United Kingdom Employment Appeal Tribunal

Appeal No. UKEAT/0591/11/JOJ

 

 

EMPLOYMENT APPEAL TRIBUNAL

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

 

 

  At the Tribunal

  On 16 April 2012

 

 

 

Before

HIS HONOUR JUDGE SEROTA QC

(SITTING ALONE)

 

 

 

 

CVS SOLICITORS LLP APPELLANT

 

 

 

 

 

 

MR N VAN DER BORGH RESPONDENT

 

 

Transcript of Proceedings

 

JUDGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

APPEARANCES

 

 

 

 

 

For the Appellant	MS CHARLOTTE HADFIELD (of Counsel) Instructed by: Berry Smith Solicitors 1 Northumberland Avenue Trafalgar Square London W1S 2NB
For the Respondent	MS KATHERINE EDDY (of Counsel) Instructed by: Messrs Julian Taylor Solicitors Hazel Cottage Studio Bicester OX25 3QX

 

 

SUMMARY

JURISDICTIONAL POINTS – Worker, employee or neither

 

The Claimant became a consultant to the Respondent firm of solicitors.  An issue arose as to whether he was an employee or a ‘worker’.  After conclusion of the evidence the Supreme Court gave judgement in Hashwani v Jivraj [2011] ICR 1004.  The decision was referred to the Employment Judge but she did not do more than to say that ‘the Employment Tribunal had considered its conclusions in the light of that judgement and they remain the same.’  The Employment Tribunal did not explain what findings, if any, it made relating to the questions of subordination and control which the Supreme Court had held were crucial to the determination of whether or not the Claimant was an employee.

 

Case remitted to the Employment Tribunal for further consideration.

HIS HONOUR JUDGE SEROTA QC

Introduction

1.            This is an appeal from a decision of the Employment Tribunal at London Central made by Employment Judge Wade, who sat alone.  She held that the Claimant was an employee of the Respondent for the purposes of bringing a claim for discrimination on the grounds of age and religion.  The appeal has been referred to a full hearing by HHJ Birtles on 17 November 2011.

 

Factual background and decision of the Employment Tribunal

2.            I take the factual background largely from the decision of the Employment Tribunal.  The Claimant is a former partner in the Respondent, a firm of solicitors.  Together with another partner, Mr Courtenay‑Evans, the time came when he decided, I assume, that he wished to take things easier, so both he and Mr Courtenay‑Evans became consultants of the firm on terms agreed between them but which were drafted by Mr Courtenay‑Evans.  I do not have a copy of the consultancy agreement in my papers, but the relevant terms so far as this appeal is concerned are set out in the decision of the Employment Tribunal at paragraph 3.  Paragraph 1.14 provides:

 

“[…] the consultant will not be committed to any particular number of hours in any year or other period.  It is of course in the consultant’s financial interest to bring in as much business and to do as much fee earning work as possible.  The amount of such fee earning work shall be at the sole discretion of the consultant.  […]

1.16 Consultant will seek to introduce new business and also to ensure, as possible, continuity of existing clients.  […]

1.21 CE/NVDB [that is, Mr Courtenay‑Evans/the Claimant] will only deal with and introduce legal business to CVS and not to any other law firm […].”

 

3.            The Employment Tribunal recounts that the consultancies began on 1 May 2006 but relations between the Claimant and the Respondent deteriorated badly from 2008.  There were further terms of the consultancy agreement.  The Claimant was to receive an annual fee of £30,000.  In addition to that he was entitled to a commission; I assume the commission rates were agreed in the consultancy agreement or elsewhere.  If his commission or other earnings exceeded £30,000, he would be entitled to retain anything in excess of £30,000.  The Employment Tribunal was satisfied that the Respondent provided the Claimant with his “tools”.  I am not altogether certain what the tools of a solicitor are, but I imagine that it included such things as use of a library, digital or otherwise, and provision of pencils, paper and similar stationery.  His name appeared on the staff contact list, he had an email address, he had his notepaper, and, I am told without objection, his name was on the firm’s notepaper.  He also had the use of a personal computer, together with a printer.  Secretarial arrangements were made for him so he could carry out his work.  He was required to do the work himself.  There was no suggestion he could bring in a substitute.  The Claimant did fee‑paying work to start with, but as relationships cooled the amount of fee‑paying work he did diminished.

 

4.            The Claimant continued, as he asserted, to comply with the obligation set out in paragraph 1.16, which I have read out.  The Respondent disputed this and, indeed, was contemplating taking proceedings against the Claimant for failure to comply with his obligations to introduce clients and maintain client relationships.  This perhaps is relevant background to the issue as to whether or not he had an obligation to carry out those duties or not.  The Respondent asserted he did not; the Claimant asserted that he had a positive obligation, for which he was being paid, to introduce clients and maintain relationships with clients, and in due course the Employment Tribunal accepted the Claimant’s case.

 

5.            Before the Employment Tribunal the Respondent’s case was that the Claimant was not an independent contractor.  He was also, it was submitted, not an employee, because there was no obligation on his part to perform work, so there was no mutuality of obligation.  In this regard I draw attention to the ET3, paragraph 6, which contains the following:

 

“[…] there is no obligation on the Respondent to provide the Claimant with any work.  There is no mutual obligation between the Claimant and Respondent to offer or accept work and therefore the Claimant is not an employee of the first or second Respondent for the purposes of the Employment Equality (Age) Regulations 2006 and/or the Employment Equality (Religion or Belief) Regulations 2003.”

 

6.            I should explain that for some reason Mr Anup Shah, the senior partner of the Respondent, was joined as a second Respondent.  I shall continue, however, to refer to the firm as “the Respondent”, as I do not believe Mr Shah features again in this Judgment.

 

7.            The case was obviously argued on the basis of the law as it was understood at the time.  It is clear that the reference to the lack of mutual obligation to offer or accept work reflects those cases where such has been held by the House of Lords to be the irreducible minimum of a contract of employment (Carmichael v National Power).  Also, the reference, to which I shall come, in the Judgment to a case of James v Redcats (Brands) Ltd [2007] ICR 1006 makes it clear that the parties approached the question as to whether the Claimant was an employee within the meaning of the Regulations by reference to asking what was the dominant purpose of the consultancy agreement.  After the close of submissions, and while the Employment Judge was considering her decision, the Supreme Court gave Judgment in the case of Hashwani v Jivraj [2010] ICR 1435.  That case concerned an issue relating to an arbitration agreement that required arbitrators to be respected members of and hold high office within the Ismaili community.  The question was whether, therefore, a potential arbitrator who was not a member of the Ismaili community was eligible for appointment on the basis that were he not, there would be discrimination against that arbitrator on religious grounds contrary to the Employment Equality (Religion or Belief) Regulations (EE(RB)R), which the Claimant relies upon in this case.

 

8.            I shall turn to the Judgment in Hashwani later, but the parties did in fact provide brief submissions to the Employment Judge, on the part of the Claimant suggesting that the Hashwani case added nothing to the existing submissions, and the Respondent submitting that it effected a change in approach that should be adopted by the court, by placing an emphasis not so much solely on what the dominant purpose of the contract was, whether it was for personal work or otherwise, but whether that work was under the direction of the other party to the contract.  It was submitted by the Respondent that the Claimant was not carrying out personal services for and under the direction of the Respondent.  I shall come to the significance of this submission when I have completed my consideration of the decision of the Employment Tribunal.

 

9.            The Employment Tribunal concluded:

 

“9. The Tribunal concludes that the Claimant was not obliged to work for the Respondent for any particular number of hours but this did not mean that he did not have an obligation to continue to introduce and maintain clients.  In fact, neither the Claimant nor Mr Courtenay‑Evans (whose evidence was very persuasive for the Tribunal given that he drafted the consultancy agreement and appeared as a witness for the Respondent) could get away from complying with clayse [sic] 1.16 in that their social life would have suffered as a result.  As Mr Courtenay‑Evans said he considered that the terms of the agreement expected him to ensure continuity of existing clients and this could involve work.  As a result he was remunerated.

10. Bearing in mind the conclusion in paragraph 9, as the Respondent concedes, the Tribunal needs to go further.  There was a contract personally to execute work.  The Respondent has not sought to argue that the Claimant was a ‘contractor’ or in business for himself which meant that he was effectively selling his services for the Respondent.  Instead, the Respondent’s point has been that whilst the Claimant had a personal contract with the First Respondent there was no obligation to execute work because this was a contract which required no work to be done.

11. For the avoidance of doubt the Tribunal wishes to record that had the contract not provided, at clause 1.16, for work to be done by the Claimant it would still have found that the consultancy agreement and the way it worked in practice was evidence of a contract personally to execute work.”

 

10.         The Respondent argued that the case was similar to the situation in the case in Mingeley v Pennock & Ivory (t/a Amber Cars) [2004] EWCA Civ 328, a decision of the Court of Appeal, but in the Tribunal’s view that case can be distinguished; the reality of the situation should be looked at in order to decide whether the dominant purpose of the contract is that the Claimant should personally execute work (see Redcats, paragraphs 53, 59 and 66).  The dominant purpose was for work to be carried out by the Claimant for the benefit of both himself and the firm; the Employment Tribunal distinguished the case of Mingeley on the basis it was a contract essentially to provide a taxi service and not work.  I do not really consider that the decision in Mingeley assists, and I do not propose to refer to it further.

 

11.         It is apparent that the decision of the Employment Judge had been dictated prior to, as she as put it, the “promulgation” of the decision of the Supreme Court in what she referred to as “Jivraj v Hashwani”; I think the parties are agreed that “Hashwani v Jivraj” is the nomenclature in the Supreme Court.  The Employment Judge simply said this (paragraph 14):

 

“The Tribunal has considered its conclusions in the light of that Judgment and they remain the same.”

 

12.         I note that both the age and religion or belief Regulations and the Equality Act 2010 (EqA), so far as concerns these two kinds of discrimination, are based upon the European Framework Agreement, to which reference will be made later.

 

13.         It is probably helpful if I draw attention to the relevant parts of Regulation 2(2) of the Employment Equality (Age) Regulations).  “Employment” is defined as that it means:

 

“[…] employment under a contract of service or of apprenticeship or a contract personally to do any work, and related expressions (such as ‘employee’ and ‘employer’) shall be construed accordingly.”

 

14.         Regulation 2(3) of the EE(RB)R is very similar; “employment” is defined as meaning:

 

“[…] employment under a contract of service or of apprenticeship or a contract personally to do any work, and related expressions shall be construed accordingly.”

 

15.         Section 83(2)(a) of the EqA defines “employment” as:

 

“[…] employment under a contract of employment, a contract of apprenticeship or a contract personally to do work […].”

 

16.         As is apparent, the Employment Judge considered that she should apply the law as she understood it had been set out in the Redcats case, to which I shall refer, and her Judgment is based at least in part on what she considered to be the dominant purpose of the consultancy agreement.  During the course of the hearing Ms Hadfield made a concession.  She conceded that if the Employment Judge found against the Respondent on whether the Claimant was obliged to do work under the contract, then he would be an employee.  She now submits that he was not an employee but an independent person providing personal services but not in a relationship of subordination.  She made her concession, as I shall explain, on the basis of what she understood the law to be at the time, and indeed what no doubt the Claimant understood the law to be.

 

17.         However, she did not make an application to withdraw her concession.  It is apparent, however, from the supplemental written submissions that she supplied to the Tribunal that she submitted the Employment Judge should consider, even if the Claimant was obliged to undertake work, the issue as to whether he was an employee within the meaning of the Regulations by reference to the question as to whether or not he was in a relationship of subordination or control on the part of the Respondent.  Ms Hadfield says that in the circumstances the concession she made was entirely in line with existing authority; the law as it was understood was changed by the Hashwani decision of the Supreme Court, and it should have been obvious to the Employment Tribunal that she was abandoning the concession that she had made.  Her principal point is that the Judgment cannot stand because the Employment Judge relied in determining the issue as to whether the Claimant was an employee on the dominant purpose of the contract.  However, she maintained that there had been a significant change in the law brought about by Hashwani, so the Employment Judge applied the wrong test.

 

18.         There was a subsidiary point, linked to the first, that if the Employment Judge was entitled to conclude as she did that the Claimant was an employee within the meaning of the Regulations, her decision was not Meek v City of Birmingham District Council [1987] IRLR 250 compliant.  Rule 30(6) of the Employment Tribunals (Constitution and Rules of Procedure) Regulations requires an Employment Tribunal Judgment to contain the following information, and two of those are:

 

“(d) a concise statement of the applicable law; [and]

(e) how the relevant findings of fact and applicable law have been applied in order to determine the issues […].”

 

19.         In Meek the Court of Appeal said that a Tribunal decision was not to be “an elaborate, formalistic product of refined legal draughtsmanship”, but, rather:

 

“[…] the parties are entitled to be told why they have won or lost.  There should be sufficient account of the facts and of the reasoning to enable the EAT, or, on further appeal, this court [that is, the Court of Appeal] to see whether any question of law arises.”

 

20.         Ms Hadfield submits that the Judgment of the Employment Judge in this case, though commendably brief, simply does not enable her to understand or explain to her client what findings, if any, the Employment Judge made in relation to the question of subordination or control that I have already identified.  She submits that the proper course in those circumstances is for me to remit this case for a further Pre‑Hearing Review to be heard before another Employment Judge.

 

The law and submissions

21.         Let me say something, briefly, about the law as it was understood at the time of the hearing before the Employment Tribunal.  I think I need not go much further than the decision of the Court of Appeal in the Hashwani case:

 

“13. Both parties' applications were determined by David Steel J ("the judge") on 26 June 2009: see [2009] EWHC 1364 (Comm), [2010] 1 All ER 302.  In the meantime on 11 March 2009, which was before the applications were heard, the solicitors for Mr Jivraj wrote an open letter to the solicitors for Mr Hashwani  offering him the option of pursuing his claim in the High Court on the basis that Mr Jivraj would not seek a stay on the basis of the arbitration clause.  Mr Hashwani  did not accept the offer.

14. It was submitted before the judge on behalf of Mr Hashwani  that the term requiring arbitrators to be members of the Ismaili community was invalid by reason of one or more of the following: the Regulations, the Human Rights Act 1998 ("the HRA"), or public policy at common law.  The judge held (i) that the term did not constitute unlawful discrimination on any of those bases and, specifically, that arbitrators were not "employed" within the meaning of the Regulations; (ii) that if, nonetheless, appointment of arbitrators fell within the scope of the Regulations, it was demonstrated that one of the more significant characteristics of the Ismaili sect was an enthusiasm for dispute resolution within the Ismaili community, that this was an "ethos based on religion" within the meaning of the Regulations and that the requirement for the arbitrators to be members of the Ismaili community constituted a genuine occupational requirement which it was proportionate to apply within regulation 7(3); and (iii) that, if that was also wrong, the requirement was not severable from the arbitration provision as a whole, so that the whole arbitration clause would be void. The judge ordered Mr Hashwani  to pay Mr Jivraj's costs and refused Mr Hashwani 's application for permission to appeal.

16. The unanimous judgment of the Court of Appeal, which comprised Moore‑Bick and Aikens LJJ and Sir Richard Buxton, was handed down on 22 June 2010: see [2010] EWCA Civ 712, [2010] ICR 1435. The Court of Appeal reached a different conclusion from the judge on the principal points.  It held that the appointment of an arbitrator involved a contract for the provision of services which constituted "a contract personally to do any work", and therefore satisfied the definition of "employment" in regulation 2(3).  It followed that the appointor was an "employer" within the meaning of regulation 6(1) and that the restriction of eligibility for appointment as an arbitrator to members of the Ismaili community constituted unlawful discrimination on religious grounds, both in making "arrangements … for the purpose of determining to whom he should offer employment" contrary to regulation 6(1)(a), and by "refusing to offer, or deliberately not offering" employment contrary to regulation 6(1)(c).  The Court of Appeal further held that being a member of the Ismaili community was not "a genuine occupational requirement for the job" within the meaning of the exception in regulation 7(3).  It is submitted on behalf of Mr Jivraj that both those conclusions were wrong.”

 

22.         In effect the Supreme Court read the Regulations as providing that where personal services were provided the provider became an employee.  At the same time there was a further understanding that in determining whether someone was an employee within the meaning of the Regulations one had to look at the dominant purpose of the agreement in question.  In this regard Ms Hadfield, when making her concession, and indeed in the submissions that were made to the Employment Tribunal, had in mind paragraphs 58 and 59 of the decision in Redcats, a decision of the former President, Elias J, as he then was.  He considered that the dominant purpose test was really an attempt to identify the essential nature of the contract.  It was in essence to be located in the field of dependent work relationships; or was it in essence a contract between two independent business undertakings?  He stated that the test did not assist in determining whether a contract was a contract of services, nor would it help in discriminating between cases falling between limbs (a) and (b) of the definition of “worker”:

 

“Its purpose is to distinguish between the concept of worker and the independent contractor who is in business on his own account, even if only in a small way.”

 

23.         Did the decision of the Supreme Court in Hashwani alter the law by suggesting that the dominant purpose test was only part of the equation, and that it was important to have regard to the extent to which the Claimant was controlled by, or might be in a subordinate position to, an employer?  The Respondent, through Ms Hadfield, has submitted that yes, there was a change; the dominant purpose test was replaced by a test requiring there to be a degree of subordination or control before a Claimant could be regarded as an employee within the meaning of the Regulations.  Ms Hadfield accepted as a result of the decision in Hashwani that a person providing personal services must be either an employee or alternatively an independent provider of services who was not in a relationship of subordination with the Respondent.  There is no third category of persons providing personal services.

 

24.         The Claimant submitted that Hashwani did not change the law, or, if it did, it did not change it significantly.  It was submitted by Ms Eddy that at the time of the hearing the question of the dominant purpose was relevant but that included consideration of the issue of control or subordination.  The dominant purpose of such a contract as the Claimant’s was in itself one of the matters that had to be considered in determining whether or not the Claimant was in fact in a position of subordination or not.  The correct approach was considered at length by the Supreme Court:

 

“66. The judge then in para 44 set out part of article XIII of the Constitution which set up a National Conciliation and Arbitration Board for all types of dispute, which provided by article 13.5:

‘Each National Conciliation and Arbitration Board shall upon the application of any Ismaili assist him to settle any differences or disputes with another party residing in the area of jurisdiction of the National Conciliation and Arbitration Board in relation to any of the matters mentioned in article 13.1(a).’

Article 13.1(a) provided that the Board was:

‘to assist in the conciliation process between parties in differences or disputes arising from commercial, business and other civil liability matters, domestic and family matters, including those relating to matrimony, children of a marriage, matrimonial property, and testate and intestate succession;’

67. In these circumstances the judge held that the provision in the JVA which provided that the arbitrators should be respected members of the Ismaili community and holders of high office within the community was a GOR within regulation 7(3).  He did so on the basis that the material set out above showed that, as he put it at para 45, one of the more significant and characteristic spirits of the Ismaili sect was an enthusiasm for dispute resolution contained within the Ismaili community.  He said that he had no difficulty in determining this spirit to be an "ethos based on religion".  He also relied upon the terms of the arbitration clause itself and the engagement by both sides of members of the Ismaili community to perform mediation and conciliation services from 1988 until 1994.  […]

27. On the basis of those materials I would accept Mr Davies' submission that the Court of Justice draws a clear distinction between those who are, in substance, employed and those who are "independent providers of services who are not in a relationship of subordination with the person who receives the services".  I see no reason why the same distinction should not be drawn for the purposes of the Regulations between those who are employed and those who are not notionally but genuinely self-employed.  In the light of Allonby [v Accrington & Rossendale College [2004] ICR 1328], there can be no doubt that that would be the correct approach to the near identical definition in section 1(6) of the Equal Pay Act 1970 and must remain the correct approach to the definition of employment in section 83(2) of the EA, which provides, so far as relevant:

‘“Employment” means – (a) employment under a contract of employment, a contract of apprenticeship or a contract personally to do work; …’

That definition is almost identical to the definition in regulation 2(3) of the Regulations and, since it applies to equal pay issues by virtue of sections 83(4), 80(2) and 64 of the EA, it must equally apply to the Regulations.

28. In my opinion there is nothing in the domestic authorities which requires the court to come to any different conclusion.  The problem with some of them is that they do not refer to the jurisprudence of the Court of Justice. However, the most recent decision of the House of Lords does.  In [Percy] the House of Lords considered a sex discrimination claim brought by a woman who was a minister of the Church of Scotland.  The issue was whether she was employed within the meaning of section 82(1) of the SDA 1975.  The House held that she was. Lord Hoffmann dissented on the basis that she was the holder of an office but had no doubt (at para 66) that, if the arrangement had been contractual, it would plainly have been a contract of service.  […]

34. As I read Percy, it sought to apply the principles identified by the Court of Justice, as indeed did this court in O'Brien [v Ministry of Justice] [2010] 4 All ER 62.  The essential questions in each case are therefore those identified in paras 67 and 68 of Allonby [2004] ICR 1328, namely whether, on the one hand, the person concerned performs services for and under the direction of another person in return for which he or she receives remuneration or, on the other hand, he or she is an independent provider of services who is not in a relationship of subordination with the person who receives the services.  Those are broad questions which depend upon the circumstances of the particular case.  They depend upon a detailed consideration of the relationship between the parties.  As I see it, that is what Baroness Hale meant when she said that the essential difference is between the employed and the self-employed.  The answer will depend upon an analysis of the substance of the matter having regard to all the circumstances of the case.  I would not accept the Court of Appeal's analysis (at para 21) of Baroness Hale's speech in this regard.  […]

39. It is noteworthy that the European cases were not cited in many of the cases, including that before Elias J.  In the light of the European cases, dominant purpose cannot be the sole test, although it may well be relevant in arriving at the correct conclusion on the facts of a particular case.  After all, if the dominant purpose of the contract is the execution of personal work, it seems likely that the relationship will be, in the words of Allonby [2004] ICR 1328, para 67, a case in which the person concerned performs services for and under the direction of the other party to the contract in return for remuneration as opposed to an independent provider of services who is not in a relationship of subordination with him or it.  This may not be so however because, although the dominant purpose of the contract may be personal work, it may not be personal work under the direction of the other party to the contract.  All will depend upon the applications of the principles in Allonby to the circumstances of the particular case.”

 

25.         It is also significant that the House of Lords in an earlier decision Percy v Board of National Mission of the Church of Scotland [2006] ICR 134 that was considered by the Supreme Court in Hashwani without criticism and without in any way suggesting it was to be departed from or treated as overruled:

 

“113. Then there is the question whether the position which the appellant was to enjoy under it was ‘employment’ within the meaning of section 82(1) of the 1975 Act.  This is, of course, a different question than that which has to be answered in unfair dismissal cases.  We are not looking to see whether there was a contract of service here, but whether this was a contract under which the appellant undertook personally to execute any work or labour.  To fall within this definition there first needs to be a contract of some sort.  The agreement must be looked at as a whole and, if the contract is not one of service, the obligation by a contracting party must be an obligation personally to carry out work or labour.  And the personal obligation to execute work or labour must be the dominant purpose of the contract: Mirror Group Newspapers Ltd v  Gunning [1986] 1 WLR 546, paras 13, 36, per Oliver LJ; Patterson v  Legal Services Commission [2003] EWCA Civ 1558, [2004] ICR 312, para 21, per Clarke LJ; [Mingeley].

114. Here too the terms and conditions seem to me to provide what is needed for this definition to be satisfied.  Under the heading ‘Aims and Duties’, condition 6 states that areas of service in which the Associate Minister was to be expected to work were assisting the Minister of the parish and as Chaplain to the Prison at Noranside.  This was what the appellant was to do in return for the payment of her salary and the other benefits which were to go with her status as an Associate Minister.  By accepting this offer she undertook by her contract to work as an Associate Minister on the terms and conditions on which the post had been offered to her.  Of course it can be said, as Lord Hoffmann points out, that the duties which she was to perform were the duties of an office.  But they were duties which she was bound by her contract with respondents to perform.  In order to perform them she required to execute work and labour.  The dominant purpose of the contract was to secure her appointment to the office so that she could perform those duties personally in the parish as its Associate Minister.  In return the contract gave her a right to enforce the respondents' undertaking to provide her, with her salary and the other benefits.  […]

141. The familiar concepts of the common law are of limited help in construing modern employment legislation.  As the learned authors of Harvey on Industrial Relations and Employment Law point out, at para A.1.2,

‘At common law the expressions “employer” and “employee” have no precise meaning in law apart from their context. The common law understands the expression “master and servant” and “employer and employee” is frequently used as a modern translation thereof.  […]  However, whereas 'master and servant' has a precise connotation, “employee” may be - and often is - used in a sense wider than that of “servant”, and “employer”, than that of “master”.’

Hence careful attention has to be paid to the definition section of the relevant statute, because these draw some quite deliberate distinctions.  The definition of ‘employment’ with which we are concerned is, of course, wider than that covered by a contract of service between master and servant, because it encompasses ‘any contract personally to execute any work or labour’.  So the authorities on what did or did not fall within the common law's understanding of a master-servant relationship will not give us much help.  In Harvey, the view is taken, at para A.1.4, that ‘the distinction is between those who work for themselves and those who work for others, regardless of the nature of the contract under which they are employed.’  […]

146. I have quoted those words at length because they illustrate how the essential distinction is, as Harvey says, between the employed and the self-employed. The fact that the worker has very considerable freedom and independence in how she performs the duties of her office does not take her outside the definition.  Judges are servants of the law, in the sense that the law governs all that they do and decide, just as clergy are servants of God, in the sense that God's word, as interpreted in the doctrines of their faith, governs all that they practise, preach and teach.  This does not mean that they cannot be ‘workers’ or in the ‘employment’ of those who decide how their Ministry should be put to the service of the Church.”

 

26.         It was pressed upon me by Ms Eddy that there is no suggestion to be found in Hashwani that this case, which was cited, was to be departed from or that it was no longer to be regarded as authoritative.  It was further submitted that Redcats itself was not limited to the question of determining the dominant purpose.  Elias J approved the formulation of Mr Recorder Underhill, as he then was, in the case of Byrne Brothers (Formwork) Ltd v Baird [2002] ICR 667.  At paragraph 17(4) and (5) Underhill J, as he now is, had this to say:

 

“(4) It seems to us that the best guidance is to be found by considering the policy behind the inclusion of limb (b).  That can only have been to extend the benefits of protection to workers who are in the same need of that type of protection as employees stricto sensu - workers, that is, who are viewed as liable, whatever their formal employment status, to be required to work excessive hours (or, in the cases of Part II of the Employment Rights Act 1996 or the National Minimum Wage Act 1998, to suffer unlawful deductions from their earnings or to be paid too little).  The reason why employees are thought to need such protection is that they are in a subordinate and dependent position vis-à-vis their employers: the purpose of the Regulations is to extend protection to workers who are, substantively and economically, in the same position.  Thus the essence of the intended distinction must be between, on the one hand, workers whose degree of dependence is essentially the same as that of employees and, on the other, contractors who have a sufficiently arm's-length and independent position to be treated as being able to look after themselves in the relevant respects.

(5) Drawing that distinction in any particular case will involve all or most of the same considerations as arise in drawing the distinction between a contract of service and a contract for services – but with the boundary pushed further in the putative worker's favour.  It may, for example, be relevant to assess the degree of control exercised by the putative employer, the exclusivity of the engagement and its typical duration, the method of payment, what equipment the putative worker supplies, the level of risk undertaken etc.  The basic effect of limb (b) is, so to speak, to lower the pass-mark, so that cases which failed to reach the mark necessary to qualify for protection as employees might nevertheless do so as workers.”

 

27.         Elias J in Redcats referred to Baird at paragraph 68:

 

“This is not to suggest that a Tribunal will be in error in failing specifically to apply the "dominant purpose" or indeed any other test.  The appropriate classification will in every case depend upon a careful analysis of all the elements of the relationship, as Mr Recorder Underhill pointed out in [Baird].  It is a fact sensitive issue, and there is no shortcut to a considered assessment of all relevant factors.  However, in some cases the application of the "dominant purpose" test may help tribunals to decide which side of the boundary a particular case lies.”

 

28.         I think I should also refer to certain other passages in Redcats to show that Elias J was not limiting himself to the question of the dominant purpose.  At paragraph 15 he referred to the submission of Mr Andrew Stafford that if the Claimant was a home worker, then the question of personal service was not material, and he says that Mr Stafford accepted the critical question remained whether the Claimant was contracting with the Respondent as someone running a business and dealing with the Respondent as a customer.  I also refer to paragraphs 47 and 48, where there is the reference to Baird as follows:

 

“[Baird] was a case involving the Working Time Regulations where the definition of worker is identical.  Mr Recorder Underhill suggested that the purpose of that legislation must have been to recognise that there are persons who work for an employer and who are not employees but who are economically and substantively in the same position as employees.  The degree of dependence is critical, he observed.  He continued (para. 17(5)):

‘Drawing that distinction in any particular case will involve all or most of the same considerations as arise in drawing the distinction between a contract of service and a contract for services – but with the boundary pushed further in the putative worker's favour.  It may, for example, be relevant to assess the degree of control exercised by the putative employer, the exclusivity of the engagement and its typical duration, the method of payment, what equipment the putative worker supplies, the level of risk undertaken etc.  The basic effect of limb (b) is, so to speak, to lower the pass-mark, so that cases which failed to reach the mark necessary to qualify for protection as employees might nevertheless do so as workers.’

I accept that in a general sense the degree of dependence is in large part what one is seeking to identify - if employees are integrated into the business, workers may be described as semi detached and those conducting a business undertaking as detached – but that must be assessed by a careful analysis of the contract itself.  The fact that the individual may be in a subordinate position, both economically and substantively, is of itself of little assistance in defining the relevant boundary because a small business operation may be as economically dependent on the other contracting party, as is the self employed worker, particularly if it is a key or the only customer.”

 

29.         I return to Hashwani at this stage to draw attention to what is said by the Court of Appeal at the end of paragraph 19, a reference to the advice of the Advocate General in the case of Centrum voor Gelijkheid van Kansen en voor Racismebestrijding v Firma Feryn NV [2008] ICR 1390:

 

“The court itself did not expressly accept the Advocate General’s expression of opinion; rather it confined itself to holding that a general statement of the kind under consideration constituted direct discrimination because it was likely to deter some potential applicants and thus hinder their access to the labour market (paragraph 25).  Nonetheless, the Advocate General’s view of the broad policy objective, the Directive [that is, that it should have a wide construction] is in our opinion supported by the recitals.  It is also one which is essentially incompatible with an acceptance of the right to discriminate between any providers of services on the basis of race, sex, religion or any of the other grounds covered by the Directive.”

 

30.         Ms Eddy went on to submit that the first that the Claimant was aware that the Respondent wished to resile from its concession was shortly before the exchange of skeleton arguments.  Ms Eddy submitted to me that in the supplemental submissions to the Employment Tribunal Ms Hadfield had not expressly and in terms sought to withdraw her concession.  Ms Eddy relied upon a passage in Harvey on Industrial Relations and Employment Law, part P1, paragraph 1,602:

 

“Although the EAT has a discretion to allow a new point of law to be raised on appeal and to permit a concession made before the Tribunal to be withdrawn, it is a discretion that should only be exercised in exceptional circumstances and for compelling reasons, particularly if the new point would necessitate the case being remitted to the Tribunal to hear further evidence.  This principle, which is based on the strong public interest finality of litigation has been held to apply even where a case has been decided on a basis of law that is not merely arguable but demonstrably wrong at the time it reaches the appellate court […].” 

 

31.         Then there is a reference to Jones v The Governing Body of Burdett‑Coutts School [1998] IRLR 521, a decision of the Court of Appeal.  It was submitted to me on behalf of the Claimant that if I was against her and there had been a significant change in the law, and it was incumbent on the Employment Judge to direct herself by reference to what Clarke LJ had said, particularly at paragraph 34, there was no other conclusion than that the Claimant was an employee based on her findings of fact.  I deal with this particular submission now.  It seems to me that it is quite impossible for me, not having heard the evidence and not even knowing what the evidence or detailed findings were, to come to such a conclusion.  The question of whether there was control of subordination is simply something I am quite unable to decide but which was certainly a matter for the Employment Judge.

 

32.         Ms Eddy submitted that this is not a case where the Judgment was anything other than Meek compliant.  It was irrelevant for the Employment Judge to consider the question of Hashwani, because the law had not changed both before and after the Hashwani decision.  The degree of control and subordination was always relevant by reference to the question of what the dominant purpose of any particular contract was.

 

33.         Further, the Employment Judge did not direct herself specifically by reference to any particular formulation in this regard, and she considered the law as it was apparently regarded at the time as set out in paragraphs 13 and 14 of the Supreme Court in Hashwani.  There was therefore no need for her to explain why she did not consider that this was affected by the decision of the House of Lords.

 

34.         Additionally, there was no need to specifically refer to the decision of Hashwani in the Supreme Court because it was not relevant, and, as was made clear in the case that was cited to me of High Table Ltd v Horst [1997] ICR 409, an Employment Tribunal is only required to deal with points of controversy.  Here, there had been a concession that if the Claimant was obliged to carry out work, then he was an employee; the only issue was whether the Claimant was bound to perform work under the terms of the contract.

 

35.         In those circumstances, it was not incumbent on the Employment Tribunal to make detailed findings on the application or otherwise of paragraph 59 of Redcats (see the decision in Horst at page 420E‑G).  This supports the submission that the Respondent did not expressly seek to resile from the concession, and Ms Hadfield should have advanced exceptional reasons to the Tribunal if she wished to withdraw the concession.

 

36.         It was submitted to me by the Claimant that were I against her, I should order a new PHR.  In terms of proportionality, it should be before the same Employment Tribunal.  Reliance was placed upon the well‑known decision of Burton J in Sinclair Roche & Temperley v Heard [2004] IRLR 763.  There is no suggestion, it was suggested here, of any bias or apparent bias on the part of the Employment Judge.  The question of proportionality was in the Claimant’s favour; it was inappropriate for the parties to become involved in further expense of having a complete rehearing when the Employment Judge was well equipped and able to reconsider the matter in the light of the Hashwani decision.  My attention was drawn to the well‑known passage that:

 

“45. […] where a tribunal is corrected on an honest misunderstanding or misapplication of the legally required approach (not amounting to a ‘totally flawed’ decision […]) then, unless it appears that the Tribunal has so thoroughly committed itself that a rethink appears impracticable, there can be the presumption it will go about the task set them on remission in a professional way, paying careful attention to the guidance given to it by the appellate tribunal.”

 

Conclusions

37.         I am satisfied, by reference to the cases decided in the European Court of Justice and the importance those cases have stressed of the worker not being in a subservient relationship, did change the emphasis of the law; not to the extent that the Employment Judge was wrong, especially in the absence of the withdrawal of Ms Hadfield’s concession, but in failing to explain why she had either agreed to a withdrawal of the concession or why in some way she was satisfied that the Claimant was an independent provider of services who was not in a relationship of subordination with the person who received the services.  As was said by Clarke LJ, those are broad questions depending on the circumstances of the particular case.  They depend upon a detailed consideration of a relationship between the parties.  In my opinion, the Judgment in this regard is deficient.  There is no sufficient compliance with the decision in Meek because the parties simply do not know the reason why the Employment Judge evidently came to the conclusion that the Claimant was in a relationship of subordination with the Respondent.

 

38.         I have considered that the matter should be remitted to the same Employment Judge essentially for reasons of proportionality.  Employment Judge Wade will be already familiar with the case, and in my opinion I should respect her professionalism in being able to consider the matter and give reasons on the following: firstly, did she accept that the Claimant was seeking to withdraw the concession made to which I have referred, and if so, did she accept or reject the Claimant’s implied request to withdraw the concession and to set out her reasons whether she accepted or rejected them; and secondly, she should give reasons as to whether she considered the question of whether the Claimant was an independent provider of services who was not in a relationship of subordination with the Respondent, and whether she found that the Respondent was in such a relationship and her reasons for so finding.

 

39.         It only remains for me to thank both Ms Hadfield and Ms Eddy for their very helpful written and oral submissions; I am very grateful.  I am content, if Ms Hadfield and Ms Eddy, in the light of the Judgment I have just delivered, wish to formulate the matters to be remitted to the Employment Tribunal in the light of this Judgment.