United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR ROBIN WHITE (of Counsel) Instructed by: DWF LLP Solicitors Bridgwater Place Water Lane Leeds LS11 5DY
For the First Respondent For the Second Respondent	MS ADRIENNE MORGAN (of Counsel) Instructed by: Forum Law Avon House 453 Stratford Road Shirley Solihull B90 4AA MR S R COX (The Respondent in Person)


 


SUMMARY

CONTRACT OF EMPLOYMENT

The Claimants were employed by the Prison Service. They were also officials of the Prison Officers Association ("the Respondents").

The issue was whether the Employment Tribunal was entitled to hold that the Claimants were employees of the Prison Service as well as being at the same time employees of the Respondents.

Held:

The Employment Tribunal was entitled to reach that conclusion as:-

(a) an individual can at the same time have two jobs with two different employers provided that they are compatible with each other (Statement of Rix LJ in Viasystems (Tyneside) Limited v Thermal Transfer (Northern) Limited [2005] IRLR 983 considered);

(b) the proper test as set out in 102 Social Club & Institute Ltd v Bickerton [1977] ICR 911 at 918 was applied to the Claimants' work with the respondents; and

there was no error of law in the Employment Tribunal's reasoning.


 


THE HONOURABLE MR JUSTICE SILBER

Introduction

1. The Prison Officers Association ("the Respondents") appeal against a decision of Employment Judge Hesselberth sitting in Leeds and made on 4 August 2009 by which he held that Steven James Gough and Steven Richard Cox ("the Claimants") were employees of the Respondents within the meaning of section 230(1) of the Employment Rights Act 1996. The order under appeal was made during a Pre-Hearing Review of claims brought by the Claimants against the Respondents and against other parties. The Claimants joined the Prison Service as prison officers and they continued to be employed by the Prison Service but the issue was whether they had also at the same time become employees of the Appellants in the light of the functions they performed for them.
2. It is necessary to make three preliminary observations. First, it is common ground that the factual and legal status of Mr Gough and of Mr Cox on this appeal are identical with the consequence that it is agreed that the results of their appeals should be identical. Mr Gough has been legally represented while Mr Cox has not but he adopts all the submissions made on behalf of Mr Gough. It is appropriate and not disrespectful to Mr Cox in this judgment merely to refer to Mr Gough (and not to Mr Cox) in this judgment because of the identity of their factual and legal positions.
3. Second, it has not been suggested that either Claimants were employed under a contract of services working on their own account nor is it or was it disputed that they could properly be described as office holders under the rules of the Appellants. Third, the contest between the parties was not as to whether they are office holders of the Respondents but rather whether they were at the same time working under a contract of employment with the Respondents. The Claimants contend that they were as the Employment Judge found to be the case while the Respondents submit that the Claimants were not working under a contract of service.

The Legislation

4. The relevant statutory provisions, which are set out in section 230 of the Employment Rights Act 1996, state that:-

"Employees, workers etc

(1) In this Act "employee" means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.

(2) In this Act "contract of employment" means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.

(3) In this Act "worker" (except in the phrases "shop worker" and "betting worker") means an individual who has entered into or works under (or, where the employment has ceased, worked under) –

(a) a contract of employment, or

(b) any other 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;…"

The Facts

5. There was a great deal of documentary evidence before the Employment Judge and an agreed bundle of documents which ran to over 500 pages. He also heard evidence not merely from the Claimants but also from Mr Don Wood the Vice Chairman of the Respondents and from Mr Brian Caton the General Secretary of the Respondents. The factual findings of the Employment Judge can be dealt with under a number of headings.
6. First, the Employment Judge made findings of fact about the organisation of the respondent union, which was essentially run by a National Executive Committee ("NEC") and its full-time officers ("FTOs") as well as by employees predominantly on the administrative side. All FTOs are employees of the Respondents as well as in some instances being office-holders. The National Chairman and the General Secretary of the Respondents are also employees of the Respondents and they have formal written terms and the conditions of employment.
7. The NEC is made up of National Executive Officers ("NEO") all of whom are elected in a national ballot. Mr Gough was so elected in 2000 winning the position of NEO on the NEC. It was not disputed that the position of the NEO is an office-holder and that an office holder can be an employee as well as being an office-holder of the Respondents. Mr Gough was duly elected as National Vice Chairman in 2005.
8. The Employment Judge then described the arrangement with the Prison Service which is more appropriate for me to explain when I deal with the submissions of Mr. Robin White counsel for the respondents.
9. There was also the Employment Judge's explanation of the remuneration of Mr Gough who received in addition to his salary from Prison Service an annual "remuneration" from the Respondents, which was latterly in the region of £14,000 per year. This payment was by agreement between the Respondents and the Inland Revenue treated for tax and national insurance in a way which was consistent with a normal employer/employee contract of employment.
10. It was explained by the Employment Judge that the income derived by the Claimants from the Respondents was officially known as the Miscellaneous Expenditure Grant ("MEG") but it was paid using a normal waged/salary method namely a detailed pay slip and an annual P60. The Employment Judge resolved a dispute between the parties as to the purpose of the MEG by saying that it was more than just a grant to cover expenses because he noted that a NEO was in any event also entitled to expenses for travel, for accommodation and for other legitimate pocket expenses.
11. The Employment Judge recorded first that the MEG was approved in advance rather than being subject as is usual in the cases of expenses to retrospective approval and second that the Claimants received what was described as "a fully expensed motor vehicle" to assist with their duties for the Respondents. This vehicle was also available for the Claimants' private use but it was subject to additional tax under the ordinary arrangements with the Inland Revenue.
12. Turning to the duties of a NEO such as Mr Gough, the Employment Judge found that they took up approximately 15% of his time and these duties were allied to the other duties of a NEO of assisting members of the POA in relation to daily issues surrounding their employment such as disputes or grievances and disciplinary issues. Furthermore, Mr Gough was assigned to specific prison sites from time to time and those additional duties over and above those defined by the Constitution in the words of the Employment Judge "self-evidently occupied almost 85% of his time".
13. It is also noteworthy that the Respondents' rules and constitution imposed an obligation on the NEOs to protect and to promote the best interests of the membership while a failure to adhere to that obligation could result in a disciplinary process against the NEOs such as the Claimants as set out in rule 25.
14. The Claimants were required apart from performing the autonomous role as NEOs to carry out the duties under the constitution as were allocated to him by the National Chairman or the General Secretary of the Respondents. On this, the Employment Judge concluded "that there was a thread and theme" going through the relationship between Mr Gough and his NEO colleagues of being answerable to the full-time officers in the roles which they performed strictly outside the constitutional requirements.
15. On the issue of sick pay, the consensus of the evidence according to the Employment Judge was that the MEG "was payable irrespective of the length of absence although that did appear to be opinion rather than precedent".

The Employment Judge's Decision

16. The potential relationship between an office holder and a contract was considered by Lord Nicholls of Birkenhead in Percy v Church of Scotland Board of National Mission [2006] IRLR 1999 in which he said that:-

"19. Sometimes the existence of an office is clear. An office may be of ancient common law origin such as the office of Constable. Indeed, some offices were regarded by the common law as incorporeal hereditaments belonging to the current office holder. A Benefice in the Church of England is regarded as a freehold office belonging to the incumbent for the time being. Or an office may be created by statute with attendant statutory functions. A superintendent registrar at Births Deaths and Marriages is an example; Miles v Wakefield Metropolitan District Council [1987] IRLR 193.

20. Less clear cut are cases where an organisation, ranging from the local golf club to the huge multinational conglomerate makes provision in its constitution for particular posts or appointments, such as Chairman or Vice-President. In a broad sense, these appointments may well be regarded as offices, but caution needs to be exercised here, lest the use of this term in this context lead to a false dichotomy. A person either holds an office or is an employee. He cannot be both at the same time. This is not so. If office is given a broad meaning, holding an office and being an employee are not inconsistent. A person may hold an office on the terms of and pursuant to a contract of employment, or like a director of a company a person may hold an office and concurrently have a service contract. Whether there is a contract in a particular case, and if so, what is its nature and what are its terms depends on an application of familiar general principles. That the appointment in question is or may be described as an office is a matter to taken into account. The weight of this feature will depend upon all the circumstances, but this feature does not of itself pre-empt the answer to the question of whether the holder of the office is an employee. This feature does not necessarily preclude the existence of a parallel contract, but carrying out the duties of the office, even where they are statutory…"

17. Lord Nicholl's speech was referred to by the Employment Judge in this case and who then referred to seven factors mentioned by Elias P in GMB Trade Union and Others v Hughes [2006] UKEAT/0288/06/0208 in which he referred to the factors set out in 102 Social Club & Institute Ltd v Bickerton [1977] ICR 911 at 918 in which this Appeal Tribunal (with Phillips J presiding) set out a number of factors to be considered in deciding whether the secretary of a members club might also be an employee. He considered the factors which could be potentially relevant as being the following:-

(1) The payment made to the secretary: was it an honorarium (Shorter Oxford English Dictionary (first meaning) "an honorary reward") or was it a salary? In Rogers v. Booth [1937] 2 All E.R. 751, 755, Sir Wilfrid Greene M.R. said of the Salvation Army Officer who had claimed under the Workmen's Compensation Act:-

The circumstances that a monetary sum is paid to officers who enter into this relationship is, in my opinion, quite insufficient to change the relationship from what it otherwise would be. It is quite obvious that, if officers are devoting the whole of their lives to this service, the Army would make provision to maintain them, and that it in effect does. But that does not mean that the sum which is paid has any similarity to wages or salary, or any payment given contractually for services given or for services rendered. It is a maintenance payment, to enable them to carry on the work that they have undertaken. It appears to me, therefore, that the appellant cannot establish, not merely a contract of service, but also any contractual relationship at all which could possibly become a contract of service or be a contract of service, and, in my opinion, the appeal fails on that ground. So the question is whether the payment was made contractually for the services, and whether the services were rendered in return for the payment, or whether it was a mere grant or solatium.

(2) The tribunal may wish to consider whether the payment was fixed in advance, possibly on a periodical basis, or whether it was voted at the end of the year in token of the members' work. The former arrangement would favour the view that the payment was a salary, the latter that it was not: though neither would be conclusive.

(3) It is material to see whether the arrangements confer upon the secretary a right to payment or whether what is paid is a mere bounty.

(4) The size of the payment.

(5) Whether he is exercising the functions of an independent office (somewhat in the way that a curate or a police officer does) or is subject to the control and orders of the club.

(6) The extent and weight of the duties performed; the smaller they are the less likely he is to be an employee.

(7) The description given to the payment in the minute or resolution authorising it, and its treatment in the accounts, and for tax and national insurance purposes."

18. In the present case the approach of the Employment Judge was to consider how each of those seven factors applied in this case and he then said that:-

"10.1 The question is whether the payment was made contractually for the services, and whether the services were rendered in return for the payment, or whether it was a mere grant or solatium. In my judgement the payment was made for services.

(a) I have considered whether the payment was fixed in advance, possibly on a periodic basis, or whether it was voted at the end of the year in token of the work. The former arrangement would favour the view that the payment was a salary, the latter that it was not. I note that neither would be conclusive. In this case the payment was fixed and was varied with inflation.

(b) It is material to see whether the arrangements confer upon the claimants a right to payment or whether what is paid is a mere bounty. The arrangements certainly confer a right to payment.

(c) The size of the payment. It was not insubstantial – albeit that it represented perhaps only a living wage it was certainly not just a few hundred pounds a year. I am persuaded that the size of the payment points towards employment.

(d) Whether the claimants were exercising the function of an independent office or was it subject to the control and orders of the POA. I am satisfied that the greater part of the claimants' functions were the subject of control and orders.

(e) The extent and weight of the duties performed; the smaller they are the less likely they are to be employees. I am persuaded that the extent and weight of the duties was considerable.

(f) The description given to the payment in the minute or resolution authorising it, and its treatment in the accounts, and for tax and national insurance purposes. I personally do not find this a particularly persuasive element bearing in mind that the Inland Revenue are reluctant to treat any emoluments other than under the PAYE system. That said the very clear position with the claimants was that they were paid as would any employees"

19. The conclusion of the Employment Judge was that:-

"11.In combining the factual issues and the legal position with the assistance of the two cases referred I conclude that the claimants were employees. They worked full time for the respondent in return for not insubstantial payment fixed in advance. They worked under a degree of control and there was mutuality of obligation. Their duties went beyond the constitution and I find that the duties which they did perform were not defined by that constitution. The claimants performed a range of duties for which the greater part of their time was outside the constitution. They were certainly not voluntary acts.

12.I have looked at the reality of the relationship in this case and conclude that the claimants were employed under a contract of service and they were, therefore, employees within Section 230(1) of the Employment Rights Act 1996".

20. Before turning to the Grounds of Appeal, it is appropriate to explain that a person can have two jobs with separate employers at the same time providing they are compatible with each other. This point was made clear by Rix LJ in Viasystems (Tyneside) Limited v Thermal Transfer (Northern) Limited [2005] IRLR 983 in which it was said that:-

"76…In my judgment, there is no doubt that there has been a long standing assumption that dual vicarious liability is not possible, and in such a situation it is necessary to pause carefully to consider the weight of that tradition. However, in truth, the issue has never been properly considered. There appears to be a number of possible strands to the assumption. Two are mentioned by Littledale J: the formal principle that a servant cannot have two masters; and the policy against multiplicity of actions. As for the first, even if it be granted that an employee cannot have contracts of employment with two separate employers at the same time and for the same period and purposes – and yet it seems plain that a person can (a) have two jobs with separate employers at the same time, provided they are compatible with one another; or (b) be employed by a consortium of several employers acting jointly – nevertheless that does not prevent the employee of a general employer being lent to a temporary employer"

21. It was said on behalf of the Respondents that these comments were made in a case of vicarious liability which is true but to my mind that does not matter because what was being explained in that case also applies in determining whether there can be two separate contracts of employment. After all there is no different question of principle which precludes a person having two jobs with separate employers at the same time provided they are compatible with each other. In the present case, it is not said that there could be anything incompatible with employees of the Prison Service also being employees of the Respondent but that of course in itself does not show that the Claimants can establish being employed under a contract of service with the Respondents while still employed by the Respondents.
22. At the forefront of the case for the Respondents is the submission of Mr Robin White that the Employment Judge said in paragraph 5.4 of his judgment of the Claimants that "the arrangement with the prison service is important" but yet he then failed entirely to deal with this issue in considering the employment status of the Claimants. Thus he says the tests set out in the cases referred to do not deal with this important factor and so the case should be remitted to the Employment Judge for further consideration.
23. It is important to stress that Mr White specifically does not contend that the Employment Judge in reaching his conclusions on the Claimants' status considered matters which he should not have done or that he omitted to consider any single relevant factor other than any consideration of the important issue of the arrangement with the Prison Service. There are four reasons which individually and cumulatively satisfy me that Mr. White's submission has to be rejected.
24. First, the Employment Judge explained clearly and also considered the arrangement between the Claimants and the Prison Service and in particular that while acting as officers of the Respondents, the Claimants:-

a. remained as employees of the Prison Service ;

b. continued to receive their full salary from the Prison Service while holding office with the respondent;

c. retained their pension entitlement from the Prison Service;

d. continued to be subject to all their terms and conditions of employment with the Prison Service;

e. were subject to a "secondment" (from the Prison Service ).. is exactly what did happen namely that the Prison Service in all respects retained Mr Gough as an employee but released him to [the respondents] to carry out such duties for the respondent as was required" (paragraph 5.4 of the Decision); and

f. even retained the right to the issue of prison uniform and the terms and conditions relating to holiday entitlement.

25. Second, in my view the relationship between the Claimants and the Prison Service is not of much assistance in resolving the issue raised on this appeal. Indeed, it is noteworthy that in his submissions to the Employment Judge, Mr White who then also appeared for the Appellants was recorded as saying that "the relationship with the Prison Service does not really help to say there was no requirement for creating a further employment relationship".
26. I would respectfully agree because the focus of the Employment Judge had to be on the relationship between the Claimants and the Respondents and that is precisely the correct exercise carried out by the Employment Judge.
27. Third, Mr White has failed to state any way in which consideration of further details of the relationship between the Claimants and the Prison Service could or would have assisted in resolving the issue raised on this appeal or might have conceivably led to a different conclusion.
28. Fourth, as the Employment Judge considered aspects of the Claimants' relationship with the Prison Service as I have explained in paragraph 23 above, the complaint of the Respondent must be that inadequate weight was attached to these matters but that is not an error of law. Indeed I understood Mr White to have accepted that any argument on his part based on inadequate weight was doomed to failure.
29. I should add that Mr White did not pursue other points raised in his written skeleton argument and he was correct not to do so. There is no reason why the Prison Service would not continue to pay the salary of the Claimants if they were also employees of the Respondent but in any event I fail to see why or how that is relevant to the issue of whether the Claimants were employees of the Respondents. There is also no merit in the other point set out in the Respondent's written skeleton argument which was that if the Claimants were not re-elected, the Respondents "would have to commence a procedure before they could be dismissed". That is no different from the position of the employee who requires a driving licence for his job but who then receives a ban from driving for the rest of his life.

Conclusions

30. In my view this appeal must therefore fail as the Respondent has not come near establishing an error of law on the part of the Employment Judge.
31. At the end of the oral hearing, I reserved judgment but Mr White contended that if the Respondents was unsuccessful as has turned out to be the case, I should give the Respondents permission to appeal because (a) there was great urgency required as the substantive hearing of the Claimants' case was due to take place on about 25 January 2010 and (b) this case raised a matter of substantial public importance.
32. In my view both those grounds are misconceived because as (a) the imminent substantive hearing is not a relevant factor in determining whether permission to appeal should be granted. Similarly ground (b) is misconceived as this case depends on its prospects of success on appeal and the case for the respondent is doomed to failure. In any event, this decision is fact sensitive.
33. When I circulated a draft of the judgment, I invited Counsel for the Respondent to put forward any further grounds he wished for seeking permission to appeal but he declined the opportunity. I therefore dismiss the appeal and for the reasons set out in paragraph 32 above, I also refuse permission to appeal.