United Kingdom Employment Appeal Tribunal

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URL: http://www.bailii.org/uk/cases/UKEAT/2012/0537_11_3110.html
Cite as: [2012] UKEAT 537_11_3110, [2012] UKEAT 0537_11_3110

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Appeal No. UKEAT/0537/11/BA

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 31 October 2012

Before

HIS HONOUR JUDGE McMULLEN QC

(SITTING ALONE)

MRS M RANU APPELLANT

DIAMOND SOLICITORS LLP RESPONDENT

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellant

DR RANU

(Representative)

For the Respondent

MR S NEAMAN

(of Counsel)

Instructed by:

Diamond Solicitors LLP

Lincoln House

184 Queens Road

Buckhurst Hill

Essex

IG9 5BD

SUMMARY

JURISDICTIONAL POINTS – Worker, employee or neither

The Employment Judge correctly decided the Claimant solicitor was not an employee of the firm, albeit a worker in it.

HIS HONOUR JUDGE McMULLEN QC

1. This is an appeal by the Claimant in those proceedings against a judgment of Employment Judge Allen sitting in East London on two days sent with Reasons on 29 June 2011.

Procedure

2. Representation in this case is worth noting. In the preparation of her case, the Claimant was represented by expert employment solicitors. At the first day of the hearing she was represented by experienced counsel. On the second day she was represented by her husband, Dr Ranu, who has appeared before me today. He is a forensic medical examiner who has told me he understands a good deal about court procedure and indeed wishes Employment Tribunals behaved a bit more like an inquest where he would feel more familiar. Today Dr Ranu relies upon a skeleton argument and amended grounds of appeal which have been prepared by Mr Nicholas Goodfellow of counsel who had conduct of the appeal up to and including the drafting of what are described as supplemental grounds and a 12-page skeleton argument.

3. For reasons which I have not found it necessary to investigate, neither the skeleton, the supplemental grounds nor a list of authorities which includes all the familiar cases on employment status were vouchsafed to the Respondent effectively until this week.

4. The Respondent was represented by different counsel at the Employment Tribunal and today has the advantage to be represented by Mr Sam Neaman of counsel who spoke to his skeleton argument, but indicated difficulties in relation to a full response in particular to the supplemental grounds which were sought to be adduced.

5. I decided that the way to make progress today was to allow Dr Ranu to advance the arguments which are contained in the four grounds, two of which are labelled new, while giving Mr Neaman the opportunity, should it arise, for him to take further time to prepare a response and to take further instructions. He pragmatically accepted the way forward which we have adopted. Pragmatic because it saves an adjournment to a different day or perhaps later in the day and problems of costs arising, bearing in mind also that the parties in this case effectively Ms Power who is the force behind the very small firm of Diamond Solicitors, and Mrs Mandip Ranu, are solicitors.

6. I have of course paid attention to the fact that Dr Ranu is not a lawyer and Mrs Ranu is not a litigator but as Mr Neaman graphically puts it, they are not typical of the population of dispossessed persons who frequently attend Employment Tribunals, abused by their employers as to their employment status; see for example the vindication of such people’s rights Autoclenz Ltd v Belcher and Others [2011] ICR 1157 and the cases cited there of those who are subject to immigration control. Dr Ranu was complimented by Mr Neaman on his succinct and eloquent approach to today’s proceedings and I share that. He has been at no disadvantage in this court and his wife, who is a non-litigating solicitor, has had justice through his work.

7. As the case developed it became clear that the principal grievance of the Ranus is as to a missed opportunity in the Employment Tribunal. Naïve Dr Ranu says he was in not knowing how much material to put before Judge Allen. But with respect, these are articulate, highly educated professionals represented by solicitors and counsel. Whatever esprit d’escalier the Ranus now feel, I accept Mr Neaman’s submission that they are seeking a second bite at the cherry which was once and only once available to them.

The issues

8. That is by way of introduction to the finding in the case. As the parties squared up, the central contention of the Claimant was she was an employee and of the Respondent that she was an independent contractor. Neither side won their argument for the Judge found that the Claimant was a worker, not an employee and not an independent contractor. That gave her access to certain rights but not the prime one of unfair dismissal which is what she sought.

9. The issue before the Judge was clearly set out as to whether the Claimant was an employee for the purposes of section 230 of the Employment Rights Act 1996. The Claimant appeals against the finding that did not go far enough for her to put her into employment status. Directions were given by Langstaff P who diagnosed this case essentially as one of perversity –the correct diagnosis.

The legislation

10. Section 230 of the Employment Rights Act 1996 provides as follows:

“230(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.”

The facts

11. The parties were introduced by the Judge to us in the following way (the Claimant was engaged on wills and probate):

“4. Diamond Solicitors LLP is a High Street Practice. Sixty per cent of the work is family work, non-publicly funded ancillary relief and private children work. Most of the rest of the work is conveyancing and wills and probate with a small amount of other work. Ms Power has been the principal solicitor at the Respondent since 1 May 2007 when she purchased the business. The Office Manager, Ms Dean, had been working at the Respondent since 1997. The Claimant, Mrs Mandip Ranu, also worked at the Respondent as a locum in the past but started, as far as we are concerned, as a locum solicitor in the summer of 2007, initially to cover a period of holiday leave on the part of Ms Power. The word ‘locum’ means temporary substitute. It does not define whether someone is an employee or self-employed.

5. The Claimant and Ms Power agreed that she would be paid £66.50 per hour when working from home, and £20 per hour when working from the Respondent’s office. Ms Power described this agreement in evidence as ‘ridiculous’ but accepted that she had proposed it and that this was the relationship between the Claimant and the Respondent. These initial arrangements appeared to have been entered into very loosely on both sides. There was no documentation and there appeared to have been no discussion as to employment status at the outset. The arrangement was to turn out not to be temporary and the Claimant worked at Diamonds Solicitors until November 2009.”

12. It is important to note that Dr Ranu has today conceded the correctness of the finding in paragraph 5. As he puts it, there was no discussion as to employment status at the initiation of the relationship but there became one; the erudite skeleton argument which had been produced by Mr Goodfellow for the assistance of Dr Ranu raises a very large number of points, but as clarified to me by Dr Ranu, by means of the supplemental grounds of appeal, there are two; the first is that the Judge’s findings were not Meek compliant; see Meek v City of Birmingham District Council [1987] IRLR 250 CA and that the decision was perverse. The Judge analysed the material and came to the conclusion on having heard the two protagonists, the Claimant and Ms Power, and a witness for the Claimant, Ms Dean, who was initially a co-Claimant, she having been dismissed for disciplinary reasons and who spoke up on her behalf at the Tribunal.

13. The watershed in the relationship, helpfully identified by Dr Ranu this morning, was what occurred in 2008 and the Judge set this out:

“15. A meeting took place in 2008 at which Ms Power offered the Claimant a contract. The Claimant says that this was in early 2008 - in about January. Ms Power says it took place in late 2008. Ms Power wanted to regularise the working relationship and she wanted to obtain more control of the Claimant’s working hours and working arrangements. The Claimant says at this meeting Ms Power agreed to put her on the pay role with fixed hours - Tuesday, Thursday and Friday; between 9.00 am to 3.00 pm; and with regular wages. The Claimant says that she was to have had considerable more flexibility during the school holidays. The Claimant says that Ms Power said at the conclusion of this meeting that she was now ‘committed for life’. In stark contrast Ms Power says the Claimant refused her offer of a contract on the ground that she preferred the flexibility of her existing self-employed arrangements.

16. It was difficult to determine this matter; both witnesses seemed, in general, to be credible. On this point the Tribunal preferred the evidence of Ms Power who did seem in general to be more certain of her dates and times than the Claimant. The Tribunal preferred the evidence of Ms Power as to when the meeting had taken place i.e. late 2008 rather than early 2008 and as to the outcome of the meeting. The outcome may well have been less than clear but the Tribunal was convinced that the Claimant was not told that she would be employed from that point onwards nor that she would be placed on the payroll from that point onwards.”

14. That includes a change in respect of the Claimant going on the payroll but the Judge made the most important finding that there was no change to working practices following 1 June although she was paid on a regular basis. The relationship began to break down when Ms Power noted that the Claimant had been put onto the payroll and the Claimant was indicating that she was prepared to be self-employed if the Inland Revenue agreed. As the Judge wryly noted it was for the Claimant:

“[…] to tell her that her being on the payroll was a mistake. In an email to Ms Power on 22 October 2009, the Claimant indicated that she was prepared to be self-employed if the Inland Revenue agreed but that she wanted clarification in writing of her employment status. She pointed out that she had worked a 3-day week and that she had provided cover and that she had consulted Ms Power about her holidays and any adjustments to her working week. She states, “You were aware I was on PAYE since the matter was discussed, albeit briefly when we spoke about a written contract”. The Claimant, although a solicitor, did not at that point definitely state anything along the lines of ‘you offered and I accepted employment status and PAYE’ but rather suggests that the ‘matter was discussed’ between the two of them.”

15. It represented a finding by the Judge that there was no change in the status by way of action or conversation following the June admission of the Claimant to the payroll. The Judge upheld the principal submissions for the foundation of a contract of employment in impliedly addressing the factors in Ready Mixed Concrete v Minister for Pensions and National Insurance [1968] 2 QB 497. The Claimant succeeded in proving that there was a contractual relationship and that she had to provide work personally. The search was on therefore for mutuality of obligation and for control, as to which the Judge said this:

“31. The Claimant was not a natural record keeper. Her failure to submit a Tax Return was an indication more of her lack of concern about records and such formalities than her employment status. Mutuality of obligation and control were present to some degree. The Claimant did carry out work over a long period of time on a reasonably regular basis. Some mutuality of obligation existed. There was also at least some control, perhaps more by force of personality than clearly understood rules with respect to holiday notification, the taking of files home, and of course the position of Ms Power as the principal solicitor at the firm. Overlapping with this was the fact that the Claimant behaved in a civilised and professional manner when notifying Ms Power of holidays and was willing to help out when the need arose.

32. Whilst the Tribunal is no doubt that the Claimant was initially engaged on a self-employed basis, it is a more difficult to answer the question as to whether the law applied to the facts as found above, pointed to employment status having been gained some point during the parties relationship, in particular post 1 June 2008 when the Claimant was placed on the payroll. On balance the Tribunal found that the facts did not point in this direction. There were certainly elements present which could alone have suggested employment. However, taken as a whole the weight of evidence suggested that the Claimant was a self-employed professional operating with considerable flexibility to her own benefit as well as that of the Respondent. The Claimant’s inclusion on the payroll by Ms Dean appeared to be for reason of practical convenience connected with her erratic submission of records, rather than an indication of employment status or change in employment status. It follows that the Claimant cannot bring an unfair dismissal or a breach of contract claim in the Employment Tribunal.”

The submissions and conclusions

16. Having noted that the Claimant’s case to be a worker succeeded, the issue was whether it went that much further. I accept Mr Neaman’s submission that this case really now is about the way in which the Claimant presented her case that the relationship changed; that is that having been self-employed from the outset, by June 2008 she became an employee. It is upon her to show how that happened. It can happen over time, it can happen on the basis of a conversation which makes that clear, it can happen by documentation but it is for the Claimant to show how the relationship changed and the Claimant’s case on this was not accepted by the Judge.

17. The principal submission was that she had been offered and accepted the change in status. The Judge made a finding having heard both of the women on that point, and the issue therefore is whether the Judge gave sufficient reasons for rejecting the change of status argument. In my judgment this passes the Meek test. The Judge refers back to the findings of fact, doing a balancing exercise. Very rarely is the situation binary yes or no but usually involves the assessment of a range of factors. The finding of the facts as to, for example, what flexibility means was one for the Judge and the criticism that undue weight was placed on the flexibility is one which does not give rise to a question of law. As Dr Ranu accepted, there was evidence; Dr Ranu’s complaint is the Judge gave too much weight to it. Indeed, that is the language of ground 3 of the supplemental grounds and that is an unpromising start in a court where the jurisdiction is limited to questions of law.

18. In Weight Watchers (UK) Ltd & Others v Revenue and Customs Commissioners [2012] STC 265 there is a similar phrase used about the balancing. What the Judge is required to do is to make findings on the facts and to weigh the factors pointing for and against employment status and then to make a judgment on it. In this case the finding was not easy for him but the fact that the Judge says that the question is difficult to answer does not mean the decision is the more exigible to appeal.

19. I find the Judge has given ample reasons and they are cogent. These solicitors did not do themselves any good by failing to put precisely in writing what their relationship was and had to leave it to the Employment Tribunal to make findings out of the evidence which was given. It may be that on a different day, with different evidence called this or a different Judge might have decided there was employment status but that is hindsight; a scientific skill which Dr Ranu obviously has but which is not available to a simple Judge on appeal.

20. And so I will dismiss the appeal and I would like to thank both Dr Ranu and Mr Neaman for the co-operative way in which they have now been able to put their respective cases.