United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR P SAYER (Of Counsel) Instructed by: Messrs Dean Thomas & Co Solicitors 120 Bridge Street Workshop Nottinghamshire S80 1HU
For the Respondent	MR ANDREW HOGARTH QC (Of Counsel) Instructed by: Messrs O H Parsons & Sons Solicitors 3rd Floor, Sovereign House 212/224 Shaftesbury Avenue London WC2H 8PR


 


JUDGE PETER CLARK

1. The question in this appeal, brought by the Respondent before the Sheffield Employment Tribunal chaired by Mr D R Sneath TD DL, is whether the 6 Applicants were workers within the extended definition in limb (b) of Regulation 2 of WTR 1998 and in particular whether or not they fell within the exception to that definition, namely whether, by virtue of a contract for personal service the Respondent was a customer of a business undertaking carried on by each Applicant, or we might add, by all or any of the Applicants in combination.
2. The Applicants operated in 2 gangs on building sites on which the Respondent were contractors. In the first gang the Applicants Messrs Edwards and Hague were bricklayers and Mr Palmer was their labourer. In the second Messrs Birtles, Leach and Stacey were bricklayers and a Mr Renshaw acted as their labourer.
3. There also featured a mysterious Mr Terry Smith who may or may not have substituted for Mr Palmer, the labourer in the first gang. However, the question of substitution goes to the issue of whether there was a contract for personal service; that was not seriously disputed below (reasons paragraph 21) and is not pursued on appeal. We are therefore not directly concerned with Mr Smith.
4. On the business undertaking issue the Employment Tribunal directed themselves in accordance with the judgement of Mr Recorder Underhill QC in Byrne Brothers (Formwork) Ltd v Baird [2002] IRLR 96, paragraphs 17, 18.
5. In deciding on which side of the line these Applicants fell, in the absence of any written agreement, the Employment Tribunal took into account their findings of fact; that the Respondent exercised control over the Applicants to the extent that it directed them that to the sites at which they were to work. The Respondents exercised a degree of supervision over the work performed by the Applicants. The Respondents controlled the rates of pay; it deducted 18 per cent tax at source in respect of each Applicant under the CIS scheme. The Applicants were not required to have their own public liability insurance. They provided their own hand tools, but all other materials and equipment were provided by the Respondent or main contractor on site. They normally worked from 8 am to 4.30 pm Monday to Thursday and until 3.30 pm on Fridays, to maximise their earnings and as required by the Respondent. Payment was usually on the basis of the number of bricks laid. Thus, one member of the gang would submit a manuscript invoice to the Respondent stating the cost of building a house. Stage payments were then shared between the members of the gang, the labour receiving a smaller share than the bricklayers. Alternatively, if filling in on other sites, the men were paid a daily rate; more for bricklayers than for labourers. Further, the Applicants worked exclusively for the Respondent and no other employer; that suggested to the Employment Tribunal a degree of mutuality of obligation. Unknown to the Applicants the rates of pay included a 14 per cent uplift for holiday.
6. Weighing up these factors the Employment Tribunal concluded that the Applicants were workers, not engaged in a business undertaking of which the Respondent was a customer.
7. The original grounds of appeal settled by Mr Sayer, who appeared for the Respondent below, contained 10 numbered sub-paragraphs. Following a preliminary hearing before a division presided over by HHJ Birtles held on 10 April 2003 the appeal was permitted to proceed on amended grounds. Grounds 6.2 - 10 of the original notice have been deleted, following Ground 6.1, which asserts that the Employment Tribunal was wrong in law to find the Applicants workers within the meaning of regulation 2 WTR.
8. The remaining ground reads:

"6.2 The Tribunal were wrong in not giving sufficient weight to the fact that the organisation of the bricklayer gangs and the way that they conducted their business indicated that they were a 'business undertaking'. Insufficient emphasis was placed by the Tribunal on the following factors: …"

There then follow certain findings of fact by the tribunal in summary form.

9. Pausing there, it is well settled that a complaint that a tribunal has given insufficient weight to one or more factors in arriving at their conclusion does not raise a point of law. It is necessary to go further and show perversity in the true legal sense. See now Yeboah v Crofton [2002] IRLR 634. It seems to us that the question raised in this appeal, whether the Respondent was a customer of a business undertaking carried on by the Applicants, alone or in combination, is not dissimilar to the issue as to whether a person is employed under a contract of service (employee) or engaged under a contract for services, in which case he is not an employee. The powers of this appeal tribunal to interfere with Employment Tribunal decisions, absent a patent misdirection in law, are severely limited. It is essentially a question of fact for the Employment Tribunal.
10. However, to reject the appeal on that ground alone, Mr Sayer not going as far as to say that the Employment Tribunal was acting perversely in the balancing exercise which it carried out, would not be to do justice to the main thrust of his argument before us.
11. He focuses on the fact that these Applicants were organised in gangs. They were, he submits, an economic unit. Whilst it would be difficult to attack the Employment Tribunal's conclusion where the Applicants were separately engaged it is the fact of their being a group of associated workers which brought them within the exception.
12. In support of that proposition he took us to venerable authority, not directly on point, the words of Sir George Jessel MR in Smith v Anderson 15 Ch D, 247, 258; 260 on the ordinary dictionary definition of the word business in a different context, and secondly to a sentence plucked from a more recent judgment of Mr Recorder Langstaff QC in Barlow v P E Jones Contractors Ltd (EAT 1086/00 4 March 2002. Unreported), in which the present provision was under consideration, at paragraph 17. That sentence reads:

"If the word 'undertaking' suggests a narrower scope, then the self-employed person in business on his own account as a sole principal would be covered by the protection of the section, and only those offering services as part of a more structured economic entity would be excluded from it".

13. Mr Sayer seizes on the expression "structured economic entity" as offering support for the proposition which he advances in this case.
14. We prefer to read judgments as a whole. The learned recorder went on to adopt the reasoning of the EAT in Byrne Brothers, paragraphs 17, 18. We shall do likewise.
15. In Byrne Brothers, at paragraph 17(4), Mr Recorder Underhill QC said, of the purpose behind the exception:

"Thus the essence of the intended distinction must be between, on the one hand, workers whose degree of dependence is essentially the same as that of employees and, on the other, contractors who have a sufficiently arms length and independent position to be treated as being able to look after themselves in the relevant respects."

16. Applying that dictum, to which the Employment Tribunal in the present case expressly directed themselves (reasons paragraph 21), we see a clear distinction between a gangmaster who tenders for a job, receives the price and distributes the money as pay from him to the members of his gang, his workers, with a case like the present where, although a representative of the gang quotes a price for the job, payment, less tax is made direct by the 'employer' (the Respondent) to each individual gangmember. In such circumstances it was open to the Employment Tribunal, on the particular facts of the case, to conclude that these Applicants just fell on the right side of the line demarcating worker status from business undertaking (reasons paragraph 30).
17. In these circumstances we have concluded that this appeal discloses no error of law in the Employment Tribunal's approach. It will be dismissed.