United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR IAN WRIGHT (of Counsel) Appearing under the Bar Pro Bono Unit
For the Respondent	MR FRANK IRONS (Representative) Peninsular Business Services Ltd Riverside New Bridge Street Manchester M3 3PB

SUMMARY

Contract of Employment: Definition of employee & Practice & Procedure: Adequacy of Reasons

Consideration of the proper test for the adequacy of reasons given by a Tribunal; the proper approach to mutuality of obligation (and the dangers of failing to focus on the need to identify only a minimum of obligation to work); whether an agreement that a cab-driver would work for no-one else meant that his relationship with the suppliers of work was necessarily one of employment; whether his relationship was probably best characterised as one of licensor/licensee.


 


THE HONOURABLE MR JUSTICE LANGSTAFF

1. This is an appeal from a Decision of the Employment Tribunal sitting at London (South), whose Extended Reasons were promulgated on 20 December 2004. At an earlier directions hearing, the issue which the Tribunal had to address was identified as being whether the Claimant was an employee, and so might proceed with a complaint of unfair dismissal, which unless he was an employee he could not do.
2. The Respondent ("Checkers") conceded that the Claimant was a worker. It nonetheless contended that there was no mutuality of obligations between it and the Claimant. No one – and that includes the Employment Tribunal – appears to have recognised that there might be an inconsistency between the concession, and the contention. This arises if "mutuality of obligations" involves an obligation resting on the would-be employee to work personally for the purported employer. To be a "worker", as defined in the Employment Rights Act 1996, Section 230(3) a person is either to be an employee (Section 230(3)(a)) or be subject to a contract

"…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…"

Preliminary Matters

3. Mr Wright, who appeared before us pro bono on behalf of the Claimant and had only recently been instructed, applied at the outset to adjourn the hearing. He said he was "not fully briefed". He had the Claimant's bundle but was unsure that all the relevant material that it might contain was before us.
4. We rejected his application. It is frequently the case that Counsel is instructed overnight, as was Mr Wright. In any event, it is the Claimant's responsibility to ensure that the relevant material was before us. He had been represented by Mr Wright before a preliminary hearing, at which he was given leave to pursue this appeal. Cases need to be heard promptly (particularly appeals) although there may be a tension between speed and completeness of argument, upon both of which justice depends, particularly in cases where facts are complex. This was not one of those. The Tribunal decision extended to four pages. Appeal is on a point of law to this Tribunal, not a point of fact. The test we applied was one of balance of prejudice to the parties. We took into account the fact that the subject of the appeal had been ventilated at a preliminary hearing at which the Claimant and Mr Wright were present, some three months ago, and there had been ample time for the Claimant to organise his submissions and, if necessary, representation appropriately.
5. As it happened, bundles of documents had been received from both the Appellant and the Respondent. Those provided by the Appellant did not comply with paragraph 6 of the EAT Practice Direction 2004, whereas those lodged by the Respondent did. The Appellant was notified on 25 October 2005 that the Respondent's bundle would be treated as a core bundle and that lodged by the Appellant as a supplementary one at the hearing. Such unfamiliarity as Mr Wright had with the "other" bundle of documents could be rectified, we felt, with a short adjournment for that purpose.
6. Accordingly, we declined to adjourn the hearing to another day, but did adjourn for a sufficient period before beginning the hearing to enable Mr Wright to be in adequate command of the material for the purposes of the appeal.

The Facts

7. The Claimant worked as a private hire car driver. He claimed to have worked since April 2001 for Checkers, who operated a 24 hour taxi service based at Gatwick Airport under an exclusive contract between it and the British Airport Authority. The Tribunal's findings of fact are expressed in terms which are sufficiently economical for us to set them out in full, beginning with paragraph 5 of its decision.

"5. Checkers Cars Limited operates a 24 hour taxi service based at Gatwick Airport under an exclusive contract between it and British Airport Authority. The Authority operates the Gatwick Airport site and strictly enforces its requirements. The Respondent engages approximately two hundred drivers who provide a tax service to both terminals and to the train station. All of the drivers, under their terms of engagement, only work for the Respondent. The volume of work is such that work is always available to drivers, although some periods are busier than others. It was not disputed that once a driver attended work, he or she was required to comply with many requirements such as maintaining the clean and tidy appearance of their vehicles, driving certain makes of vehicle and complying with the company's dress code. Drivers are required to comply with the Respondent's operating procedures that include what fares they can charge customers and what routes they can drive.

6. The Claimant was engaged to work as a driver and owned and was responsible for his own vehicle. He was required to obtain a private hire driver licence from Crawley Council. He paid his own income tax and National Insurance. In common with the other drivers, he was required to use set routes and charge set fares. He collected fares from customers, paying a commission to the Respondent. All of the drivers had complete flexibility over when they worked. Accordingly, the Claimant was not obliged to accept work and the Respondent was not obliged to offer him work. He could work at the times he wanted to work and for as few or as many hours as he wished. He did not have to give notice of when he was or was not available. This flexibility was evidenced by a schedule of days worked by the Claimant that was put before the Tribunal. Drivers were never required to attend work and were never disciplined for attending or not attending work. All drivers reporting for work were allocated jobs fairly by way of a queuing system administered by the drivers themselves. In addition to driving, the Claimant carried out other duties commensurate with his work, that included collecting lost luggage or parcels left by passengers and delivering them from one terminal to the other where necessary.

7. Mr Maskell gave evidence that whilst drivers varied in their attendance the Respondent had adapted procedures to ensure an even flow of drivers to meet demand. For example, from time to time when there was a shortage of drivers steps were taken to inform drivers through contacting them by leaving a message on their mobile telephones that work was available in an effort to encourage them to offer themselves for work."

The Tribunal's Conclusions

8. The Decision of the Tribunal is laconic. Having set out its view that Section 230 of the Employment Rights Act 1996 provides no precise definition of an employee, such that it is left for a Tribunal to consider whether the relationship between the parties is governed by a contract of employment in all the circumstances of the case having weighed the relevant factors, it went on to say (at paragraph 14) as follows:

"14. It is, however, well established that the test of what has become known as 'mutuality of obligation' must be applied, since an essential ingredient in a contract of employment is that the parties must as a minimum be under an obligation towards each other. The 'employer' must be under an obligation to offer work and the employee must be under an obligation to accept work. If there is no such obligation then it is highly unlikely that a contract of employment exists (National Power plc v Carmichael [1999] ICR 1226 HL).

The Tribunal's Conclusions

15. Having heard the evidence the Tribunal found that there was no mutuality of obligation in this case. The Respondent was not under an obligation to offer work and the Claimant was not under to accept work."

Submissions

9. It was common ground between the parties that there was no written contract between the Claimant and Checkers. Accordingly, whatever terms the Tribunal held the contract to contain had to be derived either from direct oral evidence of agreement, or by inference from the practices adopted by the parties. In this latter case, the terms of the contract are a question of fact (see per Lord Hoffman in Carmichael v National Power plc at 1233, and 1244, where he commented that the ascertainment of the terms of such an agreement "…was a question of fact in which the Employment Appeal Tribunal were right not to interfere").
10. Mr Wright, for the Claimant, took five principal points. These were all aspects of a general submission that the Tribunal had failed to consider all the relevant facts, and thus failed to carry out the qualitative assessment required of them, and that they fell into error by failing to make clear detailed findings of fact.
11. First, Mr Wright submitted that the Claimant had been held by an Employment Tribunal at Brighton to be an employee of GoldLine Cars Ltd, which had been a predecessor of Checkers enjoying an exclusive contract with the British Airports Authority to operate a taxi service at Gatwick. It was said by the Claimant that his position with Checkers was identical, and that at the very least, the Tribunal should have given reasons for differing from the decision made in respect of Gold Line. Secondly, he argued that Mr Maskell, Operations Manager of the Respondent, had given evidence which the Claimant relied upon but with which the Tribunal simply did not deal. This was (i) that Checkers was the sole concessionaire at Gatwick Airport providing a taxi service for both terminals; (ii) that there was no written agreement between the Respondent and its drivers, but the arrangements were governed by custom and practice; (iii) that the Checkers drivers were expected to comply with Checkers' procedures concerning type and appearance of vehicle; (iv) that drivers were expected to apply with Checkers' operating procedures and standards of conduct.
12. Third, he complained that inadequate attention had been paid to the agreement between the British Airport Authority and Checkers, in particular, the obligation resting upon Checkers to provide an adequate number of vehicles to ensure high service standards to the satisfaction of the BAA, giving BAA a right to specify the number of vehicles to be made available and to require Checkers to provide on request additional vehicles in such circumstances and for such periods as the circumstances might require – thus necessitating an arrangement between Checkers and its drivers by which Checkers could require them if it wished to provide their cars as taxis, and thus to imply an obligation upon drivers such as the Claimant to provide his labour on demand.
13. Fourthly, he argued that the Tribunal inadequately considered the question of control, and contrasted their passing reference to this with the extensive treatment of the mutuality of obligation, although both had a part to play in assessing whether there was a contract of employment.
14. Finally, he noted that the Tribunal had found that the Claimant could not work for any firm other than the Respondent. This restriction to working for one employer alone was not only consistent with the Claimant's case that he was an employee, but inconsistent with the opposite. For someone who had invested in a car with which to earn a living to be prevented from working for any other person would be so remarkable a provision to agree to if the party, to whom the promise was made, was not obliged to provide any work at all that it necessarily implied that there was an obligation resting upon Checkers to provide at least some work. It would otherwise emasculate the earning capacity of the Claimant. When coupled with the consistency with which the Claimant in fact worked (apart from a period of some six weeks from 7 December 2003 to 18 January 2004 and between 29 March 2004 and 17 April 2004, the evidence of Checkers was that he worked for at least some period of time, almost every day between 4 December 2003 and 12 April 2004) this showed that the Tribunal was bound to derive an employment relationship from the arrangements which operated.
15. For the Respondent, Mr Irons argued that the Tribunal's findings as to mutuality of obligation were conclusive against the Claimant. Although the arrangements with GoldLine had been similar to those with Checkers, mutuality of obligation was similarly lacking and the Employment Tribunal specifically addressed the point. As in the case of the purported employee, Cheng Yuen, in the case he brought against the Royal Hong Kong Golf Club [1998] ICR 131 (Privy Council) the proper analysis here was that of licence, not contract of employment or self-employment. Mingeley v Pennock & Ivory [2004] ICR 727, a case brought under the Race Relations Act was Court of Appeal authority examining the case of a private hire taxi driver in a factual relationship with his employer indistinguishable from that of Mr Khan. That Court rejected the contentions that he could be regarded as an employee. Whoever else it might be appropriate to think of as working under the terms of a licence to do so, licence arrangements certainly applied to caddies (Cheng Yuen) and cabbies (Mingeley, and the present case).

Conclusions

16. If it was ever in doubt, there is now copious authority that a Tribunal must give reasons which are adequate to fulfil three major purposes: to tell the parties why they have won, or lost; to demonstrate any process of reasoning sufficiently so that a Court on appeal may be satisfied that there is no error of law, and to act as a necessary self-discipline so that the Tribunal reminds itself that of those matters to which it should pay regard. Further, a decision of a Tribunal is not a conclusion such as an investigator might reach, determining for itself those matters which are of relevance and ignoring those which are not. It is rather the conclusion of an adversarial process, in which the arguments that have to be weighed are those put forward by the rival parties. Thus, if an argument is of central importance to the case of one party, a Tribunal should indicate what it makes of the argument and, if it considers it of no relevance, indicate at least why that is so.
17. We go thus far with the argument of Mr Wright. What we do not accept, however, is that an Employment Tribunal must in its decision deal with every point of contention. Even if a Tribunal were to deal with many important conflicts, it might still render a decision overlong and unwieldy. A decision which attempted to be all encompassing would run a risk of obscuring the essential reasons for a Tribunal deciding as it did and in a misguided attempt to satisfy the needs of justice by being fully comprehensive, actually defeat the clarity, intelligibility, reviewability and focus upon which justice depends. Thus not only does a Tribunal not have to "dot every i and cross every t", but it should not try to do so, for in the attempt more is likely to be lost than is to be gained.
18. Generalised appeals that there is a lack of qualitative assessment in the record of the reasoning are thus to be deprecated. The test is whether in substance a Tribunal has so dealt with the central issues placed before it by the parties as to meet the three principal objectives identified above.
19. We reject the Claimant's submission that the Tribunal did not deal with the significance of his previous successful claim against GoldLine Cars Ltd. As to that, the Tribunal recognised that the Claimant had been found to be an employee (paragraph 4). It specifically noted as a self-direction that it was not bound by the decision of another Tribunal, and that each case would turn on its own facts. It noted that the facts before that other Tribunal included what it described as "uncontested evidence that drivers were required to attend work at set times, were expected to work a minimum period and were subject to reprimands and suspensions".
20. The fact that the Tribunal highlighted the particular features of the evidence which would, in that case, have resolved any conflict as to whether there was in some obligation resting upon the Claimant to work at least some minimum period is contrasted with what the Tribunal found as fact at paragraph 6 in the present case. In our view, therefore, the Tribunal were indicating the particular features of the Brighton Tribunal decision which distinguished it from that of Mr Khan, which explained it, and which made it important to recognise that, in any event, it could not bind the London (South) Tribunal.
21. Although the Tribunal might have dealt with the "GoldLine" case in greater detail, and explained the distinction more clearly, we do not think that its failure to do so amounts to an error of law. Moreover, the decision of a Tribunal involving fact only, not involving any legal precedent, and determined between different parties on the basis of facts and submissions which were not put before the London (South) Tribunal could be of no relevance in deciding whether or not the Claimant was an employee of Checkers.
22. We reject also the argument that it was an error of law not to deal in terms with the facts set out at paragraph 12 of the statement of Mr Maskell, as Mr Wright argued. Mr Maskell said there that if he had known that Mr Khan had secured a Tribunal decision that he had been an employee of Gold Line Cars whilst working at Gatwick, it would have caused a considerable shock and change in Checkers' perception of what was going on in their arrangements "because they were so similar to those of GoldLine". He would have wished to give serious consideration to Checkers' position in that regard. To extract from this paragraph that the working arrangements within Checkers were identical to those of GoldLine, such that the facts relevant to determine if a person was an employee of one would be identical in the other, thus persuasively arguing to the same result, is to over-read what Mr Maskell was in fact saying. His observations were made in the context of arguing both that there was no "mutuality of obligation" as between Checkers and the Claimant, and also that the Claimant found it advantageous to himself to be regarded as self-employed and not an employee, and wished to see the arrangements in that light.
23. However, the substance of the Tribunal's findings at paragraph 6 is to identify material respects in which the arrangements at Checkers differed from those in Gold Line, as set out in paragraph 4 of its decision (whatever other similarities there might have been) as to make a material difference between the two positions. We do not think that the Tribunal was required to set out what Mr Maskell said, and answer the points one by one. But even if it was required, in our view, the Tribunal sufficiently answered the substance of the points raised (see their paragraph 6).
24. The fact that the British Airport Authority could, by contract, require Checkers to provide vehicles on request in such numbers and for such periods as circumstances required was not something which required specific treatment by the Tribunal. The Tribunal recited a submission by the Claimant, that Checkers "…had promised BAA a 24 hour service and there followed that there was an obligation to provide him with work", and came to the conclusion in paragraph 15 that there was no such obligation. Moreover, the point appears to be answered by the apparent acceptance by the Tribunal of that which Mr Maskell said, as recorded at paragraph 7 of the Reasons: and once again it needs to be stressed that the Claimant was seeking to place reliance upon a contract with a third party (in this case BAA on the one hand, and Checkers on the other) which could, logically, be of only tangential relevance to the contract which the Tribunal had to consider, that between the Claimant and Checkers.
25. The complaint that the Tribunal should have considered the extent to which there was control over the Claimant by Checkers does not, in our view, amount to an error of law, even if it were true (the Tribunal record that Checkers did not dispute what the Claimant contended in relation to the degree of control exercised by Checkers once he had reported the duty with the company controllers). In Nethermere (St Neots) Ltd v Gardiner & Another [1984] ICR 612, a decision reviewed by the House of Lords in Carmichael v National Power plc and not dissented from, Stephenson LJ said this at 623C:

"The obligation required of an employee was concisely stated by Stable J in a sentence in Chadwick v Pioneer Private Telephone Co Ltd [1941] 1 All ER 522, 523D: 'A contract of services implies an obligation to serve, and it comprises some degree of control by the master'. That was expanded by Mackenna J in Ready Mixed Concrete (South East Ltd) v Minister of Pensions and National Insurance [1968] 2 QB 497, 515:

'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'".

He noted that as to (i) and (ii), Mackenna J said this:

"There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration, no contract of any kind. The servant must be obliged to provide his own work and skill"

and commented:

"There must, in my judgment, be an irreducible minimum of obligation on each side to create a contract of service".

26. It is plain from that extract, as it is from passages in his judgment at 624 F-H, that of Kerr LJ at 629 F-G, 630 C-D and that of Dillon LJ at 634 F-H that the following propositions of law to be adopted:

(a) The right to exercise control, at least in so far as there is room for it, is a necessary element of a contract if it is to be one of employment;

(b) An obligation resting upon a purported employee to provide at least some minimum of work personally for the employer, and whilst doing so, to be subject to the control referred to, is a separate and equally necessary requirement; but

(c) The phrase "mutuality of obligation" should be understood as referring to an obligation to provide some minimum of work. It does not require the would-be employee to be obliged to work whenever asked by the purported employer. It permits the purported employee to refuse work, although this may involve a factual assessment as whether any refusal is so extensive as to deny the existence of an obligation even to do a minimum of work.

The presence or absence of the essential obligation upon the employee to do some minimum of work cannot therefore be determined simply by pointing to the fact that he had refused some, any more than it could be established by the fact that he had accepted some.

27. At one stage in the argument, we were concerned whether the Employment Tribunal's recitation of fact at paragraph 6 suggested that the Tribunal did not have clearly in mind that what was determinative of "mutuality of obligation" was consistent with flexibility of times of working, and consistent with a right to refuse some work: the finding "all of the drivers had complete flexibility over when they worked" does not state that they had complete flexibility over whether they worked. The next sentence reads:

"Accordingly, the Claimant was not obliged to accept work and the Respondent was not obliged to offer him work".

The word "accordingly" ties the finding to the previous sentence. As it stands, it is a non-sequitur. Flexibility over the time of working is neutral as to an obligation to accept it. Similarly, the next following sentence:

"He could work at the times he wanted to work for as few or many hours as he wished. He did not have to give notice of when he was or was not available"

focuses upon the amount of work done, rather than the obligation to do it in the first place. However, we did not have to resolve our concerns that this might be to take too literal an approach to a Tribunal's reasons, construing them as if they were statute, because of what followed: "Drivers were never required to attend work…". On any literal interpretation, this is clear. It excludes an obligation even to perform the minimum of work to which Nethermere (and cases following on from it) refer. The fair sense of paragraph 6 is that read as a whole, the Claimant could choose whether to work or not and, if so, when he did so.

28. We accepted, also, that when in paragraph 3 the Tribunal noted the concession of the Respondent that the Claimant was a "worker", it was not recording a concession that the Claimant was subject to a contract by which he undertook to work personally for the Respondent. That would be inconsistent with the statement immediately thereafter that the issue between the parties was "mutuality of obligation" which the Tribunal set out at paragraph 14 – an obligation on the part of the employer to offer work and on the employee to accept it. Although this is too restrictive a definition of the employer's obligation (it may, for instance, be an obligation to pay rather than to offer work, or to provide some other benefit in return for a promise to accept work), the essential requirement of "mutuality of obligation" is that there should be sufficient consideration given by both parties to amount to bargain by which, if the contract is to be one of employment, the purported employee is obliged to provide at least some work personally for the purported employer, exactly as Mackenna J said in Ready Mixed Concrete.
29. A contractual term to the effect that the Claimant could not work for any firm other than the Respondent might, in the absence of a contract of employment, have potentially been unenforceable as an unlawful restraint on trade, such that a conclusion that such a term had been agreed between the parties by practice, or by oral agreement, might suggest that (since the parties should be taken to agree something in a context in which it would be lawful rather than one in which it would be unlawful) the existence of the term indicated that there was a contract of employment. Under such a contract, working for competition would be excluded: outside it, it would prima facie be unlawful or uncomfortable. On face value, an agreement that the Claimant would work for no-one else would tend strongly to encourage a finding that the arrangements between the parties was such as to make that agreement sensible, and thus provide powerful support for an argument that here there was a contract of employment.
30. Nonetheless, the factual assessment was one for the Tribunal to make. Although we consider that it would have been more helpful if the Tribunal had set out, in brief summary, the evidence it heard and that which it had accepted and which it did not, rather than (a) simply setting out its conclusions with little indication from where those conclusions were derived, and (b) making no statement at all that there was no written contract of employment whatsoever, and although we would have preferred the Tribunal decision overall to be less concise, we think that its terseness nonetheless falls short of being an error of law, and of falling foul of the applicable principle. Mr Wright did not argue, here, that the Tribunal had failed to identify its reasons for establishing the primary facts: rather, he concentrated upon what he regarded as shortcomings in the qualitative assessment of those facts thus found.
31. The issue before the Tribunal was simply whether the Claimant was, or was not, an employee so as to be able to qualify for unfair dismissal rights. What was in issue was not whether, when he worked, he did so as an employee or independent contractor, for no issue as to continuity of employment pursuant to Section 212 of the Employment Rights Act 1996 arose. It is thus a sufficient answer to the Claimant's case for us to hold, as we do, that this Tribunal was entitled to find that there was no contract of employment.
32. It is thus strictly unnecessary for us to determine whether Mr Irons is correct to submit that the contract between the Claimant and Checkers was neither one of service nor for provision of services but that the Tribunal should have concluded, as did Lord Slynn of Hadley, for the majority of the Privy Council in Hong Kong Golf Club, when he said (at 138B-E):

"The only reasonable view of the facts is that the arrangements between the club and the Claimant went no further than to amount to a licence by the club to permit the Claimant to offer himself as a caddy for individual golfers on certain terms dictated by the administrative convenience of the club and its members…"

making all necessary modifications to translate the position of a caddy on a golf course to a cabby at Gatwick. If it had been material to our decision, we would have been inclined to find that the arrangement here was analogous to that in the Hong Kong Golf Club case, as it is to that of the position of the Claimant in Mingeley v Pennock, and, on the findings of fact that the Tribunal made, the contract went no further than to amount to a licence by Checkers to permit the Claimant to offer himself as a private hire taxi driver to individual passengers on terms dictated by the administrative convenience of Checkers and BAA. For that reason, too, we would have dismissed the appeal.

33. For these reasons, we dismiss this appeal.