United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	SIMON DEVONSHIRE (Of Counsel) Instructed by: Messrs Roythorne & Co 10 Pinchbeck Road Spalding Lincs PE11 1PZ
For the Respondent	RUTH DOWNING (Of Counsel) Instructed by: Messrs Humfry and Symonds 1 St John Street Hereford HR1 2NO


 


MR RECORDER BURKE QC

The Facts

1. This is an appeal by the Appellants, Newnham Farms Ltd, against the decisions of the Employment Tribunal, sitting at Hereford and chaired by Mr Prichard, that the Respondent, Mrs Louise Powell was between 1994 and 2000 an employee of the Appellants, that she was "employed in agriculture" within the meaning of section 3 of the Agricultural Wages Act 1948, that, on the basis that she was an employee, had she been dismissed after a fair procedure she would have been employed for one month longer than she was and that she had been paid less than the minimum wage laid down from time to time by the relevant Agricultural Wages Orders made under the Agricultural Wages Act.
2. The Tribunal at the outset of their detailed decision said that the case was an unusual, difficult and important one on the position of the farmer's wife. To some extent we agree with that comment; there is certainly no direct authority as to the employment status of farmers' wives who work with their husbands upon the farm where they live of which they and their husbands are neither tenants nor owners or as to their position in terms of the Agricultural Wages Act; but that may be because there are likely to be many different fact-situations in which farmers' wives work; and in many respects, at least at the appellate stage, this appeal requires the application of familiar principles to facts determined by the Employment Tribunal.
3. In order that the points which arise in the appeal can be understood, it is necessary for us to set out the facts of this case, as briefly as possible. Mrs Powell met her husband at Agricultural College, where both gained qualifications; they were married in 1989. In 1992 they both started to work for a company called Lupofresh Ltd, of which the Appellants are a subsidiary, at a Kentish hop farm. Mrs Powell worked on the administration of the seasonal casual hop pickers and other general administrative duties; she was paid £5.00 per hour for that work as and when she did it.
4. In 1994 Mr Ibbotson who was, according to the Tribunal, the manager and a director of both companies, proposed that the Powells should move to Herefordshire to set up and run a new hop farm, Newnham Farm, near Tenbury Wells. This was a very large farm as compared with the hop farm in Kent; the Appellants' intention was to increase the hop growing area from 45 to 180 acres in one year and thus to make themselves the largest hop grower in the country. Mr Powell was to be the manager of Newnham Farm and Mrs Powell was to assist him; they worked well together and were regarded by the Appellants as a team to an extent, according to the Tribunal's findings.
5. Accordingly Mr and Mrs Powell moved to Newnham Farm with their family; they have three children, born in July 1991, March 1994 and July 1997; they lived in the main farmhouse on the farm and would, no doubt, still be there had their marriage not failed in 1999. As a result of that, Mr Powell moved out of the farmhouse in that year; and without prejudice to their position which was that Mrs Powell was not their employee, the Appellants in January 2000 gave her notice to terminate any contract of employment with effect from 30 June 2000. Mrs Powell ceased to carry out any work on the farm at the end of March 2000. She and the children subsequently left the farmhouse at the end of that year.
6. The Tribunal found that, when Mr and Mrs Powell first moved to Newnham Farm, no specific role was expressly given to her; but she carried out a number of tasks for which she was responsible. Those tasks were (as set out by the Tribunal in paragraph 15 of the decision but also in paragraphs 20 and 31):-

(1) Throughout the relevant period she was responsible for the coding of invoices between the different sides of the farm's business; there was a substantial flock of sheep; and fruit was grown in addition to hops.

(2) Every year, at harvest time she dealt with the arrangement for and payment of the wages of the casual hop pickers.

(3) She operated the base unit in the farmhouse for the farm's two-way radio.

(4) She answered business telephone calls and welcomed and looked after visiting viewers; and she took an active part in entertaining customers and running tours of the farm.

(5) She looked after the feeding of the "tiddler" lambs.

(6) She ran a small fishing club.

(7) She was at one stage an authorised signatory for business cheques and received training in farm management computer software

(8) When Mr Ibbotson was on the farm she was his main message-taker

(9) She occasionally undertook relief work of a direct agricultural nature including helping with the harvest, stringing and bine cutting.

(10) She ran occasional errands and she had a qualification in agriculture and when interfacing with visitors and incoming calls was regarded as more than a hostess/receptionist or message taker.

7. The Tribunal found that these tasks, which were not exhaustive or in any particular order, gave a general picture. Some of these tasks were very occasional and her work, apart from organising the casuals, was not conspicuously arduous or persistent; but Mrs Powell was always very willing and enjoyed making the contribution which she made. Mr Ibbotson's evidence was that "she seemed happy to help". She was permanently available as a human voice at the end of the farm's main telephone, was never fully 'off duty' even during conventional maternity periods and was a resource of value to the Appellants who would have to pay for extra part-time help and/or business machinery/software without her. She regarded the farm as part of her career and not just her husband's.
8. Mrs Powell had no written contract of employment or other written document evidencing her status or the terms on which she worked. The Tribunal findings do not tell us whether there was any such documentation in Mr Powell's case.
9. From the time when the Powells started to work at Newnham Farm Mrs Powell was paid £2,000 per annum by the Appellants; payments were made monthly and were subject to deduction of the employed person's national insurance contribution. In paragraph 35 of their decision, when considering the underpayment claim, the Tribunal found that the payment of £2,000 per annum was of a token amount but was made to Mrs Powell in her own right and not simply as a member of a husband and wife team. She was treated as using her personal income tax allowance under Schedule E for PAYE purposes.
10. In addition, in the years 1995 to 1997, Mrs Powell was paid directly a proportion of the bonus allocated to her husband. The Tribunal found that she did not know precisely what these payments represented but that that was not a matter of great importance to her. The payments made to her went into the same joint account as did payments made to her husband. While the decision does not set out the actual bonuses paid to her, the sums paid were not in dispute and appear later in this judgment. The annual sum of £2,000 paid to Mrs Powell was initially agreed between Mr Powell and Mr Ibbotson in order to use Mrs Powell's personal allowance and thus to reduce Mr Powell's tax liability.

The Tribunal's Decision and The Appeal

11. Mrs Powell, in her Originating Application, claimed that she was an employee of the Appellants, that she had been unfairly dismissed, that she had not been paid the minimum rate applied by law to her position as a person to whom the Agricultural Wages Orders applied and that she had not, on termination of her employment, been provided with her holiday pay entitlement.
12. In their Notice of Appearance the Appellant did not deny employment; they asserted that Mrs Powell's duties, such as they were, involved her assisting her husband in miscellaneous ways and did not exceed eight hours per week; they denied the application of the Agricultural Wages Orders. They contended that Mrs Powell was fairly dismissed for redundancy and that she had failed to mitigate her loss. Their solicitors subsequently, but in good time, informed Mrs Powell and the Tribunal that they proposed to contend that Mrs Powell was not an employee.
13. The Tribunal decided, firstly, that Mrs Powell was an employee of the Appellants; having so decided, it followed that they regarded her as a 'worker' for the purposes of the Agricultural Wages Act 1948. They then decided that she was a worker 'employed in agriculture', rejecting the argument of the Appellants that her work was administrative and therefore not agricultural work. Both of these aspects of the Tribunal's decision are challenged in this appeal. The Tribunal next decided that, contrary to Mrs Powell's case, there was a redundancy situation and that she had been dismissed for redundancy; but they found that her dismissal was unfair because there had been no prior consultation; these decisions are not challenged by either party. The Tribunal then found that appropriate consultation would have delayed the end of Mrs Powell's employment by one month; that conclusion gives rise to the third issue in this appeal. The Tribunal dismissed Mrs Powell's claim to holiday pay and rejected the Appellants' contention that her claim in respect of underpayment of wages was out of time; and while, in accordance with the parties' wishes, not making any calculation of the underpayments, they concluded for the purposes of such calculation that the £2,000 per annum paid to Mrs Powell should be regarded as pay to her in her own right - in other words that that figure was to be regarded as her annual remuneration; and on that basis she had been under-paid in terms of her minimum statutory entitlement. This last conclusion gives rise to the fourth issue which we must decide in this appeal.

Mrs Powell's status

14. On behalf of the Appellant Mr Devonshire admitted that the Tribunal had erred in law in the following respects, in summary:-

(i) They wrongly proceeded on the basis that there was a contractual relationship between the Appellants and Mrs Powell when there was no such contract and no mutuality of obligation between them; if Mrs Powell was in any contractual relationship in respect of her work it was, he submitted, with her husband and not with the Appellant.

(ii) There could not be any contract of employment in the absence of control; but the Appellants had no or no sufficient control over Mrs Powell.

(iii) The Tribunal misdirected themselves in law in regarding the payment to Mrs Powell of £2,000 per annum as a very weighty factor in favour of employment when such payment was only made because of an agreement between Mr Ibbotson and Mr Powell that £2,000 of Mr Powell's salary should be paid directly to Mrs Powell to use her personal tax allowance.

(iv) They failed to identify the tasks and duties which they considered to be imposed on Mrs Powell under the contract of employment and thus failed to give adequate reasons for their decision.

15. Miss Downing, on behalf of Mrs Powell submitted in summary:-

(1) Whether Mrs Powell was an employee of the Appellants in the absence of any contractual documentation was a question of fact for the Tribunal which had fully examined the facts and came to a conclusion which was open to them.

(2) The Tribunal had found that there was mutuality of obligation; they were entitled so to find; this was not a case of a casual worker working only when she felt like it; Mrs Powell received annual remuneration for carrying out the various tasks specifically identified in the decision without any calculation for how many hours or on how many days she had carried them out.

(3) The findings of the Tribunal amply supported the necessary element of control.

(4) Whatever the origin of the payments made to Mrs Powell, the Tribunal found that both parties regarded the work or at least its principal aspects as her work, that the Appellants were willing to pay her for her work and did pay her for her work a regular salary.

(5) The tasks which Mrs Powell was expected to discharge were specifically and in adequate detail identified by the Tribunal.

16. In Carmichael v National Power Plc [1999] ICR 1227 there arose in the case of guides who worked from time to time at a power station on an "as required" basis, so far as the alleged employers were concerned, and, so far as the guides were concerned, when they wished to, an issue as to whether they were employed by the operators of the power station under contracts of employment. The Tribunal found that there was no contract between the parties, whether of service or otherwise. The Employment Appeal Tribunal upheld the Tribunal's decision; but the Court of Appeal allowed the guides' appeal. The House of Lords restored the decision of the Tribunal. Lord Hoffmann, with whom Lord Goff of Chievely and Lord Jauncey of Tullichettle agreed, held that whether or not there was a contract of employment, in circumstances in which the issue did not depend solely on the construction of documents, was a question of fact and that the Tribunal's finding that there was a lack of mutuality of obligation between the parties could not be disturbed on appeal; see pp 1233 A-C and 1235 D-E.
17. We have no doubt that whether there was a contract between Mrs Powell and the Appellants and whether that contract was a contract of employment were questions of fact to be determined by the Tribunal. In the absence of any specific meetings or conversations which were alleged expressly to constitute a contract between Mrs Powell and the Appellants or any contract with another, such as the alternative suggested by Mr Devonshire that Mrs Powell was in respect of her work in a contractual relationship with her husband, the Tribunal had to decide what, if any, contract was to be implied from the circumstances; and the Tribunal expressly recognised at paragraph 19 of their decision and concluded that a contract of employment was to be implied between Mrs Powell and the Appellants; indeed they regarded this case as a very good example of an implied contract of employment. While whether we would have taken the same view as the Tribunal on the primary facts is not material, we would if necessary have agreed with the Tribunal's conclusions; and we do not accept that the Tribunal were not entitled to reach the conclusions which they reached on this issue. As the Tribunal found, Mrs Powell was willing to work and carry out the tasks which the Tribunal identified; the tasks of dealing with the invoices and with seasonal hop pickers were her principal tasks throughout her period on the farm from 1994 until after she received notice in 2000; her other tasks she carried out when they were needed; the facts that these other tasks were carried out subject to availability - for she had young children - did not mean that she was not expected to carry them out (but no-one suggested, by the end of the Tribunal hearing at least, that she was a full-time employee). Mr Powell told the Tribunal that Mrs Powell's payment of £2000 per annum was in recognition of her work; the Appellants regarded Mr and Mrs Powell as a team; and they were willing to pay her for the part-time work she put in. The Tribunal found, as we have said, that she was paid in her own right and that payments were made to her, subject to deduction of her national insurance contribution.
18. These were all circumstances from which a contract of employment between the Appellants and Mrs Powell could be implied.
19. Mr Devonshire relied upon Hewlett Packard Ltd v Murphy [2002] IRLR 4, a decision of the Employment Appeal Tribunal presided over by Douglas Brown J, as support for the proposition that the Tribunal needed firstly in this case to consider whether there was a contract between the parties at all and on the decision of the Court of Appeal in Montgomery v Johnson Underwood Ltd [2001] IRLR 269 in support of the proposition that mutuality of obligation between the parties and control residing in the employer constitute the irreducible minimal legal requirements for the existence of a contract of employment. In Hewlett Packard Mr Murphy claimed to be an employee of Hewlett Packard in circumstances in which he provided his services to a limited company which he had himself formed; that company then entered into a contract with an employment agency whereby it agreed to provide computer services to any client of the agency; and Hewlett Packard entered into an agreement with the agency for the provision of services which were performed by Mr Murphy. Mr Murphy received payments from his company which received fees from the agency who in turn received fees from Hewlett Packard. Employment agency cases notoriously give rise to considerable difficulties of analysis in employment law; but it is perhaps unsurprising in the circumstances that the Employment Appeal Tribunal, firstly, allowed Hewlett Packard's appeal against the Tribunal's decision that Mr Murphy was employee of Hewlett Packard at the date when his services came to an end and could bring an unfair dismissal claim against them and, secondly, in so doing laid emphasis on the need to ascertain whether there was any contract at all between the parties.
20. Those circumstances were very different from the circumstances of this case in which, on the primary facts as found, Mrs Powell was on any view working on the farm as part of the activities of the business carried on at the farm by the Appellants and was being paid by the Appellants throughout her time there, until the arrangements fell apart when her marriage broke down. The Tribunal expressly considered whether there was a contract between Mrs Powell and the Appellants and whether it was a contract of employment, as is clear from their decision on this issue as a whole and from paragraph 19 of the decision in particular.
21. There was not, in our judgment, on the primary facts as found, any real alternative to the conclusion that there was a contractual relationship between the Appellant and Mrs Powell; and in any event the Tribunal was entitled to conclude that there was. Mr Devonshire suggested that the contractual obligation to carry out the necessary work on the farm lay upon Mr Powell and that Mrs Powell was only assisting him in the discharge of his duties; what she did was entirely a matter of agreement between the two of them and not evidence supporting an agreement between the Appellant and Mrs Powell at all. This suggestion appears to us to be wholly unrealistic; but, more significantly, there are no findings of fact to that effect and the Tribunal's expressed findings are to the contrary effect. In response to a question as to what findings supported this analysis, Mr Devonshire was able only to point to the absence of any formal discussion as to her tasks between the Appellants and Mrs Powell when she and her husband first moved to the farm and the finding that Mr Powell was to be the Manager and Mrs Powell was to help; but her principal tasks soon emerged, because the Tribunal found that she had undertaken them throughout her life on the farm; and in a new business venture it is hardly surprising that her precise role could not be defined at the beginning and was worked out in practice; the Tribunal were entitled, as they did, to draw inferences from what in practice was done by Mrs Powell in and for the business and by the Appellants during the relevant period.
22. Nor, on the facts, could it sensibly be decided that Mrs Powell was a casual worker without any continuing contract, of employment or otherwise. The contrast between the situation when she was working in Kent and paid £5 per hour for hours worked, in which Miss Downing accepted that her status was properly described as that of a casual worker, and that which prevailed at Newnham Farm from 1994 as described by the Tribunal from paragraphs 10 to 28 of their decision is manifest.
23. Montgomery v Johnson Underwood was also an employment agency case; Mrs Montgomery was registered with such an agency who sent her to work for a local company for whom she continued to work for two and half years until her services were no longer required. She brought an unfair dismissal claim against both the agency and the local company; the Tribunal decided that she was not an employee of the local company but was an employee of the agency. The Court of Appeal allowed the agency's appeal, the agency having been unsuccessful before the Employment Appeal Tribunal; they concluded that, in the light of the passage from Lord Hoffmann's speech in Carmichael v National Power, to which we have referred in paragraph 16 above, and other authorities to similar effect, it was for the Tribunal to decide on the basis of the agency's standard conditions and the objective inferences which could reasonably be drawn from what the parties said and did whether the agency employed Mrs Montgomery but that the Tribunal had misdirected itself in law in failing to consider that, as an irreducible minimum for her contract of employment, there must be mutuality of obligation between the parties and some element of control of the employee by the employer. Buckley J, with whom Longmore and Brooke LJJ agreed, at paragraphs 18-19 and 23 said:-

"18 I consider the safest starting point to be the oft- quoted passage of McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515:

'I must now consider what is meant by a 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.'

19 McKenna J made plain that provided (i) and (ii) are present (iii) requires that all the terms of the agreement are to be considered before the question as to the existence of a contract of service can be answered. As to (ii) he had well in mind that the early legal concept of control as including control over how the work should be done was relevant but not essential. Society has provided many examples, from masters of vessels and surgeons to research scientists and technology experts, where such direct control is absent. In many cases the employer or controlling management may have no more than a very general idea of how the work is done and no inclination directly to interfere with it. However, some sufficient framework of control must surely exist. A contractual relationship concerning work to be carried out in which the one party has no control over the other could not sensibly be called a contract of employment. McKenna J cited a passage from the judgment of Dixon J in Humberstone v Northern Timber Mills [1949] 79 CLR 389 from which I take the first few lines only:

'The question is not whether in practice the work was in fact done subject to a direction and control exercised by any actual supervision or whether any actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions.'

23 Clearly as society and the nature and manner of carrying out employment continues to develop, so will the court's view of the nature and extent of 'mutual obligations' concerning the work in question and 'control' of the individual carrying it out. In the nature of things the lead in this process will be taken by employment tribunals and the EAT. They have been carefully set up and constituted to be well suited to the task. However, since the concept of the contract of employment remains central to so much legislation which sets out to adjust the rights of employers and workers, including employees, it must be desirable that a clear framework or principle is identified and kept in mind. … I regard the quoted passage from Ready Mixed Concrete as still the best guide and as containing the irreducible minimum by way of legal requirement for a contract of employment to exist. It permits tribunals to appropriate latitude in considering the nature and extent of 'mutual obligations' in respect of the work in question and the 'control' an employer has over the individual. It does not permit those concepts to be dispensed with altogether. As several recent cases have illustrated, it directs tribunals to consider the whole picture to see whether a contract of employment emerges. It is though important that 'mutual obligation' and 'control' to a sufficient extent are first identified before looking at the whole."

24. The need for mutuality of obligation was also emphasised in Carmichael and has been at the centre of other cases in which an Applicant has sought to erect an umbrella or overarching contract of employment in circumstances in which he or she was working casually when required and when he or she was willing to work; eg Clark v Oxfordshire Health Authority [1998] IRLR 125.
25. In this case the Tribunal specifically directed their attention to the need for mutuality of obligation in paragraph 26 of their decision and concluded that there was such mutuality; they found that Mrs Powell was expected and obliged to carry out the task which they had described; elsewhere they described some of these tasks as occasional but the principal tasks were regular if, in the case of the hop pickers, seasonal. Plainly they were of value to the Appellants who paid the remuneration to Mrs Powell in respect of her work. We have already set out why the fact that some of the tasks - or even all of them - were carried out subject to her availability did not exclude mutuality of obligation; it was not inconsistent with mutuality of obligation of the employer's to permit Mrs Powell to carry out her part-time work for them in such a way as to avoid conflict with her family duties. A combination of work in the farming business and work upon family duties is surely to be found in the lives of many if not all farmers' wives. The Tribunal's findings demonstrate that Mrs Powell was under an obligation to carry out her tasks and, in return, the Appellants paid her remuneration in her own right. In our judgment the Tribunal did not misdirect themselves in law in relation to the requirement of mutuality of obligation and, having directed itself to consider that requirement, came to a conclusion in that respect which it was entitled on the fact to reach.
26. As to control, Mr Devonshire submitted that the Appellants could not tell Mrs Powell what to do or take any steps against her if she did not do or did not do properly what was expected of her; he submitted that they could complain to Mr Powell that he had to ensure that a particular task which, in practice, Mrs Powell carried out should be done but could not direct her work and could not withhold any part of the money she received because, as he put it, it was Mr Powell's money and not Mrs Powell's money. Mr Powell, he submitted, could not be expected on behalf of the Appellants to direct or dictate to Mrs Powell what she should do or how she should do it.
27. Miss Downing pointed out that, in the passages we have cited from Montgomery, the Court of Appeal quoted with approval McKenna J's reliance in Ready Mixed Concrete on the words of Dixon J in Humberstone v Northern Timber Mills Ltd which indicated that the question is not whether in practice there was any active supervision or whether any such supervision was practically possible but whether ultimate authority over the performance of the work rested in the employer. She submitted that there did not need to be established any control in practice or a framework of control in the sense of a formal or an informal disciplinary structure. All that was needed was that the ultimate authority, should the situation ever arise in which it might require to be exercised, resided with the Appellants. The Tribunal's decision records no evidence that Mrs Powell had ever failed fully and competently to discharge all the tasks required of her; there was no suggestion that the need to exercise control had ever arisen; and therefore there was no evidence as to how the Appellants would have responded had Mrs Powell failed in any way. But, on the findings of primary fact, she was expected to carry out the tasks described by the Tribunal; and had she failed to do so or committed some important error in doing so, while Mr Ibbotson might well have directed his concerns first to Mr Powell, he would, if he did so, have done so because he was the Appellant's manager and because a shortcoming on Mrs Powell's part would affect the Appellants' business. The natural and indeed the only common sense inference from the primary facts, and in particular from the fact that Mrs Powell was expected to carry out the tasks which became established as her tasks and did so, and that the Appellants were expected to and did pay her for doing so, was that ultimately the Appellants had authority over the performance of her work. The alternative proposed by Mr Devonshire, that only Mr Powell had such authority because she worked for him and not for the Appellants would have seemed as unrealistic to the Tribunal, if it was put to them, as it does to us.
28. Accordingly, while the Tribunal do not expressly state in their decision that they were looking for an element of control, they had been addressed by Mr Devonshire on the issue of control and must have had that element in mind. Their findings of fact are such that there must have been a sufficient element of control in the Appellants to satisfy this essential requirement of a contract of employment.
29. Of considerable relevance to the above conclusion is the Tribunal's finding as to the nature of the renumeration paid to Mrs Powell by the Appellants ie that it was in recognition of her work (see paragraphs 14 and 27), it was paid to her as her salary (paragraph 20), that the salary was paid to her in her own right (paragraph 35) and that the Appellants were willing to pay for her work (paragraph 19). At paragraphs 20(a) and (b) the Tribunal described the payment to Mrs Powell of a regular salary, even if her work fluctuated and on the basis of the deduction of her employee's national insurance contribution and using her personal tax allowance as factors which had an important influence upon their decision; and in paragraph 22 the Tribunal described these factors as very weighty, having said at the end of paragraph 21:

"The label any party puts upon the working relationship will never be conclusive, but when other factors are even it is certainly a relevant factor whose weight is bound to vary from case to case."

30. Mr Devonshire cited in particular a further passage from Hewlett Packard in which the Employment Appeal Tribunal said, at paragraph 49:

"It is clear from that and from the judgment of Lord Denning MR in Massey that whatever the label the court must examine the true nature of the relationship and the terms of the agreement must be looked at."

He submitted that the Tribunal had in this case misapplied Massey v Crown Life Insurance [1978] ICR 590 in which the Court of Appeal, in a case in which the Applicant who had previously been an employee agreed with his employer that he would change his status and become self employed while performing the same duties. At page 595 C-D Lord Denning MR said:

"It seems to me on the authorities that, when it is a situation which is in doubt or which is ambiguous, so that it can be brought under one relationship or the other, it is open to the parties by agreement to stipulate what the legal situation between them shall be. That was said in Ready Mixed Concrete case … :

"If it were doubtful what rights and duties the parties wished to provide for, a declaration of this kind might help in resolving the doubt and fixing them in the sense required to give effect to that intention."

So the way in which the parties draw up their agreement and express it may be a very important factor in defining what the true relation was between them. If they declare that one party is self -employed, that may be decisive."

And at page 597G Lawton LJ said:

"Ferguson clearly established that the parties cannot change a status merely by putting a new label on it. But if in all the circumstances of the case, including the terms of the agreement, it is manifest that there was an intention to change status, then, in my judgment, there is no reason why the parties should not be allowed to make the change. In this case, there seems to have been a genuine intention to change the status, and I find that the status was changed. It follows that there having been a change of status, the applicant cannot now say that there was not one."

Eveleigh LJ agreed with both judgments.

31. Mr Devonshire submitted that Massey was authority for the proposition that, if all other factors are equal, the expressed intention of the parties as to status should be given weight but that in the present case the payment of £2000 per annum came about only because Mr Ibbotson and Mr Powell agreed that £2000 of Mr Powell's salary would be paid directly to Mrs Powell in order to use her personal allowance and therefore the payment to her of that sum should not have been given any or any substantial weight.
32. It is important in considering paragraphs 21 and 22 of the Tribunal's decision, in our judgment, to see them in the context of this part of the decision as a whole. The Tribunal were plainly concerned that, on the Appellants' case, payments were being made to Mrs Powell only for fiscal purposes and not as salary in recompense for her work; but they rejected that case in paragraph 24; they found, as we have pointed more than once in this judgment, that she was being paid in her own right for her work. In the context of the issue as to the nature of the payments made, it was open to the Tribunal, as we see it, to regard the fact of the payments and the way in which they were made and the purpose for which they were made as material factors. The passage from Hewlett Packard on which Mr Devonshire relied in this part of his argument requires the Tribunal to ensure that the true nature of the relationship, whatever the label put on it by the parties, is properly considered; in other words the Tribunal must not be led by a label used by the parties to a conclusion inconsistent with the result of an examination of the true nature of the relationship; but the Tribunal did not make any such error in this case; they did examine the true nature of the relationship in detail. The results of that examination pointed in the same direction as the matters set out at paragraphs 20(a) and (b) of the decision of which Mr Devonshire, in this part of his argument, complained. Massey does not lay down as a matter of principle that the label used by the parties may only be considered if all other matters are ambiguous; it is the law that only in such a case should a label used by the parties be decisive; but the Tribunal in this case did not treat the label as decisive; it was only one of the factors, albeit to them a weighty factor, which led to their overall conclusion; and it was for the Tribunal to decide what weight to give to that factor as long as they did not make the mistake of treating it as decisive.
33. In any event we agree with Miss Downing's fallback submission that, even if the Tribunal did err as submitted by Mr Devonshire, the overwhelming and only sensible inference which could be drawn from the primary facts, even if the parties had not adopted the label of employer/employee in terms of tax and national insurance, was that Mrs Powell was an employee. We have sufficiently identified those facts in this judgment so as to make it unnecessary to set them out again.
34. We should add that, contrary to Mr Devonshire's submission, we see nothing inconsistent between the finding as to how the £2000 per annum was arrived at by Mr Ibbotson and Mr Powell and the Tribunal's rejection of the Appellants' case that the payment to her was a matter of fiscal convenience only. The amount may have been determined by fiscal convenience - as, we suspect is often the case where husband and wife work as a team for the same employer and pay their salaries into the same joint account; it does not follow that the payments were not payments agreed by Mr Powell on his wife's behalf to be paid to Mrs Powell in respect of her work and payments which were actually paid by the Appellants to her in respect of that work.
35. Finally, on the issue of Mrs Powell's status, we have no hesitation in rejecting Mr Devonshire's argument that the Tribunal erred in law in failing sufficiently to identify the tasks which the Tribunal regarded as Mrs Powell's under the contract of employment. The Tribunal identified those tasks, which we have earlier summarised, with sufficient clarity and particularity in paragraphs 14, 15, 16 and 20 of their decision. No further findings or reasoning were, in law, required.
36. For these reasons we reject the Appellant's appeal against the conclusion that Mrs Powell was, at Newnham Farm, an employee of the Appellants.

The Agricultural Wages Orders

37. Section 1 of the Agricultural Wages Act 1948 established the Agricultural Wages Board for England and Wales which has the functions, inter alia, of fixing minimum rates of wages for workers employed in agriculture as conferred by subsequent provisions of the Act. Section 3 of the Act gave to the Agricultural Wages Board power to make orders fixing minimum rates of wages, directing holidays to be allowed and fixing any other terms and condition of employment for workers 'employed in agriculture'.
38. Mrs Powell based her claim that she had been underpaid in her employment at Newnham Farm on the provisions of the relevant annual Agricultural Wages Orders; we have only seen the order for 2000. Its precise terms are not of direct relevance; no question arises at this stage as to the existence or calculation of any shortfall between what Mrs Powell received and what she should have received if the orders applied to her. The issue which the Tribunal had to decide was whether Mrs Powell was 'employed in agriculture'; if she was not, the orders could not have applied to her.
39. Section 17 of the Agriculture Wages Act 1948 defines "agriculture" as follows:

"'agriculture' includes dairy-farming, the production of any consumable produce which is grown for sale or for consumption or other use for the purposes of a trade or business or of any other undertaking (whether carried on for profit or not), and the use of land as grazing, meadow or pasture land, or orchard or osier land or woodland of for market gardens or nursery grounds."

40. No-one doubted that the business carried on at Newnham Farm was "agriculture" within that definition. The issue was whether Mrs Powell was 'employed in agriculture'.
41. Mr Devonshire's preliminary submission on this issue was that, having failed sufficiently to identify Mrs Powell's contractual duties, the Tribunal could not properly decide whether Mrs Powell was or was not employed in agriculture; but we have already rejected the argument that the Tribunal had so failed - see paragraph 35 above; and we can therefore proceed to consider what the Tribunal did decide on this issue and Mr Devonshire's criticisms of their decision.
42. The Tribunal dealt with the issue in brief terms in paragraph 31 of their decision. They concluded that Mrs Powell's tasks were ancillary to a wholly agricultural business and were therefore agricultural work, in which she was employed. They rejected the argument that, because Mrs Powell's work was administrative (as for the most part it was albeit in some respects, as the Tribunal found, she did work of a direct agricultural nature - eg the tending of the lambs of a commercial flock of sheep of considerable size), she was therefore not employed in agriculture; they pointed out that, on many farms, the workers' tasks would in practice involve a mixture of administrative and directly productive agricultural work and that the statute could not have intended to regard their duties as partly falling within the minimum wage provisions and partly lying outside them. In the absence of guidelines from statute or case law they decided the point in Mrs Powell's favour, with confidence, they said, on the facts of this case.
43. Mr Devonshire submitted that this approach was wrong in law and that work which was essentially managerial or administrative was ancillary to an agricultural business and that Mrs Powell was not substantially employed to undertake agricultural work. The minimum wage protection, he suggested, was provided to those who undertook the especially arduous work involved in physical farm labour.
44. We were asked to consider three authorities which, we believe, were not put before the Tribunal but which the industry of Counsel has unearthed. In Re Unemployment Insurance Act 1920 [1922] IKB 467 Roche J had to decide whether each of eighteen employees in different occupations was engaged in employment which was exempt from that Act's provisions for unemployment insurance. One of the exceptions was 'employment in agriculture, including horticulture'; it was held that the green keeper of a golf club was employed in horticulture and that the driver of a lorry who was employed to take farm produce to Covent Garden and to bring material back from London to the farm was not mainly or sufficiently engaged in agriculture but was employed in lorry driving which was incidentally rather than essentially connected with agriculture.
45. In Lord Glendyne v Rapley [1978] 2 AER 110 a game keeper whose job it was to keep and rear pheasants was held in the County Court not to be an agricultural worker and therefore not to be specially protected against the landlord's claim for possession after the end of his employment. The judge found that he was not employed on the farm and his wages did not go through the farm's books. The Court of Appeal upheld this decision on the basis that the judge's findings that the game keeper was engaged in keeping and breeding pheasants for sport and therefore was not 'employed to work in agriculture' were correct.
46. In McPhail v Greensmith, reported at 1993 Estate Gazette Law Reports 228, a similar issue to that in Lord Glendyne v Rapley arose; on this occasion the ex-employee tenant was employed primarily as a mechanic who maintained vehicles and machinery used on the farm; but he also did some general work on the farm which was not purely mechanical. The employer's appeal to the Court of Appeal was rejected. Fox LJ said, at page 229 F:

"He is also, in my view, within the provisions of para 4(2)(b) because, on any view of the matter, his work as a mechanic must be regarded as being incidental to agriculture if it is not work in agriculture itself. Keeping the farm machinery in working order must be within the expression "work which is incidental to agriculture". In the result, therefore, the defendant worked for the requisite number of hours, whole time, in agriculture, within the definition which is contained in para 4(2) of Schedule 3, Part I."

And he continued:

"What I have said thus far is enough to decide the case in favour of the defendant. I would however go further. Thus far I have approached the matter on the basis that the defendant's employment as a mechanic was not itself employment to work in agriculture. In my opinion, however, it is. The defendant was employed to work on the farm. It seems to me quite unreal in modern conditions of mechanised farming to say that the farm mechanic is not employed to work in agriculture. The farm machinery is of crucial importance to the farming operations. Without the machinery in working condition, the farming operations may to a greater or lesser extent come to a halt. It seems to me that the farm employee who keeps a tractor in order, for example, is as much employed to work in agriculture as the man who drives the tractor itself. I find it hard to believe, in the context of this statute, that Parliament has contemplated that the former would have less protection than the latter. "The definition" said Lord Scarman, in Lord Glendyne v Rapley … "is really directed towards including all operations involved in farming land for commercial purposes of which the one relevant to this appeal is the production of food"."

Parker LJ at page 230E said:

"A combine harvester or a tractor is useless unless someone keeps it in working order and someone else drives it. That Parliament should have intended to give protection to the driver and not to the person who keeps it in working order appears to me to attribute to Parliament an intention which is unreal and unjust. I would not construe the Act to lead to that result, unless driven to do so by authority."

47. Although the Rent (Agriculture) Act 1976, which was central to the latter two cases, used the expression "employed to work in agriculture" rather than "employed in agriculture" the definition of agriculture was the same in that Act as in the 1948 Act save that the later Act included forestry in addition. The passages which we have quoted from the Court of Appeal's decision in McPhail provide in our judgment substantial support for the approach taken by the Tribunal in this case. We can see no reason to confine the protection of the minimum agricultural wages provisions to those who undertake physically arduous work (which concept appears neither in the 1948 Act or in the Orders,) or to those who work in the fields, dairy sheds or sheep pens and to exclude from such protection others whose work is substantially performed on the farm as part of an agricultural business there carried out. The functions of the manager and the administrator, which are no doubt common in modern farming, are as integral to the farming business in which they are performed as those of the tractor driver, the tractor mechanic or the cowman. We do not accept Mr Devonshire's argument that those who carry out essentially managerial or administrative tasks as part of such a business on the farm are performing work which is only ancillary to agriculture or are for that reason or otherwise excluded from minimum wage protection.
48. In so far as this issue gives rise to a matter of construction of the words "employed in agriculture" we take the view that those words include an employee whose work is substantially carried out on the farm premises as part of the agricultural business or undertaking there carried out; on the primary findings of fact, Mrs Powell plainly fell within this construction of the relevant words. In so far as this issue gives rise simply to a question of fact, as Miss Downing urged, the Tribunal were manifestly entitled on the facts to reach the conclusion on this issue which they did.

The Effect of the Lack of Consultation

49. This issue can affect only one month's compensatory award for unfair dismissal. The thrust of the Appellants' attack on the Tribunal's finding that, had there been reasonable consultation, Mrs Powell's employment would have continued for a month longer and it in fact did, was that this conclusion was perverse in the light of the Tribunal's findings that Mrs Powell was given notice in January 2000 to expire at the end of June and that the only vacancy which came up in this period, about which on the Tribunal's view Mrs Powell should or could have been consulted, was that of a farm secretary who was to be employed in substantially different work from Mrs Powell although she also took on some of Mrs Powell's former duties, and that any consultation about that vacancy, which was filled by the end of March, would have necessarily been completed before the end of June.
50. Miss Downing's response was that the Tribunal did not find the dismissal unfair because of failure to consult Mrs Powell about the farm secretary's post but because there was, admittedly, a lack of consultation about Mrs Powell's redundancy generally. While Mr Devonshire had suggested that Mrs Powell could not have worked in any event once she and her husband had fallen out, he had left the farm house before Mrs Powell was given notice (see paragraph 2 of the decision, confirmed in Mr Devonshire's chronology in his skeleton argument) and a role for her was not impossible. The duty to consult continued until the termination of employment and was never carried out. The Tribunal in these circumstances reached a broad view as to what would have been the effect of appropriate consultation, as entitled to do.
51. We are entirely satisfied that the Tribunal were not looking at consultation only in relation to the farm secretary's job; if they had done, Mr Devonshire's argument that such consultation must have been over, if carried out at all, by the end of June 2000 would necessarily be correct. However, the Tribunal allowed the period of one month "to allow for a reasonable and suitably sensitive consultation on the available options". Plainly the Tribunal had a broader spectrum of consultation in mind. Indeed the Tribunal ruled out any possibility of the farm secretary's job being suitable for Mrs Powell because her husband would have been involved in the interviewing for the post. Nevertheless, they found, consultation - by which they plainly meant consultation generally and not consultation as to the farm secretary's post -would not, prospectively, have been futile. In the light of that finding and in the absence of any finding that there were no prospects that consultation could sensibly have been carried out at all, the Tribunal's decision was not one which was perverse in the sense that it was one which no reasonable Tribunal could reach or in the sense that they took into account irrelevant or omitted relevant material. We take the view that the Tribunal's broad brush conclusion on this issue as one to which they were entitled to come.

The underpayment

52. The Tribunal were not asked to calculate with detailed figures what, if any, underpayment there had been in the relevant period; the Tribunal appear to have decided in the last section of their decision that there had been underpayment to Mrs Powell, the amount of which they did not consider, on the basis that she received only £2000 per annum for her services together with the value of her accommodation.
53. The Appellants' case was that the correct approach on this issue was to aggregate the annual sums paid to Mr and Mrs Powell as a team and then for that figure to be divided between them by an assessment of the share which should be paid to each. Thus, it was argued, the true figure of Mrs Powell's earnings would be ascertained; and that figure should be the base figure used for the purpose of assessing whether there were underpayments to her in terms of the statutory minimum wage and, if so, what those underpayments amounted to. It was submitted that the Tribunal should have looked at the reality which was that Mr and Mrs Powell employed as a team and that a proportion of her husband's remuneration was paid in respect of Mrs Powell's work. Between them they received more than the minimum prescribed for two full time standard workers under the Agricultural Wages Orders; and therefore on this approach there was under no payment. However, the Tribunal's decision shows no sign that they had considered this approach; and if, implicitly, they rejected it they were wrong to do so.
54. That this was the correct approach, it was submitted, was strengthened by the Tribunal's findings at paragraph 35 of their decision that the £2000 per annum paid to Mrs Powell was deducted from Mr Powell's salary for tax reasons and was an arbitrary token amount which was unlikely to attract attention or cause problems and (at paragraph 13) that the bonuses paid to Mrs Powell in the years 1995 - 1997 (which, we were told, although the Tribunal made no findings about them, were £3631, £2000 and £500 respectively) were a proportion of Mr Powell's bonus for those years. We should add that nothing in the decision explains and we were not told why Mrs Powell received no bonus or whether Mr Powell received any bonus after 1997.
55. In considering these submissions it is important to bear in mind, firstly, the earlier paragraphs of the decision which examined Mrs Powell's status and concluded that she was an employee; in so concluding the Tribunal specifically considered the nature of the annual payment of £2000 which the Appellants paid to Mrs Powell and concluded that, although the payment to her was originally agreed to be deducted from Mr Powell's salary for fiscal reasons, Mrs Powell had her own duties to perform and that she was paid that sum as a regular salary and rejected the Appellants' case that the annual payment was no more than a fiscal arrangement. When the Tribunal turned to this issue at paragraph 35 of their decision they said:

"Looking at the arrangement between the Powells and the Respondent as a whole, we conclude that the sum of £2,000 per annum was specifically given to the Applicant. We repeat our conclusions on the importance of the tax implications for the employment status question. We examined Mr Ibbotson closely on the question of why he chose the sum of £2,000. It happens to be well below the relevant personal tax allowance, so the tax benefit was not maximised. In the end we conclude it was an arbitary token amount which was unlikely to attract attention or cause complications. Because of the previous history of payments to the Applicant in Kent, and because she continue to undertake certain tasks that were hers we regard the payment as being made to the Applicant in her own right and not simply as a member of a husband/wife team. She herself had a role and was not merely providing back up or relief for her husband. … Although we indicated to the parties that the Respondent regarded the Powells as a team, that concept does not mean that their roles could not be distinguished."

In that paragraph the Tribunal demonstrated that they had considered Mr Devonshire's argument, which we have summarised above, but were rejecting it. They expressly concluded that the annual payments made to Mrs Powell, albeit of an arbitrary token amount, were not made to her simply as a member of a husband/wife team and that those payments were specifically made to Mrs Powell in her own right in payment for her work. The origin of the payments did not prevent the Tribunal from concluding that the payments made annually represented a salary paid to Mrs Powell for the work she did and the value she gave.

56. In our judgment these were conclusions of fact which the Tribunal were wholly entitled to reach. It was not, as we understand it, submitted that they were perverse; and there was on the primary facts ample material to support them. Those conclusions necessarily led to the further conclusion that, in considering whether Mrs Powell was paid less than required under the Agricultural Wages Orders, the starting point had to be her receipts and not the joint receipts of Mr and Mrs Powell divided in some way.
57. We do not accept the argument that the approach proposed by the Appellants was and still is the only proper approach. Mrs Powell was found to be an employee; she worked and gave value to the Appellants by her work; in considering whether she was paid less than the statutory minimum the natural approach or at least a natural approach would be to consider what she was in fact paid. It is not rare for a husband and wife to be employed together, on farms, as caretakers or in a household; it is, we suspect, rare for the remuneration paid to them to be regarded as one sum paid to them as a team. Although, of course, it is possible to envisage such a factual situation, it is not what, on the Tribunal's findings, occurred in this case.
58. Furthermore, the suggested approach carries with it considerable, indeed possibly irremediable, difficulties. Mr Powell was, manifestly, employed in a higher position than Mrs Powell; he was the farm manager and had greater responsibilities than his wife. Clearly it would not be right, if the total payment made to both were to be regarded as one payment to a team, to ascertain Mrs Powell's share of that total by dividing that total by two or by ascertaining the number of hours worked by each and, using the same hourly rates, sharing the total out by reference to the number of hours worked. If the correct calculation could not be made by these routes, great difficulty in deciding how to apportion the total would necessarily be experienced by any Tribunal.
59. The Appellants further relied upon the finding that no specific role was given to Mrs Powell at the outset of the new enterprise. We have addressed this point in the section of our judgment dealing with the first issue; it is not surprising that Mrs Powell's role developed as experience of the new enterprise required; and she was found, after the earlier period, to have had a set of tasks which were hers. The findings as to the absence of a specific role at the outset of the venture is not, in our judgment, in any way inconsistent the Tribunal's conclusions in paragraph 35.
60. For these reasons we also reject the Appellants' appeal on this issue. However, there is a further point which we must make. The Tribunal did not make any findings as to the nature of the receipt by Mrs Powell of the bonus payments to which we have referred in 1995 - 1997. We were not invited specifically to consider the way in which the bonuses should be treated if or when the Tribunal is asked to calculate the amount of any underpayment. We therefore do no more than tentatively indicate that logic seems to us, uneducated as we are by specific argument, to suggest that Mrs Powell's receipt of bonus payments may have to be regarded in the same light as the payments of annual salary.

Conclusion

61. This appeal is dismissed for the reasons set out above.