United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS NAOMI LING (of Counsel)
For the First Respondent For the Second Respondent	No appearance or representation by or on behalf of the Respondent MR M DUGGAN (of Counsel) Instructed by: Messrs Longmores Solicitors 24 Castle Street Hertford SG14 1HP


 


SUMMARY

PRACTICE AND PROCEDURE

Striking-out/dismissal

JURISDICTIONAL POINTS

Agency relationships

Striking out of agency worker's claim for outstanding wages inappropriate in the light of the legal and factual complexity of such cases; and also of an email from the employer found by the Claimant shortly after the hearing, which the Tribunal ought to have admitted on an application for review.


 


THE HONORABLE MR JUSTICE BEAN

Introduction

1. This appeal by Dr Patricia Evans is against a decision of Employment Judge Byrne, sitting in the Employment Tribunal at Reading on Friday 29 August 2008, striking out her claims against Parasol Ltd (the First Respondent) and RSA Consulting Ltd (the Second Respondent) on the grounds that they had no reasonable prospect of success. Dr Evans also appeals against the refusal by the same judge to grant a review of that decision. There were a number of such refusals but the one material for the purpose of this appeal was a decision taken on 1 October 2008.

The Facts

2. Dr Evans has a doctorate in molecular immunology. In order to make her services available to end users she was employed under what was described (whether in attempt to be amusing or not) as an umbrella arrangement by Parasol Ltd. Parasol, either directly or through her, found end users for her services and did so, relevantly for present purposes, by a contractual chain involving RSA. Thus, as Wilkie J observed at the preliminary hearing of this matter in this Appeal Tribunal, the chain of contract seems to have been between (a) the Claimant and the First Respondent who employed her, (b) the First Respondent and the Second Respondent, which had an agreement the First Respondent should supply her services for an end user arranged by the Second Respondent and (c) the Second and Third Respondent, in respect of the work to be done for the Third Respondent. The terms and conditions of employment between the Claimant and Parasol, as originally drafted, appear to have provided for, "At least one week's notice where an assignment is terminating" though this was qualified by the words "wherever possible".

The Appellant's Case

3. The hearing before the Employment Judge on 29 August was on a pre-hearing review. The notice of the pre-hearing review had indicated that one of the matters to be considered was whether the claim should be struck out. The Claimant appeared in person; the First and Second Respondents in each case through solicitors. The Claimant has stated in a witness statement (and I accept) that the bundle of documents to be used at that hearing was first served on her about half an hour before the start. The judge noted the relevant term of the original contract between Dr Evans and Parasol (which I have already read out) and went on to describe the agreement between the First and Second Respondents. Under the terms of that agreement Parasol agreed to provide to RSA the services of the Claimant, described as an "interim manager", for a period of a year from 1 November 2007. The termination provisions in that agreement allowed either party to give one month's notice to terminate at any time. The Claimant, as the Tribunal found, saw and approved that schedule and indeed signed it. The Employment Judge, in paragraph 9 of his judgment, says this:

"I asked the Claimant to explain the basis on which she was claiming the sum of £16,074 in these proceedings. She said it was her outstanding salary for the period from 12 February to 7  March 2008. She said that when the assignment was terminated by the First Respondent she was not given one month's notice as referred to in the schedule to the contract between the First and Second Respondents. The Claimant was asked by the First Respondent's solicitor on what basis she considered that the First Respondent was obliged to pay her and she replied 'I don't see that Parasol is liable for the payment. It is an absolute muddle created by RSA. They are aware that Parasol is an umbrella company … I don't see Parasol are liable for the notice period. RSA agreed a month's notice period with me not with Pharmanet Limited.'"

4. The Judge goes on to record that submissions from the First Respondent were very brief, namely there was no case to answer; the Claimant having confirmed she did not believe that any money was due to her from the First Respondent. I shall return to the findings in respect of the Second Respondent later in this judgment.
5. Within days of the Employment Judge striking out her claims, the Claimant found an email which had been sent to her by Parasol on 8 November 2007 (page 170 of the appeal bundle). This read, so far as material, as follows:

"You have confirmed the following contract.

Agent Name: RSA Interims

Client Name: PharmaNet Ltd

Contract Start Date: 12-Nov-2007

Contract End Date: 31-Oct-2008

Notice period to agency/client: 1 month by either party

Agency/client notice period to you: 1 month by either party."

6. This email appears to state, in the most express terms, that the assignment between Dr Evans and Parasol, which all parties before the Employment Judge had agreed was a contract of employment, was terminable only by one month's notice. Not surprisingly, the Claimant applied for a review. In argument before me, Ms Naomi Ling, who now appears for the Claimant, has submitted that it would have been a case for review either under Rule 34(3)(d) of the Employment Tribunals Rules of Procedure (that is to say new evidence becoming available whose existence could not have been reasonably known of or foreseen at the time of the original hearing) or Rule 34(3)(e), a more general subparagraph providing for a review in the interests of justice.
7. The Employment Judge treated the application as being made under Rule 34(3)(e) and so will I. It is an interesting question whether Rule 34(3)(d) applies but, in the light of the view I take under Rule 34(3)(e), it is an academic one. The review decision of 1 October 2008 states as follows:

"Your application for a review has been refused because the Judge considers that there are no grounds for the decision to be reviewed under Rule 34(3) and/or there is no reasonable prospect of the decision being varied or revoked.

The only possible grounds that could apply to an application to review in this case is Rule 34(e) the interests of justice require such a review.

The Claimant's letter seeks to argue or repeat submissions that were made at the hearing or could have been made at the hearing. The reasons for the Judgment are clear. It appears that the Claimant's reason for requesting a review is that she is dissatisfied with the judgment. That is not a ground which justifies a review."

The First Respondent's Case

8. The original decision to strike out against the First Respondent had been made on two grounds. One was the Claimant's statement to the Employment Judge that she considered that Parasol was not liable to pay her any money. With respect to the judge, it is unwise to rely on the view of an unrepresented Claimant as to the law, particularly in an area of such complexity and difficulty as that of agency workers. In any event, what the Claimant said was said without the benefit of the email.
9. The other ground for the original decision had been that under the terms of her contract with Parasol the only obligation of Parasol towards Dr Evans as to notice was to endeavour to provide her with at least one week's notice when an assignment was terminated. In the light of the email, that ground is not only arguably erroneous it seems to me, considering the case on the document to be plainly erroneous. Of course the Employment Judge, in making his original decision, did not know about the email. But once the email came to light and was put before the Tribunal, within a short time of the promulgation of the decision, it seems to me that the interest of justice clearly required the granting of a review.
10. I conclude that the appeal against the order striking out the claim against Parasol should succeed both on the grounds that the Claimant's statement to the Employment Judge at the original hearing should not have been given the significance that it was and, also, in the light of the email, that the decision to refuse a review was wrong.

The correspondence had indicated an objection on behalf, at any rate, of the Second Respondent to the admissibility of the email. The First Respondent did not appear on the
appeal; they simply sent an email to the EAT saying:

"I can confirm that Parasol will not be opposing the appeal.

Parasol is available at the Tribunal's discretion to attend the full hearing.

Parasol would like to put the Appellant on notice that, if successful, a full claim for costs will be applied for."

11. I assume that the first sentence meant that Parasol did not intend to appear or be represented at the appeal, rather than they were consenting to the appeal being granted but that was all that they said. They had nothing to say on the topic of the admissibility of the email on the appeal.
12. The Second Respondent has been represented before me by Mr Duggan, and it is right to say that Mr Duggan accepted that on the appeal against the judge's decision on review, at any rate, the email was admissible. The whole subject matter of the review was the email and its significance or otherwise and he rightly felt that in those circumstances an objection as to the admissibility of the email would be a somewhat technical one.
13. It would lie ill in the mouth of the First Respondents (Parasol) to object to the admissibility of the email in any event. This is an appeal from a strike out decision by the Employment Tribunal made at a stage where there had been no order for disclosure. Had such an order been made, it would have required the parties, including the First Respondent, to disclose documents in their possession on which they rely but also documents in their possession which weakened their case or supported the Claimant's. The effect of the strike out was that the case never got that far. Dr Evans has alleged in correspondence that this was deliberate malpractice on the part of Parasol. I make no such finding; I am prepared to assume that they, like Dr Evans herself, had overlooked the exchanges of emails in November 2007 and that was the reason why they were not placed before the Tribunal at the hearing on 29 August. Even so, I have no doubt at all that the interests of justice required the email to be admitted in evidence on the review and should have led to the grant of a review, and that the email is admissible on appeal.

The Second Respondent's Case

14. I turn to the more difficult question of the Employment Judge's decision to strike out the claim against RSA. Ms Ling does not suggest that they were the employers in the sense of there being a contract of employment between Dr Evans and RSA. The contract of employment was with Parasol but the Claimant does not have to show a contract of employment in the traditional sense with RSA. Dr Evans' originating application, form ET1, clearly asserted that there was a direct relationship of some kind between her and RSA. The findings of the Employment Judge on this subject are as follows:

"13. Her claim is brought under the provisions of Section 13 and 23 of the Employment Rights Act 1996, 'ERA'. Such a claim can only be brought against an employer. She identifies her employer as the First Respondent. On the evidence before me she has not made out a claim that falls within the provisions of Section 23(1)(a) ERA.

14. Turning to consider her claim against the Second Respondent, it appears to me on the evidence that I have seen that at no time was the Second Respondent her employer. All the documentation I have seen is entirely inconsistent with argument that an employment relationship existed between her and the Second Respondent. The Second Respondent was at no time her employer and accordingly there is no basis on which this Tribunal has any jurisdiction to consider a complaint of an unauthorised deduction from wages under Section 23 ERA. Further this Tribunal has no jurisdiction to consider a claim for damages for breach of contract against the Second Respondent. There is no basis on the documentation I have seen on which any Tribunal would come to that conclusion. It is possible that the Claimant signed the schedule to the contract between the First and Second Respondents as agent for the First Respondent. That might give rise to the Claimant constructing an argument that she has a contractual claim against the First Respondent through an implied variation of her terms and conditions of employment with the First Respondent as a result of a collateral contract entered into between the First and Second Respondents. That is not an argument that has been formulated before me and in any event if it were pursued as a breach of contract claim it would be against the First Respondent. The Claimant is still employed by the First Respondent and accordingly applying Article 3 of the Order this Tribunal has no jurisdiction to deal with any such claim."

15. As Ms Ling has pointed out and Mr Duggan accepts, in order to establish jurisdiction under Part 2 of the Employment Rights Act 1996 (still described by many employment lawyers and judges as a Wages Act claim) the Claimant has to show that Section 230(3) and (4) apply. Dr Evans has to show against any Respondent to a claim of this kind that she worked for that Respondent, either under a contract of employment or under a contract within the terms of Section 230(3)(b), that is to say:

"any other contract, whether express or implied and (if it is express) whether oral or in writing, 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;"

16. Unfortunately the Employment Judge did not expressly refer to this section. I am unable to make out whether, when he found in paragraph 14 that the documentation was entirely inconsistent with the argument that an employment relationship existed between Dr Evans and RSA and that RSA was at no time her employer, he meant that RSA was at no time her employer under a contract of employment or whether he intended his finding to extend to the wider provisions of Section 230. Whether a contractual relationship falling within Section 230(3)(b) exists between a worker and an end user of an agency's services, or another party in the contractual chain that is not the direct employer of the individual, is not an easy question at all.

The Legislation

17. The two leading cases in the Court of Appeal, Dacas v Brook Street Bureau (UK) Ltd [2004] ICR 1437 and James v London Borough of Greenwich [2008] ICR 545, afford some guidance. In Dacas, at paragraph 17, Mummery LJ said:

"The critical point is that, although the construction of the contractual documents is important, it is not necessarily determinative of the contract of service questions, as contractual documents do not always cover all the contractual territory or exhaust all the contractual possibilities. In determining the true nature of the relationship (if any) between each of the respective parties, it is necessary to consider the total situation occupied by the parties. The totality of the triangular arrangements may lead to the necessary inference of a contract between such parties, when they have not actually entered into an express contract, either written or oral, with one another. Although there was no express contract between the applicant and the end-user in this case, that absence does not preclude the implication of a contract between them. That depends on the evidence, which includes, but may not be confined to, the contractual documents."

18. I pause to add that in the present case the arrangements were not triangular but quadripartite. The case is certainly not simpler than the triangular arrangement described by Mummery LJ, it is at least as complicated if not more so. In James, at paragraph 51, the same Lord Justice said:

"In conclusion, the question whether an "agency worker" is an employee of an end user must be decided in accordance with common law principles of implied contract and, in some very extreme cases, by exposing sham arrangements. Just as it is wrong to regard all "agency workers" as self-employed temporary workers outside the protection of the 1996 Act, the recent authorities do not entitle all "agency workers" to argue successfully that they should all be treated as employees in disguise. As illustrated in the authorities there is a wide spectrum of factual situations. Labels are not a substitute for legal analysis of the evidence. In many cases agency workers will fall outside the scope of the protection of the 1996 Act because neither the workers nor the end users were in any kind of express contractual relationship with each other and it is not necessary to imply one in order to explain the work undertaken by the worker for the end user."

19. Mr Duggan, for RSA, argues that there is no evidence of a contractual relationship between Dr Evans and RSA, whether falling within Section 230 or otherwise. It may be that at the end of the day that submission will be proved right, but this is an appeal from a decision striking out the claim. Even on the basis of the information available to the Employment Judge on 29 August, it seems to me that there were facts in dispute. There is a long line of authority in this Appeal Tribunal and the Court of Appeal about the circumstances in which it is appropriate to strike out claims. In Ezsias v North Glamorgan NHS Trust UKEAT/0705/SM (unreported) the then President, Elias P, said at paragraphs 57 and 58:

"The classic example where striking out may occur is where the Tribunal reaches a conclusion that even on the facts advanced by the Claimant the case has no prospect of success as a matter of law. In such a case, one would expect a decision to set out the allegations of the Claimant, analyse the relevant legal principles and indicate why the claim is bound to fail.

However, where the facts themselves are in issue, in my judgment it can only be in the most extreme case that the Chairman can say without any evidence being tested in cross examination that the disputed facts will inevitably or almost inevitably be resolved against the Claimant. Such a finding involves a ruling that the Claimant is either dishonest or very fundamentally misguided. The evidence suggesting that may sometimes be strong, but that is a far cry from justifying an inference from such facts as are revealed in the papers alone that the Claimant's case has no real merit."

20. When the case reached the Court of Appeal, [2007] ICR 1126, Maurice Kay LJ, giving the leading judgment, referred to that paragraph with approval and accepted a further proposition set out by Elias J that there may be cases which embrace disputed facts but which nevertheless may justify striking out on the basis of their having no reasonable prospect of success. But what is important is the particular nature and scope of the factual dispute in question. He said at paragraph 29:

"It would only be in an exceptional case that an application to an Employment Tribunal will be struck out as having no reasonable prospect of success when the central facts are in dispute. An example might be where the facts sought to be established by the applicant were totally and inexplicably inconsistent with the undisputed contemporaneous documentation."

21. It seems to me, in the light of those observations and the complexity of the law relating to agency workers as laid down in the Dacas and James cases, that it would be a bold employment judge who would strike out a case of the kind put forward by Dr Evans against RSA. But the matter becomes stronger, from Dr Evans' point of view, if the email at page 170 is admitted in evidence, as it should be. I have already said that it is of great significance to the claim against Parasol but it is relevant to the claim against RSA also in that the notice provision provides for one month's notice to be given, "to agency / client" or by agency / client. The agency is RSA, not Parasol. This does not go all the way to establishing a clear cut case of a Section 230 relationship between Dr Evans and RSA but this is not the trial of that issue. It does, in my view, assist Ms Ling in showing that it is arguable that the Claimant and RSA agreed between themselves that Dr Evans would personally work for them in providing services to Pharmanet.
22. For these reasons, it seems to me that the decision on review as against RSA also should be set aside; that a review should be granted and that the striking out of the claim against RSA should be set aside and the case should proceed to trial on the merits as against both Respondents.
23. Ms Ling put forward an alternative argument based on Rule 10(2)(r) of the Employment Tribunal Rules of Procedure, which lays down that any person who the Tribunal considers has an interest in the outcome of proceedings may be joined as a party to the proceedings. My present view is that it is not appropriate or would rarely be appropriate to use that paragraph as a basis for joining a party against its will. It is rather intended for a case where (for example) a party who may be liable under a contractual indemnity in favour of the existing Respondent, seeks to be joined as a party because it has an interest in the outcome of the proceedings, in the sense that a decision in the favour of the Claimant may lead to it, the applicant, picking up the bill. But it is not necessary to decide that today because Ms Ling succeeds on other grounds.

Conclusion

24. The case should be remitted for rehearing, as I have said. I have a good deal of sympathy with Employment Judge Byrne, who did not have the considerable advantage which I have had of the submissions of Ms Ling for the Claimant and Mr Duggan for the Second Respondent. Nevertheless, I think it would be better if a fresh mind was brought to bear on the proceedings and I shall, therefore, direct that the employment judge at the remitted hearing on the merits should be a different judge, selected by the Regional Employment Judge in the usual way.