United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	Mr S Hurley, Solicitor Of- Messrs Hammond Suddards Solicitors Trinity Court 16 John Dalton Street MANCHESTER M60 8HS
For the 1st Respondent For the 2nd Respondents	Mr B Murphy, Solicitor Of- Messrs A C White Solicitors 23 Wellington Square AYR KA7 1HG Miss J Cradden, Solicitor Of – Messrs Brodies Solicitors 15 Atholl Crescent EDINBURGH EH3 8HA


 


MR JUSTICE LINDSAY (PRESIDENT):

1. In November 1996 Mr Gary Davidson saw an advertisement for jobs as analysers to repair mobile telephones with Motorola Ltd ("Motorola") at their plant at Bathgate. He responded to the advertisement and was taken on. He worked at Motorola's plant until December 1998 when he was at first suspended by Motorola's Regional Service Manager after a disciplinary hearing. That manager then decided to terminate Mr Davidson's assignment with Motorola.
2. Although the picture we might be thought thus far to have painted might seem conventional enough, there were striking features in Mr Davidson's case; it was, at lowest, arguable that he had worked under the terms and conditions set out on the back of time-sheets which were terms and conditions not between him and Motorola but between him and Melville Craig Group Ltd ("Melville Craig") and which described him as a temporary worker working under a contract for services. Melville Craig carries on, inter alia, a business of or much like that of an employment agency, supplying suitable individuals (whom it pays) and whom it assigns to work for its customers (who then pay it in respect of those individuals' services). Accordingly Motorola's IT3 began with an assertion that it had all along regarded Mr Davidson as an employee of Melville Craig and that he had never had a contract of service with Motorola. Motorola invited the Tribunal to strike out Mr Davidson's IT1. A hearing before the Employment Tribunal was arranged to determine whether it was proper for Mr Davidson's claim to go further.
3. After a hearing spread over two days in the Summer and early Autumn of 1999 before the Employment Tribunal at Glasgow under the Chairmanship of Mr C.S. Watt and at which each of Mr Davidson, Motorola and Melville Craig were represented, the unanimous decision of the Tribunal on a preliminary issue, sent to the parties on the 24th November 1999, was that Mr Davidson was an employee of Motorola and that his unfair dismissal claim should proceed against only Motorola. On the 24th December 1999 Motorola lodged its notice of appeal.
4. The appeal began by Mr Hurley, for Motorola, saying that it was only as to "control" that he wished to address the Employment Appeal Tribunal. In so saying he was referring to the well-known dictum of MacKenna J in Ready Mixed Concrete (South East) Ltd -v- Minister of Pensions [1968] 1 All E.R. 433 at 439 where he says:-

"I must now consider what is meant by a contract of service. A contract of service exists if the following 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. ...... As to (ii). Control includes the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when, and the place where it shall be done. All these aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant. The right need not be unrestricted.

"What matters is lawful authority to command, so far as there is scope for it. And there must always be some room for it, if only in incidental or collateral matters".

Zuijus -v- Wirth Brothers Pty., Ltd (1995) 93 CLR 561 at 571. To find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matter one may look no further. If the contract does not expressly provide which party shall have the right, the question must be answered in the ordinary way by implication".

5. As we have mentioned, Mr Hurley indicated that it was only as to that second component, control, that he wished to address us. We accept his self-denying ordinance. We will therefore proceed on the basis that to the extent that the Tribunal made findings directed to MacKenna J's (i) and (iii) Motorola makes no complaint. The appeal thus becomes an investigation of, and only of, this principal question: did the Tribunal err in law in concluding that as between Motorola and Mr Davidson there existed the right of the former to control the latter to a degree sufficient to enable the Tribunal properly to regard Motorola as the employer and Mr Davidson as its employee?
6. The arrangement between Motorola and Melville Craig Group Ltd was not general in the sense that Melville Craig could send along to Motorola such individuals on its books as it felt in some general way might satisfy Motorola's needs but rather that it selected, or at any rate should have selected, individuals in a much more specific way which it had agreed with Motorola. The ability of Motorola to exercise some form of control, at any rate in theory, over a given individual could thus in a negative sort of way be said to have begun with Motorola's specification to Melville Craig of precisely what it, Motorola, required of the candidates which Melville Craig was invited to send to it. There was an Operating Agreement for the Supply of Temporary Workers between Motorola and Melville Craig. The particular one provided to the Tribunal was dated October 1997, well after Mr Davidson began working at Motorola's premises. The Tribunal does not expressly refer to this Operating Agreement but it provides that Melville Craig should conduct a recruitment process as specified by Motorola, on Motorola's behalf. Melville Craig would administer to prospective candidates aptitude and other tests which it had agreed with Motorola and was to interview them. Melville Craig would raise with candidates a medical questionnaire supplied by Motorola and require from them a Confidentiality Agreement and a Computer Software Agreement, in each case in terms which had been specified by Motorola.
7. There are no clear findings by the Tribunal to suggest that the pre-assignment provisions of the 1997 Operating Agreement or of some predecessor of it were applied to Mr Davidson. On the one hand Mr Davidson's evidence was that he was not interviewed and was not even asked for references; on the other hand, Motorola by its Human Resources Consultant said that Mr Davidson had been "selected by Melville Craig". The likelihood seems to be that whilst Motorola could have exercised a negative type of control by requiring Melville Craig not to send on to it anyone who had not satisfied the requirements which Motorola had itself specified, it had been, at all events in Mr Davidson's case, content to assume, without inquiry, that the individual sent, Mr Davidson, was a candidate who had met its specified standards. However, once the date of the Operating Agreement, the 7th October 1997, was passed, there is no reason to suppose its provisions did not apply to all such workers as Motorola took on or had taken on by way of Melville Craig, including Mr Davidson.
8. Once Mr Davidson was at the Motorola site he became largely subject to control much as would have been the case had he been an ordinary full-time employee. He went through a Motorola induction course. He worked at the Motorola site; he received instructions from Motorola employees. He used Motorola tools for all his work. If he wanted a holiday he would get permission from (and only from) Motorola. He arranged absences from work directly with his Motorola superior. If he had a grievance he simply contracted his Motorola supervisor, Tommy Wright. His evidence was that he had to be available for overtime if his Motorola foreman required that. He obeyed, he said, the usual Motorola factory rules. He wore a Motorola uniform with Motorola badges. When he caused or was thought to have caused some disciplinary offence it was a Motorola manager, John Carslaw, and Mr Wright that constituted a disciplinary hearing for him. It was Mr Carslaw who suspended him and it was Mr Carslaw who, after discussion with Mr Wright, "decided that he would terminate Mr Davidson's assignment with" Motorola.
9. Against that, still looking only at control, Mr Davidson was in a position to chose for any reason or none not to work for Motorola, either on particular occasions or at all, if so inclined, without that being in any way on his part a breach of contract with Motorola. Such freedom, not given to Motorola's full-time employees or, as a rule to any employees, was, however, more theoretical than real. If Motorola had wanted him to attend for work at some time when he did not wish to work then Mr Davidson would very likely have been contractually obliged, not to Motorola but to Melville Craig:-

"(b) To be present during the times or for the total number of hours during each day and/or week as far as required by [Melville Craig]

(c) To afford [the client of Melville Craig - here Motorola] faithful services of a standard such as would sustain a contract of employment".

Such were the conditions on the back of Melville Craig's time-sheets provided to Mr Davidson. The Operating Agreement between Melville Craig and Motorola provided that:-

"Where Motorola finds a worker supplied by Melville Craig unacceptable after starting work Motorola will inform Melville Craig and it will be Melville Craig's responsibility to ensure the unacceptable worker does not return".

Although there is no finding in terms to that effect, that some such provision, express or implied, regulated Melville Craig's relationship with Motorola in relation to Mr Davidson's employment at Motorola is implicit in the Tribunal's finding, in relation to the termination of Mr Davidson's engagement, that:-

"... The reality of the situation is that the real decision was taken by Motorola by their advising Melville Craig that they no longer wanted Mr Davidson ...".

10. In such a situation Motorola had in practical terms much the same or even a greater degree of control over Mr Davidson than it would have had over a full-time "orthodox" employee. If Mr Davidson displeased Motorola, Motorola could ask Melville Craig to terminate his assignment with it. No long notice was required; no disciplinary process had to be worked through. Melville Craig could not resist that request. Melville Craig's business or this part of it depended upon its supplying individuals to employer-customers at a premium over that which it had to pay the individuals. It therefore had to stay on good terms with such customers. If Motorola asked for a man's removal, there was no reason in law why Melville Craig should not ensure that he did not return to Motorola and every reason in practical business and in contractual terms why it should. The terms on the back of the time-sheets provided that Melville Craig could instruct a temporary worker to end an assignment at any time. It was not even obliged to give reasons.
11. Although MacKenna J speaks of control, as we have noted, in terms of rights, there is, in our view, no good reason to ignore practical aspects of control that fall short of direct legal rights. After all, there is a sense in which no employer has control over an employee as a matter of effective legal right. Whatever the man's contract might say, if he chooses not to do as he is told and leaves the job the employer will not generally be given an injunction to enforce a contract of personal service and, even if the employer finds that the employee is financially worth powder and shot, what it would end up with would not be compliance with its direction but monetary compensation for whatever was suffered by reason of its not being obeyed. Nor, surely, could it be acceptable to have a sort of means-test criterion under which one could regard an employer's control as effective in terms of rights where the employee had savings or other financial resources in respect of which an award of damages would be a meaningful sanction but ineffective where the employee had no means.
12. The Employment Tribunal held that:-

"It is clear that the control of what Mr Davidson did on a day-to-day basis lay with Motorola".

On any given day at the Bathgate plant when Mr Davidson attended for work Motorola thus determined (to revert to MacKenna J's dictum) "The thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when and the place where it shall be done". We find it unreal to ignore the existence of that practical degree of control simply because a direct legal right did not lie in Motorola under a contract it had made with Mr Davidson. Mr Davidson was contractually bound (under the time-sheet terms) to comply with all reasonable instructions and requests (within the scope of the service he had agreed to provide) made by Motorola. We do not see that contractual obligation upon Mr Davidson as not amounting to a sufficient right of control residing in Motorola simply by reason of the obligation being owed by Mr Davidson only to Melville Craig, given that Melville Craig was itself under contractual obligations to Motorola in respect of the individuals supplied to Motorola to ensure that they did not return to Motorola's plant if Motorola wished them not to. The law has long regarded it as possible in appropriate contexts that an act which A procures B to do should be regarded as done by A: qui facit per alium facit per se. Nor do we see it as a necessary component of the type of control exercised by an employer over an employee that it should invariably be exercised only directly between them and not by way of a third party acting upon the directions or at the request of the employer. Nor, further, as we see it, does one necessarily disprove the existence of a degree of control over a worker consistent with his being an employee of A by showing that B had equal or even greater powers over him.

13. Mr Hurley insists that the reality of control and its exercise is irrelevant; one must, he says, look only to the right or power to control. Melville Craig, he points out, could at any stage over the long period during which Mr Davidson worked at the Bathgate plant have assigned him to work elsewhere, however much Motorola might have wished to continue to have the benefit of his services. It is true that Melville Craig had that right, akin to the right to cut off one's nose to spite one's face, but we revert to our observation that one does not necessarily disprove A's control to a given degree by proving that B had similar or greater powers of control. Mr Hurley points out, too, that there was no legal obligation owed by Mr Davidson to Motorola even for him to turn up for work. That, again, is true, but, for all that, Mr Davidson, until told otherwise, was obliged to Melville Craig that he should turn up for work at Motorola and the sanction available against Mr Davidson should he not turn up (that Melville Craig could terminate his assignment with Motorola and, by reason of his breach of his obligations to Melville Craig to present himself to serve its clients, never use his services again) are so akin to the sanction an employer would have against an employee that we do not feel able to say that the control exercisable by Motorola was not "in a sufficient degree to make one party the master and the other his servant".
14. Mr Hurley also relies on Serco Ltd -v- Matthew Blair and Others, EAT unreported 31st August 1998. In that judgment Lord Johnston giving the judgment of the EAT dealt with a case where the Industrial Tribunal had held that there was a jus quaesitum tertio such that on not wholly dissimilar facts the individual worker assigned by the employment agency to a customer of the employment agency ended up owing direct to contractual obligations to that customer. The EAT rejected that conclusion holding, at p. 6 of the transcript:-

"In our opinion the concept of jus quaesitum tertio is alien to the concepts involved in employment law and cannot be used in the present context to create some form of legal relationship as between the workers and the Appellants" (namely the customer of the employment agency).

We would not wish and have no need to disagree with that proposition. Unlike the position in Serco, we, as we have indicated, in response to Mr Hurley's limited form of argument, are looking solely at the question of control. When, in Serco, the Employment Appeal Tribunal turned to look at control as only one of a number of issues, it held, upon the facts of the particular case, that:-

"The facts found, in our opinion, do not support the view that there was sufficient degree of control to enable the workers fairly to be called servants ........".

Ultimate control, it held, lay there with the agency and the EAT added:-

"Hence it is important to note how the so-called dismissal was effected, not by the Appellants but by the agency, albeit upon the request of the Appellants".

By contrast, in our case as we have mentioned, it was Mr Carslaw of Motorola that suspended Mr Davidson and Mr Carslaw who decided that he would terminate Mr Davidson's assignment with Motorola, and that the evidence of Mrs Stanley, a former Senior Accounts Manager with Melville Craig, was that Mr Davidson had been suspended but that she had had no involvement in the suspension at all. According to Mr Davidson's evidence, Melville Craig's representative knew nothing about the disciplinary problems at all. When Mr Davidson had written both to Motorola and to Melville Craig asking for the reasons for his termination Motorola had referred him to Melville Craig but he received no reply at all from them.

15. The conclusion in Serco that in that case there was not a sufficient degree of control to enable the workers fairly to be called servants in no way precludes a conclusion on the facts of the case at hand that here there was a sufficient degree for that purpose. Moreover in Serco the Employment Appeal Tribunal went on to consider the third element in MacKenna J's dictum, namely whether the other provisions of the relevant contracts were consistent or not with there being a contract of service. Given that we are looking only to control, that consideration does not arise in our case. There is nothing in Serco which in our view precludes a view that the Tribunal in our case could conclude as they did.
16. The Employment Tribunal set out the facts in the case at hand in relation to the issue of control, which included, as we have mentioned, that it was Motorola which had suspended Mr Davidson and Motorola which had terminated his assignment at Motorola and that Melville Craig did not even know that there had been a disciplinary problem. The Tribunal concluded:-

"In light of all the facts of this case, the Tribunal was satisfied that there was a sufficient degree of control in this case for the worker fairly to be called a servant of [Motorola]".

We do not feel able to describe that as an error of law. We must emphasise that we have concentrated upon "control". As to whether we would have concluded, more widely, as did the Employment Tribunal, we say nothing; Motorola chose to argue only as to the "control" component and we, too, have limited observations to that subject. We answer the principal question we raised in paragraph 5 of this judgment in the negative. Accordingly we dismiss the appeal.