United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR C QUINN (of Counsel)
For the 1st Respondent MRS I LEAMY For the 2nd Respondent MISS D TSALMA	MR MASAYUKI NEGISHI Free Representation Unit 4th Floor Peer House 8-14 Verulam Street London WC1X 8LZ MS A PORTER Free Representation Unit 4th Floor Peer House 8-14 Verulam Street London WC1X 8LZ


 


JUDGE D M LEVY QC:

1. This is an appeal from a decision of an Employment Tribunal held at London Central on 22 November 2002 where the Chairman was Mr P.R.K.Menon. There was a discussion in Chambers between the Members on 18 December 2002 and, several months later on 19 March 2003, the decision of the Tribunal was disseminated.
2. The issue before the Tribunal was whether the two Respondents to this appeal, Mrs I. Leamy and Miss D. Tsalma, were or were not employees of the Appellant, HCA International Limited t/a Wellington Hospital. The matter was taken as a preliminary matter, as these issues so often are.
3. The representation before the Tribunal was, as it is here, namely Mr Quinn appeared for the Respondent below, he appears for the Appellant here. Mr Negishi appears for the 1^st Applicant, now the 1^st Respondent, Mrs Leamy. Miss Porter appears for the 2^nd Applicant, now the 2^nd Respondent, Miss Tsalma.
4. The two Respondents worked under a system at the Appellant's hospital which was governed by a working arrangement, shown in two documents called Pool Membership on pages 56 and 57 of the bundle. According to those pages, Mrs Leamy's availability was by arrangement. According to documents signed by Miss Tsalma it was as required. They worked for many years under that Pool document which the Tribunal examined, calling it "The only contractual document signed by Mrs Leamy", at paragraph 14 of the Reasons.
5. In the Extended Reasons, given with several headings, the first heading was the case of Mrs Leamy (paragraph 1). The second heading was the case of Miss Tsalma (paragraph 4) and the third heading was The Law, which is at paragraph 7. Paragraph 8 is headed The Witnesses and then, underneath the witnesses there are the submissions of the three representatives. Paragraph 13 commences thus:

"The Tribunal finds that HCA's description of the Applicants' being 'Members of a Bank Register' is highly misleading and it is an inappropriate description of the Applicants' contractual relationship with HCA."

6. Having considered the contractual documents in paragraph 15 of the Extended Reasons, as far as Mrs Leamy is concerned, the Tribunal said this:

"The hours and days were as assigned by the Hospital. In theory she could have turned down the hours on offer but in practice, had she done so, she would not have been offered any further work by HCA at the Hospital."

Miss Tsalma's position is summarised, in the middle of paragraph 16, where the Tribunal says:

"In theory she could have turned down work, but in practice had she done so, HCA would not have offered her any further work."

7. In paragraph 11(2) of the Extended Reasons, recording a submission of Mr Negishi, the Tribunal referred to the three-fold test in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, a judgment given by Mackenna J, but summarised those reasons in words other than those used by Mackenna J. He said:

"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. ...

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."

And as to the third, the learned Judge said:

"The third and negative condition is for my purpose the important one, and I shall try with the help of five examples to explain what I mean by provisions inconsistent with the nature of a contract of service.

(i) A contract obliges one party to build for the other, providing at his own expense the necessary plant and materials. This is not a contract of service, even though the builder may be obliged to use his own labour only and to accept a high degree of control: it is a building contract. It is not a contract to serve another for a wage, but a contract to produce a thing (or a result) for a price.

(ii) A contract obliges one party to carry another's goods, providing at his own expense everything needed for performance. This is not a contract of service, even though the carrier may be obliged to drive the vehicle himself and to accept the other's control over his performance: it is a contract of carriage.

(iii) A contract obliges a labourer to work for a builder, providing some simple tools, and to accept the builder's control. Notwithstanding the obligation to provide the tools, the contract is one of service. That obligation is not inconsistent with the nature of a contract of service. It is not a sufficiently important matter to affect the substance of the contract.

(iv) A contract obliges one party to work for the other, accepting his control, and to provide his own transport. This is still a contract of service. The obligation to provide his own transport does not affect the substance. Transport in this example is incidental to the main purpose of the contract. Transport in the second example was the essential part of the performance.

(v) The same instrument provides that one party shall work for the other subject to the other's control, and also that he shall sell him his land. The first part of the instrument is no less a contract of service because the second part imposes obligations of a different kind."

8. The Tribunal then set out the facts which were in favour of supporting an employment relationship and those which were against it and reaching the decision that on the matters which they found pointed to an employment relationship found that there was a contract of service.
9. Mr Quinn says that that was a decision to which they were not entitled to come, in the light of the finding set out in paragraph 6 above. He submits that, given that finding of fact, it was not open to the Tribunal to come to the conclusion that they were employees and referred us, in turn, in the course of his address, to: Clark v Oxfordshire Health Authority [1998] IRLR 125, Carmichael v National Power [2000] IRLR 43, Montgomery v Johnson Underwood Ltd [2001] EWCA Civ 318, Stevedoring & Haulage Services Ltd v Fuller and Others [2001] EWCA Civ 651 [2001] IRLR 627.
10. Counsel appearing for the Respondents submitted, in broad terms, that from the four corners of the Decision, it was quite clear that the Tribunal had all the matters in mind which they should have had and came to a conclusion which they were entitled to reach and one with which we should not interfere.
11. The majority of us accept Mr Quinn's submission that the finding, in theory, the Respondents could do as they wished was so compelling that the Tribunal erred in the decision it reached in finding that they were employees.
12. The minority of us agree with the Respondents' submission that, looking at the document as a whole and given the fact, as was suggested in Nethermere (St Neots) Ltd v Taverna & Gardiner [1984] IRLR 240 CA, the Tribunal was entitled to reach the decision as it found it, and secondly, the Pool documents which the ET found did not equate to reality or practice, was the document which the Tribunal had in mind when it used the words "in theory" and not the facts as a whole, but particularly the last sentence in Nethermere, at paragraph 28, cited by Stephenson LJ, who gave the first judgment, which reads as follows:

"I cannot see why well founded expectations of continuing homework should not be hardened or refined into enforceable contracts by regular giving and taking of work over periods of a year or more, and why outworkers should not thereby become employees under contracts of service like those doing similar work at the same rate in the factory."

By analogy one Member thought that that properly applied to the facts of this case.

13. In the circumstances, in our judgment this matter should be returned to the Employment Tribunal for further reconsideration of the matter, particularly in the light of the difficulties which have been identified in the paragraphs which "in theory", are used. The majority of us think the matter should go back to the same Tribunal. The minority of us thinks it should go back to a different Tribunal.
14. In the circumstances, this appeal will be allowed and the matter be remitted to the same Tribunal if practicable for further consideration of the preliminary issue in respect of each Respondent.
15. The Respondents have applied for permission to appeal. In the light of the findings of the majority on what was a preliminary issue and the decision to remit, the panel all conclude that permission be refused.