United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR D McCARTHY (of Counsel) Appearing under the Employment Law Appeal Advice Scheme


 


MR RECORDER UNDERHILL QC:

1. This is the preliminary hearing of an appeal from a decision of an Employment Tribunal sitting in Sheffield. We propose to allow the appeal to proceed, but the matter is not straightforward and we will give a short judgment explaining our reasons.
2. In April 1996 the Appellant, who is of Pakistani origin, entered into what was described as a "licence agreement" with the Respondents under which he would operate a petrol filling station in Penistone Road in Sheffield.
3. On 22 March 2000 the Appellant brought proceedings in the Employment Tribunal. He complained that he had not been paid sums that he was due under his contract with the Respondents, which he claimed was contrary to his "(worker's) rights under the Employment Rights Act 1996 3B". He explained in a letter two days later that "3B was a slip for section 230(3)(b)". He asked the Employment Tribunal "to determine my status as a worker under the Employment Act 1996 to get my statutory rights".
4. In their IT3 the Respondents treated the application as being for a statement of employment rights under section 11 of the 1996 Act, to which they denied that he was entitled because he was not an employee. But it seems to us, to put it at its lowest, clearly arguable that the claim, albeit not ideally expressed, was intended to and did raise a claim for unlawful deductions under Part II of the Employment Rights Act 1996. Such a claim may be brought not only by an employee in the narrow sense, but also by a "worker" as defined in section 230(3)(b) of the 1996 Act (being the section to which the Appellant had expressly referred). Section 230(3)(b) is in the following terms:

"(3) In this Act 'worker' … means an individual who has entered into or works under …

(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual."

5. On 15 April 2000, a few days after notices of the Employment Tribunal proceedings had been sent out to the Respondents, the Respondents summarily terminated their agreement with the Appellant. On 17 April 2000 the Appellant issued fresh proceedings complaining that the termination was on racial grounds. He did not in terms allege unfair dismissal, but such a claim by way of alternative could at least arguably be inferred.
6. The Respondents in their IT3 denied that the termination was on racial grounds and claimed that it was because he had stolen money from them: they also claimed that the termination had been effected before they were aware of the initiation of his earlier proceedings. However, they asserted that in any event the Employment Tribunal had no jurisdiction because, again, the Appellant was not an employee. The definition of "employee" for the purpose of any unfair dismissal claim would be that at section 230(1) of the 1996 Act and is in familiar terms. But for the purpose of the Race Relations Act 1976 there is an extended definition of "employee" at section 78(1) in the following terms:

" 'Employment' means employment under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly."

7. Both sets of proceedings were consolidated and came before the Employment Tribunal on 11 January 2001. By Extended Reasons sent to the parties on 31 January 2001 the Appellant's claims were dismissed on the grounds that he was not an employee. The Employment Tribunal appears to have regarded his claims as falling under three heads: (1) a claim under section 11 of the 1996 Act; (2) a claim for unfair dismissal; and (3) a claim for racial discrimination. At paragraph 15 of the Extended Reasons it held:

"However in the final analysis it has been necessary for the tribunal to balance whether taking into account all the factors the applicant was or was not an employee, and whilst the tribunal has no doubt that on the facts before it the applicant, in particular in the way the minimum guarantee was promised and then not delivered, has been extraordinarily badly treated by the respondents, the tribunal is unanimously satisfied that the applicant was not and could not have been found to be an employee within the meaning of the Employment Act 1996."

8. It seems from the emphasised words that the Employment Tribunal did not consider either the definition of "worker" in section 230(3)(b) or the definition of "employee" in section 78(1) of the 1976 Act, which are not referred to anywhere else in the Extended Reasons. On its face it must be arguable that that is a misdirection.
9. Assuming there to be a misdirection, we would not permit the appeal to proceed if we could be sure that if the Tribunal had directed itself correctly it would necessarily still have come to the conclusion that it had no jurisdiction. But it does not seem to us safe to decide summarily that the facts which satisfied the Tribunal that the Appellant was not an employee under the ordinary definition would necessarily have led to the same result under the (assumedly) correct definitions. Accordingly, this appeal must proceed at least on those grounds.
10. However, the matter does not end there. Despite holding that it had no jurisdiction the Employment Tribunal expressed the view that the claim for racial discrimination was groundless. In paragraph 6 of the Extended Reasons it said this:

"The tribunal would first deal with the Race Discrimination point. There was not one single item of evidence beyond the undoubted fact that the applicant is of Pakistani origin which had anything to do with racial discrimination. The tribunal is completely satisfied with the company whether they behaved incorrectly or incorrectly at any specific time would have behaved in exactly the same way whether the applicant had been a Pakistani or an original native of this country. The claim in connection with race discrimination therefore has no merit and is dismissed irrespective of whether there was or was not an employment situation."

11. If that conclusion were unchallengeable it would be pointless to allow the appeal on the discrimination to proceed, because it would in any event fail on the merits. But viewed as an independent decision the reasoning in paragraph 6, which is not amplified anywhere else, is at least arguably inadequate to satisfy the requirement that an Employment Tribunal should give full reasons. No doubt the Employment Tribunal did not think it necessary to say any more since it had already decided that it had no jurisdiction. Indeed, despite the final sentence of the paragraph it is not clear whether the Employment Tribunal really regarded this as part of its decision. The formal decision, as set out at the head of the Extended Reasons, refers only to the jurisdiction point.
12. That leaves the unfair dismissal claim, which the Employment Tribunal at paragraph 9 held, albeit obiter, would certainly have succeeded if the Appellant had been an employee in the ordinary sense. The dismissal of that claim can only be challenged if it is possible to challenge the Employment Tribunal's decision that the Appellant was not an employee. The Appellant, who has been helpfully represented this morning by Mr McCarthy under the ELAAS Scheme, does challenge that decision on the basis that it was not open to the Employment Tribunal on the evidence. The particular point which Mr McCarthy makes is that the Employment Tribunal failed to have regard to evidence before it that the licence agreement by reference to which the case was primarily decided had been superseded by subsequent events, in particular by a new arrangement agreed between the parties in August 1996.
13. Mr McCarthy also raises a doubt whether the weight which the Employment Tribunal placed on the fact that the Appellant employed staff in his own right was well-founded. The facts relating to that "employment" would be equally consistent with the staff so employed being in law employees of the Respondents rather than of the Appellant personally.
14. We do not feel able to deal with either of those arguments summarily. It will be necessary for this Tribunal to see precisely what factual material was before the Employment Tribunal, for which purpose it will need to see not only the documentary material but also the Chairman's notes of evidence.
15. In the result we propose to allow the appeal to proceed to a full hearing on all the points identified in this judgment. The Appellant's Notice of Appeal is home-made. It does not raise most of the matters on which we have relied. We will give leave to re-amend, and we hope that Mr McCarthy, though he is under no obligation to do so, will be prepared to assist in the re-drafting of the Notice of Appeal to make sure it raises the correct points. It seems to us to make sense that that task should only be undertaken once the Chairman's notes have been available and we accordingly direct that it be done within 42 days after despatch of the Chairman's notes to the Appellant.
16. It may be, though on what we have heard so far we think it unlikely, that the Respondents will be in a position to argue that some or all of the points which we have raised in this judgment are not open to the Appellant, having regard to the way matters were handled below. For the avoidance of doubt we make it clear that if any point of that kind is arguable the Respondents are, of course, not precluded from taking it.
17. We direct production of the Chairman's notes for the entirety of the hearing. We appreciate the burden that asking for notes places on the Chairman, but in this case we think it necessary in the interests of justice.