United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR N FAHEEM Representative 83 Parklawn Avenue Epsom Surrey KT18 75J
For the Respondent	MISS E SMITH (of Counsel) Ms J Baines (REF-JB/RMF/MLFC) Messrs Sinclair Taylor & Martin Solicitors 9 Thorpe Close Portobello Road London W10 5XL


 


MR JUSTICE BURTON This is an appeal by Miss Susan Elizabeth Prior who for some 20 years acted as a devoted General Secretary to the Respondent, the Millwall Lionesses Football Club. The Constitution of the club was, it seems, not in evidence before the Employment Tribunal but a copy has been handed to us and by agreement of the parties we have referred to it.

1. After definition of the club, there is a provision for an annual general meeting to be held in May or June, the venue, date and time to be determined by the officers on at least 28 days prior notice; and provision for an extraordinary general meeting which can be convened by the secretary at the request at the request of the officers on a majority decision or at the written request of at least two thirds of the members with 14 days notification. The members are those who pay £5.00 per season for adults, £2.00 for OAP'S and children and £10.00 per family and there are as I understand it playing members who pay £5.00 per week as seniors or £4.00 per week as Juniors and those members or associate members who do not play and those members either senior or junior who do play are those who are entitled to vote at the annual general meeting.
2. At the annual general meeting, honorary officers are elected to serve for one year and are eligible for re-election at the following annual general meeting. They form the Management Committee. The Management Committee consists then of those officers described in paragraph 8 of the club constitution as follows:

Chairman, Vice Chairman, General Secretary, Team Secretaries, Treasurer, Fundraiser and Club Captain.

There is a provision, as I have indicated, for the management committee, which has a quorum, and then there is a provision for a disciplinary committee consisting of least 3 members of the management committee, one normally being the Chairman. And under paragraph 16 of the Constitution, the disciplinary committee may dismiss from membership any club member guilty of serious misconduct.

3. After those 20 years of devoted service by Miss Prior, in which it appears she carried out as General Secretary some or all no doubt at some stage or other or all of the tasks which are set out in paragraphs 15-19 of our bundle, in September 1998 there was an unfortunate dispute. The rights and wrongs of that dispute did not concern the Employment Tribunal and do not concern us, because the issue before the Employment Tribunal was a preliminary one, namely whether Miss Prior was or was not an employee of the club. Put shortly, it appears that the dispute arose out of the fact that Miss Prior was advising the club that they should comply with certain requirements of the football association of which the club was member, whereas her fellow members of the committee were disagreeing that it was necessary so to comply.
4. The difference of opinions between the parties appears to have led to a physical impact involving what Miss Prior believes to have been an assault upon her. The result, right or wrong was that she was asked or told to leave the club.

The letter read as follows of the 15^th September 1998:

"Your position as London FA member and accuser is now in direct conflict with your position as MFLC secretary in relation to receiver of correspondents [sic] and direct dealing with the WFA and LFA. To this end the MFLC elected committee have decided that you should relinquish all your duties until this matter is resolved."

And then a further letter was sent on the 3^rd October 1998 saying:

"At a meeting of the management committee on September 22^nd, it was decided that you would leave the club with immediate effect…. The committee considers your unauthorised use of headed notepaper in your allegation to the LFA to be a serious breach of conduct on your part."

Reference was made to "serious breach of conduct", which appears to have meant serious misconduct within the terms of paragraph 16. The precise result of those letters is to us at any rate unclear. It may or may not have been clarified in evidence before the Employment Tribunal as to whether it amounted to the purported or effective removal of the Appellant simply as General Secretary or also as member of the club. There may or may not have been channels which the Appellant could have followed, either within the Constitution or in the club or in the ordinary courts to seek to ensure that she remained a member of the club and/or remained General Secretary, and/or was restored to being General Secretary as a result of a vote of the members, or, simply by attending at the next annual general meeting or at an emergency one, if such could have been called, could be re-elected as General Secretary.

5. But either those channels were attempted and were unsuccessful, or they were not attempted. Certainly there was no application to the courts in relation to any declaration or review of her position or status as General Secretary or as a member. But what she did was apply to the Employment Tribunal, asserting that the Respondent was in breach of a contract of employment. Recognising the difficulty that she was unpaid, a matter to which I shall turn in a moment, such application did not, somewhat unusually, seek compensation, because of course there was no financial loss to compensate. The relief that she sought was limited to re-instatement. Hence the preliminary issue as to whether or not she was an employee would be, and in the event was decisive if resolved against her.
6. The Employment Tribunal delivered its reasons in very short form. The decision recites that the Tribunal heard evidence from the Appellant and from a Mr Mason, the Respondent's Chairman. The findings were that the Appellant had no written contract of employment, was not paid any wage or honorarium as a result of her position as General Secretary and was reimbursed certain of the expenses which she incurred on behalf of the Respondent, but by no means all; that she fulfilled many duties on behalf of the Respondent, especially on match days, that she looked to the committee for her instructions and had limited authority to make decisions for the club in certain areas e.g. the purchase of odd items of football kits. In paragraph 10 of the decision, the Tribunal said: -

10."In this case, the Tribunal find the rights and duties held by the Applicant as general secretary of the Respondent, were defined by the office which she held and were rights and duties which existed independently of the Applicant who filled that post. The Applicant was elected annually to the position of general secretary; she was unpaid and although she fulfilled many duties on behalf of the Respondent, she did so from her position as general secretary, an officer of the Respondent, and not under any contract of service."

7. Mr Faheem has acted as a friend of Miss Prior. He is, we are told, academically qualified as a lawyer, and at the moment is training to become a solicitor, but not presently with any solicitors' firm. He set out in support of the appeal a detailed skeleton argument. That skeleton argument in the form in which it first appeared primarily concentrated upon issues which had been well canvassed in many authorities, namely the difference between a contract of service and a contract for services, and in the substantial part of the skeleton he canvassed the authorities on the control test, the integration test, the economic reality test and the mutuality of obligation test, and then what he referred to, by reference to the seminal decision of MacKenna J. in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2QB 497 as the 'mixed' or 'multiple' test. When the matter came before the Tribunal, Charles J presiding, on a preliminary hearing, leave was given for the matter to go forward, but only on the basis of a very distinctive steer from Charles J, in which the specific point was raised by him for Mr Faheem's consideration, as to whether there was a contract of employment and as to whether there could be said to be any consideration. Without consideration, it may be suggested Mr Justice Charles was querying, could there be a contract of employment and/or was there one in this case?
8. As a result of that, Mr Faheem amended his skeleton argument, so as to add certain submissions as to the existence of consideration and the matter has come on before us today. The first issue is, of course, whether is this an appropriate case in which there can be an appeal from the Employment Tribunal at all. The Employment Tribunal is the judge of the facts and the matter can only come to this Appeal Tribunal on a point of law which of course includes an assertion that the decision of the Employment Tribunal was perverse. The Employment Tribunal heard the oral evidence and concluded that there was not here a contract of employment, and there are a number of authorities, particularly in the field of the distinction between contracts of service and contracts for services in which this Tribunal and more importantly the Court of Appeal have made it clear, that such decisions as to whether the Appellant was an employee or not are decisions of fact and that the apppellate body should not interfere. That is a difficulty which Mr Faheem has had first of all to grapple with and which would of itself in our view have been decisive of this appeal. But there has been, particularly as a result of what I have called the steer by Charles J, a considerable degree of contemplation of other points in Mr Faheem's skeleton and in oral submission before us, with which I now deal.
9. The first question is whether there is, in this case, a contract at all. In order for there to be a contract, there must in English law be consideration. Mr Faheem has submitted that the fact that the club has gained a benefit, as it undoubtedly has from Miss Prior's distinguished and considerable services, is enough, because that means that she, as one party to a contract, has provided a benefit, and thus consideration has moved from her. But plainly the provision of a benefit to another party is not enough to create a contract. It would amount to the gratuitous gift of services or goods and not a contract if it arose out of the simple provision of a benefit to another party. There has to be mutuality to any relationship in order to create a contract. Receipt by one of those two parties of a benefit is not sufficient. There must be a promise in return. "I will give you something in return for your services." There is, it seems to us, no such bargain in this case, no such mutuality of obligation. Mr Faheem, in the course of his skeleton and in his submissions referred to a unilateral contract, but a unilateral contract is not one in which there is no mutuality in the end, it is simply one in which, as in Carlill v Carbolic Smoke Ball Co 1893 1 QB 256, one party offers something if, in due course, the other party does something in return and then, by doing that act, the second party is accepting the offer and providing the consideration.
10. The position here is not that there was any kind of staggered mutuality, but that there was no mutuality at all. Doing our best to see if we can spell out any promise, the highest it could be put would be; "I agree or promise that I will accept the benefit that you are providing for me" and that is no promise, unless there is a promise to do something in return more than simply to accept the benefit. There is no promise here in return. There was half a suggestion, at one stage, buried in the skeleton, by reference to SU Stores Ltd v Lee [1969] 1 WLR 626, perhaps, which was a case that was referred to by Mr Faheem, that the fact that, as was the case, the Respondent paid a part of the Appellant's telephone bill, could, in some way, amount to some kind of consideration in return. That matter, if it were to amount to consideration, would however have to have been carefully evidenced and analysed below, which it was not; but we allowed Mr Faheem to tell us what the position was, and it only confirmed that there is no conceivable similarity in this case to the facts of SU Stores . In that case, in addition to his remuneration, per week the employee was paid a fixed sum of £5 per week, which he was entitled to keep as so-called expenses, irrespective of whether he in fact occurred any expenses or not; and in quantifying his total remuneration that £5 was taken into account by the court, on the basis that it was indeed remuneration for work done. The facts here were nothing like that at all. What ocured was that Miss Prior no doubt incurred many small expenses on behalf of the Respondent, but none of those were reimbursed. The only expense that was reimbursed was that, when she did use her home telephone on the Respondent's business, the cost of the calls was reimbursed, not the cost of the rental, not a proportion of the bill whether in fact any calls were business calls or not, but simply as to those calls which were business, as opposed to those calls which were personal, a perfectly proper and very fair and honourable way in which Miss Prior performed, as she did, the services that she gave to the club, gratuitously, voluntarily and under a sense of obligation, but not pursuant to a contract.
11. In that context, one only has to ask other questions:

Mr Faheem says that there was not just the burden to the Appellant of doing the work, but the benefit to her, as a result of doing the work and being General Secretary, of being able to hold herself out to the football, or women's football, world in general, as being a well thought of and diligent and distinguished secretary of the club, thus rendering her, as he put it, eligible for election to other bodies such as, in her case, the London Football Association. In fact, it appears that in order to be nominated as a candidate for the Divisional committee of the London Football Association, it is simply necessary for such a candidate to be a member of a club, and although, of course, she would not have been anything like so well known as she was, as General Secretary, had she simply been a member, she could have rendered herself eligible to be a candidate for the Divisional Committee of the London Football Association simply by paying a £5 subscription to the club to become an associated member. The fact that her membership of this club gave her certain standing, or kudos, in the women's football world could not possibly amount to consideration such as to argue for the existence of a contract.

The significant factor appears to us to be, that she was, in this respect, no different from others of the elected officials of this club, which include, as I have already indicated, the Chairman, Vice Chairman, General Secretary, Team Secretaries, Treasurer, Fundraiser and Club Captain. Mr Faheem, on behalf of the Appellant, suggested that, under the rules of some Association or other, it was not necessary for this club to have all those officers. But nevertheless they did, and on any basis he told us that the Chairman and the Vice-Chairman and the Treasurer would in any event be required as officers. The argument that Mr Faheem puts forward that the doing of work for this club and the carrying of the honorary title of General Secretary of the club in some way is a benefit which justifies the existence of a contract, and a contract of employment, would apply as much, if not more, to the Chairman and Vice Chairman, as to the General Secretary; and thus the consequence of what she is submitting, as Mr Faheem accepted would be that all those honorary officers would thus, similarly, be employees of the club.

12. I turn to the second point arising out this appeal, which is not simply a factual one. When one, as I have sought to do, searches for the existence of any contract by looking for consideration, one cannot find it. Where does that take us? In his skeleton, Mr Faheem rightly drew our attention to the fundamental centrality of MacKenna J's judgment in Ready Mixed Concrete and in his skeleton he reported MacKenna J as saying:

"For a contract of employment to exist, the following conditions must be satisfied. The worker must undertake to provide his own work and skill. The worker must be subject to the other's control in a sufficient degree. The other provisions of the contract must be consistent with its being a contract of service."

And Mr Faheem then said in his skeleton:

"It is submitted that Miss Prior fulfilled these conditions."

13. Unfortunately, however, Mr Faheem left out a very important aspect of MacKenna J's judgment when he set out those conditions as compared with the actual report, which he did helpfully annex to his skeleton. MacKenna J in fact said as follows, at 515C: -

"I must now consider what is meant by "contract of service". A contract of service exists if these three conditions are fulfilled.

(i) The servant agrees that in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.

(ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master.

(iii)The other provisions of the contract are consistent with its being a contract of service.

I need say little about (i) and (ii)

As to (i) there must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind."

It can be seen that his last aspect was omitted from Mr Faheem's summary. Later in his judgment, at page 524C, MacKenna J. continues: -

"Then are the four indicia of a contract of service, first mentioned in Park v Wilson's and Clyde Coal Company Ltd and repeated by Lord Thankerton in Short and J W Henderson Ltd."

The latter is a House of Lords decision, reported in 1946 62 TLR 427 at 429. McKenna J. then set out those four indicia: -

"a) The Master's power of selection of his servant

b) The payment of wages or other remuneration

c) The Master's right to control the method of doing the work

d) The Master's right of suspension or dismissal."

He then continued: -

"It seems to me that (a) and (d) are chiefly relevant in determining whether there was a contract of any kind between the supposed master and servant, and they have little use in determining whether the contract is one of service. The same is true of (b), unless one distinguishes between different methods of payment, payment by results tending to prove independence and payment by time, the relation of master and servant."

14. Those passages in MacKenna J's judgment have of course been cited time and again. But particularly significant is their citation in the Court of Appeal in Nethermere (St Neots) Ltd v Gardiner [1984] I.C.R. 612 at 623 in the judgment of Stephenson L.J., in which the learned judge referred to the passage I have cited above from MacKenna J. in Ready Mixed Concrete at 515 and then continues: -

"Of (iii) MacKenna J. proceeded to give some valuable examples, none on all fours with this case. I do not quote what he says at (i) and (ii) except as to mutual obligations.

And then he cites the central passage: -

"There must be a wage or other remuneration otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill."

And then Lord Justice Stephenson said:-

"There must, in my judgment be an irreducible minimum of obligation on each side to create a contract of service, I doubt if it can be reduced any lower than in the sentences I have just quoted."

Lord Justice Stephenson's memorable phrase the "irreducible minimum of obligation" has recently been adopted and given approbation by the House of Lords and in particular the Lord Chancellor, in Carmichael v National Power plc [2000] IRLR 43. In those circumstances, the absence of a wage or remuneration means the absence, on the facts of this case, if not of the most important indicium of a contract of employment, certainly of a fundamental one.

15. I have already referred to the facts of this case, which show that it is accepted that no payment was made, and the only payment of any kind that was made was simply a reimbursement of part of Miss Prior's expenses, and cannot be, nor has been suggested to have been, of itself consideration for the services the Appellant provided. The only case in which Mr Faheem has been able to find any assistance for his proposition that there is some kind of category, unknown to any of the text books or the authorities, of an 'unpaid employee' is a decision of a deputy judge, Mr Moriarty QC, of which Mr Faheem has provided a short report, R v Ealing London Borough Council, ex p. Fox from the Times for March 9 1998, in the housing field. It is indeed an extremely truncated report, but it reads, so far as the head note is concerned, as follows:

"It was not necessary for the purposes of establishing a local connection with a district under section 61(1)(b) of the Housing Act 1985 that a homeless person's employment in that district was paid employment. Mr Gerald Moriarty QC sitting as a deputy judge of the Queens Bench Division so held in a reserved judgment on January 29 when inter alia granting a declaration that under section 61 of the Housing Act 1985 "employed in" meant employed in work, whether the work was for remuneration or voluntary, on an application for judicial review by Mr Anthony Fox of a decision of the London Borough of Ealing to refer his homelessness application to Solihull Metropolitan Borough Council."

Without seeking in any way to question, nor could we given the very shortness of the report, the conclusion which Mr Moriarty QC there came to, one can see that there is good sense in construing a housing Act which is intended to require, in that particular section, the establishment of a local connection on the part of the person who is seeking to be housed, that does not assist us at all in deciding whether there is a contract of employment for the purposes of employment law. In any event so far in as it could be relied upon to such effect, we would not follow such a decision, nor would we be bound by it.

16. The only other case which Mr Faheem drew our attention in his skeleton argument as being in any way relevant appears to us to be not, as he would have submitted, helpful to him, but rather unhelpful. It is a decision called 102 Social Club and Institute Ltd v Bickerton [1977] ICR 911. In that case the officers of a club consisted of President, Vice President, Treasurer and Secretary. All officers were elected by ballot yearly except the Secretary, who, having been elected, remained in office during the pleasure of the club, subject to removal, and was, as was provided by the club rules, to receive 'such salary as made from time to time be determined'. Under the rule, the Secretary received £225 a year, which he described as an 'honorarium'. The issue was, in those days when it was necessary for there to be established to be four employees of a respondent entity before it could be subject to a claim for unfair dismissal, whether the applicant, who was so claiming, was one of four employees, before he would be able to establish jurisdiction, and so therefore the issue was whether the Secretary was an employee.
17. As can be seen from the head note, to which I have referred, the Secretary in that case was paid. And the issue, which in the end, was sent back to the Employment Tribunal for further consideration was whether the sum of £225 a year, which he was indeed paid, was an 'honorarium', that is a gratuitous non-contractual payment, in which case he would not have been working under a contract of employment, or a salary, in which case he would or could have been. In this case, there is no payment to the Appellant at all, whether described as an 'honorarium' or otherwise, and so it seems quite clear to us that if such had been the facts, the matter would not have been sent back in 102 Social Club; there would have been no doubt at all but that the Secretary in that case would not have been an employee, as we are satisfied in this case that Miss Prior is not an employee.
18. As we have indicated, there is no category that we have seen anywhere referred to or contemplated of gratuitous or unpaid employees. Mr Faheem has said that it is a matter for reconsideration, a matter of policy as there become more people who are giving services for example to charities and other bodies, for nothing, as we appreciate that, as more people retire early, more are doing.
19. Whether such valuable people have the protection of laws, for example of natural justice, well established rights to judicial review in certain circumstances, based on reasonable expectations of how they will be treated, which go back well before the days when employment rights were first recognised as giving the kind of sanctions which are now are available in these tribunals, would be a matter for consideration on the facts of any particular case. But this is a tribunal of employment law, and we are entirely satisfied that, for the purposes of section 230 of the Employment Rights Act, we look in vain for a contract of employment in this case. As Miss Smith has pointed out, there were other reasons why the Employment Tribunal did not find on the facts of this case the existence of a contract of employment, apart from the absence of remuneration. One of those matters was the fact that the Appellant was elected every year, and was subject to re-election or removal. Therefore the status of Secretary depended entirely on the members' vote. Of course, that may in some cases, as it might have done in 102 Social Club, (although in that case it is noteworthy that the Secretary was not elected annually) nevertheless result in the Secretary being an employee, if remuneration were to be paid to him or her once elected.
20. But in a case as here, where all the honorary officers (and the very fact they are called honorary officers emphasises their status) were elected annually, and there was no distinction, other than no doubt the extra burden of work, between the General Secretary and the other honorary officers, and where their continuation depended entirely on being annually elected, the status that they thus obtained was a status gained by that election, and not as a result of any contract of employment.
21. It is also worth dealing shortly with other such questions as were raised, and were obviously in the mind of the Employment Tribunal, such as mutuality of obligation. Clearly, in this case, the matter did not arise, but one is only left to query whether - and we are of the view that the position would hardly have been in any doubt, - if the Appellant had not carried out the obligations, the duties, the tasks which she set out in pages 15-19 of the bundle diligently, or competently, the club would have had any right to enforce a contract of employment against her. That we consider is something which would have been very obviously untenable, the moment it was raised. There might have been some ground for removing her under the rules, and she might have been able to challenge any such removal, as indeed she perhaps could have done in this case. But such enforcement of a contract by the Respondent would, we conclude, have been as impossible as her contention that she was an employee.
22. Lastly, Mr Faheem raised questions in his skeleton argument about the position of discrimination laws. Nothing we say in this judgment is intended to be directed toward anything other than a decision as to whether there was in this case a contract of employment, giving rise to a claim for unfair dismissal. Discrimination laws, whether race discrimination, sex discrimination or disability discrimination, have their own statutory provisions, which are not dependent upon the establishment of a contract of employment of the kind here alleged. We need say nothing more about that.
23. In those circumstances, with sympathy for the dedication that Miss Prior obviously gave over many years, we conclude that we are entirely satisfied that there is no ground for appeal against the Employment Tribunal's decision that she was not an employee.