applicant's position in perspective and consider all the factors which are relevant to that status. Adopting that approach, we are satisfied that, from April 1991, the relationship between the applicant and respondent was in reality one of employer and employee."

18. While it is certainly the case that the Tribunal expressed their conclusions briefly, in our judgement the way in which they reached their conclusions must be looked at in the context of the full and careful findings of fact which they made and in their rehearsal of the submissions made to them by both sides. In our judgments, it is apparent from the manner in which the Tribunal evaluated the evidence and made their findings of fact that they had fully in mind the various legal tests which had been developed in the case law as assisting in deciding whether the contract is or is not a contract of employment. They had cited to them many of the most relevant decisions including Hall v Lorimer,[1994] IRLR 171 Young & Woods v West [1980] IRLR 201, Massey v Crown Life Insurance [1978] 2 ALLER 576 Readymix Concrete v Ministry of Pensions[1968] 2QB 497 and Lane v Shire Roofing Co. [1995] IRLR 493.
19. It is against that summary of the Tribunal's decision that we come directly to consider the submissions made by counsel for the Appellants, Mr Barklem. Before we consider the specific submissions we think it right that we should mention that, in addition to the principles we have mentioned earlier, as to the correct approach of an appellate tribunal, we have derived assistance from the decision of the Court of Appeal in Hall v Lorimer and in particular the approval in that case of the principles expressed by Mr Justice Mummery, as he then was, as summarised in the head note of that decision, and also from a passage in the judgment of Lord Justice Nolan in Hall v Lorimer at paragraph 16 of the judgment of the Court Appeal at page 175.
20. The position as regards the grounds of appeal is that there were quite a number of grounds of appeal set out in the Notice of Appeal, some of which were developed in the skeleton argument but in the oral submissions made to us, Mr Barklem has narrowed considerably the particular points which he developed and we have borne that very much in mind in the way in which we have reached our conclusions. Thus, the position is, with regard to some of the grounds of appeal, that we can deal with them very shortly. There was a suggestion that the Employment Tribunal had reached a perverse finding of fact in their decision that there has been a change in the status of Mr Dyas with effect from April 1991. In our judgment, the detailed findings of the Employment Tribunal, particularly but not exclusively at paragraphs 13-15 inclusive of the decision, amply justified the finding made by the Tribunal that there was a change in the status of Mr Dyas with effect from April 1991. We must reject that ground of appeal to the extent that it was pursued.
21. We turn to consider the further submissions that are made particularly in sub-paragraph 5(a) to (f) of the Notice of Appeal. With regard the point taken in the Notice of Appeal at sub-paragraph 5(a), which is concerned with the effect of the interposition of the employment agency RSD, in our judgment the Employment Tribunal plainly took into account that business arrangement. There is no rule of law that where arrangements are made for the engagement of a worker through an employment agency with a client company that the worker cannot be an employee of the client company if such is the proper conclusion after having made an assessment of all the relevant facts. Whilst it may be, on particular facts, that an appropriate conclusion is that the worker is employed by the employment agency, that is by no means necessarily the case in our experience. We would reject the way in which the matter was sought to be put in sub-paragraph 5(a) by way of a ground of appeal in the Notice of Appeal.
22. At sub-paragraph 5(b), as developed in paragraphs 3 and 4 of the skeleton argument and by Mr Barklem in his oral argument, a complaint is made as to what are said to be mutually inconsistent findings respectively at paragraph 15 of the Tribunal's decision and at paragraph 17 in that it is submitted that it was wrong and presumably perverse, so it is submitted, for the Employment Tribunal to have found at one and the same time that work which Mr Dyas performed for others, through the limited company, Banbeck, was negligible and amounted to no more than spare time activity when they also found at paragraph 17, that Mr Dyas had performed some external work for Austwel Limited, one of Gulf's contractors, for whom he was responsible for supervising.
23. In our judgment, on examination it is clear that these findings of fact were not mutually inconsistent but were legitimate findings based on the evidence before them. We have been helpfully referred to the evidence which was before the Employment Tribunal, particularly the evidence that only about £1,000 worth of work had been carried out for Austwel by Banbeck Limited over a considerable number of years. The Tribunal were fully entitled to make the findings that they did on the evidence before them in paragraphs 15 and 17 which we do not regard as being in any way mutually contradictory or inconsistent.
24. On the findings of the Tribunal, it is apparent that throughout the period from April 1991 to August 1997, there was overwhelming evidence before the Tribunal to the effect that Mr Dyas was working for Gulf Oil full time for the very great majority of that period and that such other work as he did through Banbeck had to be fitted around his continuing and onerous obligations to Gulf. It is clear, in any event, from the Tribunal's findings, that they did not overlook the work for Austwel and others by Banbeck Limited in reaching their overall conclusion and we must reject this ground of appeal.
25. At sub-paragraph 5(c) of the Notice of Appeal, as to some extent developed in oral submission before us, the submission was made to the effect that it was only from November 1995 when Gulf imposed a requirement that Mr Dyas should provide his services exclusively to Gulf that the Tribunal could properly have concluded that Mr Dyas became an employee of Gulf. We cannot accept this submission or that the approach of the Tribunal was in any way perverse. In our judgment there is no rule of law that restricts an employer/employee relationship to circumstances where the employee binds himself not to work for anybody else. The most that can be said, as is emphasised by Lord Justice Nolan in Hall v Lorimer, is that the existence of numerous different engagements with numerous different companies may well militate against there being an employment relationship with any of them. That was certainly not the case here and we cannot fault the approach of the Tribunal on this ground.
26. At sub-paragraphs 5(d), (e) and (f) of the Notice of Appeal as developed in paragraphs 5-8 of the skeleton argument and in the oral submissions is to be found perhaps the main point that was taken in the oral submission made by Mr Barklem. It is submitted that at paragraph 18 of their decision the Employment Tribunal misconstrued Mr Dyas's letter to Mr May of Gulf Oil which, if properly construed, so it is submitted, demonstrated an unequivocal desire on the part of Mr Dyas not to be regarded as an employee of Gulf. The submission is made that a proper construction of this letter should have caused the Tribunal to reconsider and alter its findings in paragraph 8 that in 1989 Mr Dyas did not intend to set up business on his own account and generally that the misconstruction by the Tribunal was so serious that it completely upset the balance of the decision. That is the nature of the submission that is made.
27. In our judgment, however, the Tribunal were entitled to reach the findings they did at paragraph 18 as to that letter and we find they and did take properly into account the circumstances of the writing of that letter. The findings which the Tribunal made in regard to the letter of 7^th June 1996 in paragraph 18 were permissible findings of fact which it was open to the Tribunal to make in attempting to construe what was a rather ambiguous and opaque letter. In our judgment, the evidence which the Tribunal had before then, particularly from Mr Dyas to which we have been helpfully referred particularly at page 22 of the Notice of Evidence provided by the Chairman which was not contradicted by the witnesses called by Gulf and which the Tribunal said that they accepted, strongly supported the findings of the Tribunal in relation to the letter and we cannot, for a moment, characterise as perverse in any way their findings in relation to that letter.
28. We are satisfied, in any event, that the Tribunal plainly had well in mind the submission made to them by Mrs Andrew that the case of Massey could be clearly distinguished on the facts of the instant case and further that the labels which the parties intended and wished to put upon their relationship were in any event not in any way conclusive of the matter, see Young & Woods v West.
29. So those were the submissions that were made in support of this appeal and then there was finally a submission made, at least in the skeleton argument, that the findings of the Tribunal were so contradictory that their decision was rendered inexplicable and reliance was there placed on Martin v Marks & Spencers 1998 IRLR 326. In our judgment, this cannot be fairly be said in any way of the Tribunal's decision here which we unanimously find to be well reasoned and clearly expressed.
30. Before we conclude we should say that apart from considering the submissions made by Mr Barklem we have had the benefit of a closely reasoned submission by Mrs Andrew, particularly in her skeleton argument, which she did not need to develop fully before us in her submissions, in support of the correctness of the Tribunal's decision. We have concluded that we agree with the submission made to us at pages 4-6 of her skeleton argument. She has there set out the applicable principles under her headings (a) to (e) and we find that she has accurately set out the various findings of the Tribunal under the appropriate headings. In our judgment, by collating the findings of the Tribunal in that manner, Mrs Andrew powerfully demonstrated that there were findings of fact made by the Tribunal here which were properly founded on evidence which was before the Tribunal and which, taken together, amounted to a strong body of primary fact which amply justified the conclusion that the Tribunal reached.
31. Additionally, it is clear from this presentation that the Tribunal applied the correct legal principles to their findings of fact in reaching the decision they did. Not only on the basis of the rather narrow points taken by Mr Barklem but also looking at the picture in the round, we find that we are satisfied that the Tribunal had applied what we believe to be the correct principles and we are satisfied here that the decision of the Tribunal was a reasonable decision on the questions of fact which they had to decide arrived at by reference to the correct legal principles without any error of law or misdirection on their part.
32. Accordingly, for those reasons, the appeal must be dismissed. Mrs Andrew made an application for costs, which Mr Barklem opposed. We decided that both sides should put in written submissions and we would give our decision in due course on the written submissions unless either party applied to be heard.