United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR PATRICK HALLIDAY (of Counsel) Instructed by: Flint Bishop Solicitors St Michael's Court St Michael's Lane Derby DE1 3HQ
For the Respondent	MR RICHARD LEIPER (of Counsel) Instructed by: Leicester City Council Legal Services New Walk Centre Welford Place Leicester LE1 6ZG


 


SUMMARY

JURISDICTIONAL POINTS

Worker, Employee or Neither

Whether by implied agreement Claimants were employed by Local Education Authority under 'Regulation 24 Agreement' so that they could rely on LEA comparators in equal pay claims.

Employment Tribunal finding that they were not upheld.


 


HIS HONOUR JUDGE PETER CLARK

1. This case has been proceeding in the Leicester Employment Tribunal. The Claimants, Mrs Beattie and others, brought equal pay claims against the Respondent, Leicester City Council. Each was employed as a member of support staff in Voluntary-Aided (VA) schools. For example, Mrs Beattie was employed as a Level 3 Teaching Assistant at Christ the King Catholic Primary School by a series of fixed term contracts commencing in May 2001. It was common ground that the claims must fail if the Claimants were not employed by the Respondent, which was the relevant Local Education Authority (LEA) for all of the relevant schools. It was the Respondent's case that they were employed by the Governing Bodies (GB) of the Claimants' respective schools; the Claimants contended that by implication the LEA and GBs had agreed that the LEA was the employer. That was the preliminary issue which arose for determination at a Pre-Hearing Review held before Employment Judge Ahmed on 1 May 2009. By a reserved judgment with reasons promulgated on 16 June 2009 he held that the Claimants were not employed by the Respondent. Hence the claims fail because the Claimants are unable to compare themselves with their chosen comparators who are employed by the Respondent. Against that ruling the Claimants appeal; the Respondent cross-appeals one finding by the Employment Judge.

The Statutory Framework

2. I cannot readily think of any field of employment which is as closely regulated by Parliamentary legislation than the education sector. This case illustrates that proposition.
3. Section 36 of the Education Act 2002 (the 2002 Act) is headed 'Staffing of ... voluntary aided … schools."
4. By s.36(1)(b) the section applies to VA schools and by s.36(2):

"Except as provided by regulations under subsection (4) any teacher or other member of staff who is appointed to work under a contract of employment at a school to which this section applies is to be employed by the [Governing Body] of the school."

5. The relevant regulations made under s.36(4) are the School Staffing (England) Regulations 2003 (the 2003 Regulations).
6. By Regulation 24:

"Any appointment of support staff must be made by the governing body unless the governing body and the authority agree that the appointment should be made by the authority."

7. Such an agreement is commonly referred to as a Regulation 24 agreement.

The Employment Tribunal Decision

8. It was common ground that there was no express Regulation 24 agreement between the Respondent and the relevant governing bodies in this case; it was the Claimants' case that such agreement could be and should be implied from the surrounding circumstances.
9. For the Claimants below, Mr Halliday advanced four propositions which he contended were relevant to the determination of the implied agreement issue:

(1) That an 'agreement' can include an implied agreement.

(2) That an agreement does not necessarily mean a contract, so that there is no need for example to have legal consideration and other formalities.

(3) That in identifying offer and acceptance for the purposes of an agreement the test is objective, not subjective.

(4) That in determining whether a term can be implied there is no necessity to show business efficiency, but only whether there is a sufficient 'factual substratum', an expression used by Elias P in St Ives Plymouth Ltd v Haggerty (UKEAT/0432/07), paragraph 28.

10. Mr Leiper, on behalf of the Respondent, accepted propositions (1) and (3), but not (2) and (4) above. The Employment Judge agreed with Mr Halliday as to proposition (2) and Mr Leiper in relation to proposition (4).
11. Against that legal background the Employment Judge made the following relevant findings of fact.
12. Mrs Beattie's letter of appointment dated 13 July 2001 emanating from the Respondent's Education Personnel team begins:

"I am pleased to confirm your appointment to the post of SEN Ancillary Assistant at the above school [Christ the King Catholic Primary School] with effect from 21 May 2001…. This appointment is temporary until 18 July 2001….."

13. The initial contract of employment was successively extended up until the time of the Employment Tribunal hearing and beyond. Each year she receives a Form P60 which gives the employer's name as LCC (Leicester City Council) Educn Supp 41. She has been issued with a statement of particulars of employment which is headed 'Employment Rights Act 1996 – Leicester City Council' and states her post and grade and names Mrs Beattie as the employee. I note that it does not, as required by s.1(3)(a) ERA 1996 specify in terms the name of the employer, although the Claimants rely on the reference to Leicester City Council at the head of the written particulars of employment and the Employment Judge stated at paragraph 9 of his reasons that Mrs Beattie's and other Claimants pay slips and P60s emanate from the City Council and identify the LEA as the employer.
14. The Employment Judge appears to have accepted the evidence of the Respondent's witness Mr Berkovits, acting Head of Human Resources in the relevant Council Department, that the Respondent supplied employment services to VA schools. The relevant schools purchased the "HR Administration (Package)" including processing of payroll, preparation and issue of support staff contracts of employment, changing statements of particulars and other associated administrative functions. Each school also has access to an HR consultant and Assistant on the telephone as part of the package.
15. Based on his findings of fact and applying the first three of Mr Halliday's propositions of law, Employment Judge Ahmed recognised the temptation to conclude that the Respondent was the Claimants' employer having regard to the fact that it issued virtually all the contractual documentation and tax documentation such as the Forms P60 and P45. However, he concluded that the circumstances of the relationship between the Respondent and Governing Bodies pointed the other way. Whereas agreements between the Respondent and Governing Bodies were evidenced in writing, e.g. the purchase of employment services, there was no such written agreement evidencing the assumptions of the role of employer of the Claimants. On the contrary, the Respondent had, from time to time, gone out of its way to state that it was not the employer. He cites an email dated 13 November 2007 from the Respondent's Deputy Strategic HR Services Partner to Heads of among others, VA schools.
16. He concluded that references to the Respondent as employer represented sloppiness in paperwork rather than reflecting an implied agreement on the part of the Respondent that it assumed the role of employer. The employment contracts were issued by the Respondent because the Governing Bodies had paid for that service. Accordingly there was no Regulation 24 implied agreement on the facts of this case.

The Appeals

17. My starting point is the self-evident proposition that appeals to the EAT lie on questions of law only, not fact. Has Mr Halliday identified an error of law by the Employment Judge which requires correction on appeal? In my judgment he has not, for the following reasons.
18. There has been considerable focus on paragraph 24 of the Employment Judge's reasons where he said this:

"24. If a term is to be implied it must be implied for a particular reason. The only potential reason is business efficacy. It certainly does not need to be implied by necessity, for example. Insofar as it is or may be suggested, I do not understand St Ives Plymouth Ltd v Haggerty as authority for the proposition that some lower test of establishing a factual substratum will do in the absence of business efficacy or some other reason for implying an agreement. That case does not appear to be laying down such a principle of law. I do not find that any agreement ought to be implied for reasons of business efficacy or for any other reason."

19. By way of cross-appeal Mr Leiper contends that the Employment Judge was wrong to direct himself that a Regulation 24 agreement imported something less than a contractual agreement. Mr Halliday submits that the Employment Judge's approach on this aspect was correct. I favour a third way; that in deciding whether a Regulation 24 agreement is to be implied the ordinary contractual principles apply. Thus, given the statutory presumption that contracts of employment are made between the LEA and employee, in rebutting that presumption, in the absence of an express agreement displacing the presumption, it must be shown by the Claimants that it was necessary to explain the parties' behaviour by the implication of an agreement between the LEA and Governing Bodies (and not the employees). In this way I shall follow the approach of the Court of Appeal in The Aramis [1989] 1 Lloyds Report 213 as applied by the Court of Appeal in, for example, the agency worker case of James v. Greenwich Borough Council [2008] ICR 545, where a triangular relationship existed between the agency, worker and end user.
20. Mr Halliday submits that it is sufficient simply to show a 'factual substratum' supporting the factual inference that the parties have agreed that the LEA should be the employer. In my view the Employment Judge was right to reject that submission (reasons paragraph 23). Looking at paragraph 28 of the President's judgment in St Ives and placing it in context, he was making the point, on behalf of the majority in that case, that the question as to whether a legal obligation is to be implied is one of fact. Thus, even if necessity is not required, the question remains in the present case whether the Employment Judge's conclusion is permissible on the facts.
21. I accept that this would appear to place the burden on the Claimants rather higher than did the Employment Judge. He found, at paragraph 24, that the implied agreement contended for by the Claimants does not need to be implied. In my judgment that was a permissible finding based on the facts of this case.
22. I am not persuaded by Mr Halliday that, assuming in his favour that the Head Teacher of a school had delegated authority from the Governors to employ staff (2003 Regulations, Regulation 4), the evidence on which he relies from Mr Knight, Chair of Governors at Mrs Beattie's school and a solicitor (and husband of Aileen Knight, a Claimant also employed at that school), which evidence is not challenged by Mr Leiper, leads inexorably to the conclusion that the statutory presumption has been rebutted in this case. The points which he makes at paragraph 4 of his witness statement (EAT bundle page 93) are all matters which the Employment Judge took into account in reaching his conclusion.
23. In particular, I am not persuaded that, assuming that authority to enter into contracts of employment was delegated to Head Teachers, who interviewed potential members of staff and, following their appointment, received documentation from the LEA consistent with that Authority being the employer, without objection, necessarily amounts to an implied agreement between the LEA and Governing Body that the LEA is the employer.
24. Mr Halliday takes a separate point concerning the reference, at paragraph 25.2 of the Employment Judge's reasons, to an email sent by Ms Bodkin to Head Teachers of VA schools within Leicester dated 13 November 2007, stating that the Respondent was not the employer of school staff. He submits that the email was simply self-serving and was sent after the current equal pay claims had arisen. I agree that the question is whether, objectively viewed, the implied agreement contended for by the Claimants was made at the time of each employee's appointment. Nevertheless, the Employment Judge was entitled to take into account the Respondent's position at a later date as part of the overall factual matrix.
25. Finally, I do not accept that the Claimants have made out an overwhelming case that the Employment Judge's conclusion was legally perverse in the sense identified by Mummery LJ in Yeboah v Crofton [2002] IRLR 634.
26. It therefore follows, as Mr Leiper submits, that whether one applies the lower test adopted by the Employment Judge, or the higher test of necessity, the Claimants have failed to establish grounds in law for interfering with the Employment Judge's conclusion. Consequently, this appeal fails and is dismissed. It is unnecessary to make any final order on the cross-appeal and so I make no order thereon.