|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Secretary of State for Justice v Windle & Arada  EWCA Civ 459 (12 May 2016)
Cite as:  EWCA Civ 459,  ICR 721,  WLR(D) 256,  IRLR 628,  ICR 83
[New search] [Context] [View without highlighting] [Printable RTF version] [Buy ICLR report:  ICR 721] [View ICLR summary:  WLR(D) 256] [Buy ICLR report:  ICR 83] [Help]
ON APPEAL FROM The Employment Appeal Tribunal
HHJ Peter Clark, Lady Drake and Mr Mallender
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE UNDERHILL
LORD JUSTICE LINDBLOM
| SECRETARY OF STATE FOR JUSTICE
|- and -
|WINDLE & ARADA
Mr Mark Humphreys (instructed through the Free Representation Unit) for the Respondents
Hearing date: 26 January 2016
Crown Copyright ©
Lord Justice Underhill :
THE BACKGROUND LAW
"(a) employment under a contract of employment, a contract of apprenticeship or a contract personally to do work;
Section 83 (4) provides that a reference to an employee is to be read with sub-section (2). The same language appears in the predecessor legislation.
"… any other contract … whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".
Lady Hale pointed out, at para. 25 (p. 2055 B-C), that that formulation distinguished between two kinds of self-employed people:
"One kind are people who carry on a profession or a business undertaking on their own account and enter into contracts with clients or customers to provide work or services for them. The arbitrators in Hashwani v Jivraj (London Court of International Arbitration intervening)  1 WLR 1872 were people of that kind. The other kind are self-employed people who provide their services as part of a profession or business undertaking carried on by someone else. The general medical practitioner in Hospital Medical Group Ltd v Westwood  EWCA Civ 1005;  ICR 415, who also provided his services as a hair restoration surgeon to a company offering hair restoration services to the public, was a person of that kind and thus a 'worker' within the meaning of section 230(3)(b) of the 1996 Act."
She then, at paras. 31-32, went on to observe that the same distinction was recognised for the purpose of discrimination law, even though section 83 (2) (a) of the 2010 Act does not contain anything equivalent to the elaborate words of exception in the second half of section 230 (3) (b). She said:
"31. As already seen, employment law distinguishes between three types of people: those employed under a contract of employment; those self-employed people who are in business on their own account and undertake work for their clients or customers; and an intermediate class of workers who are self-employed but do not fall within the second class. Discrimination law, on the other hand, while it includes a contract 'personally to do work' within its definition of employment (see, now, Equality Act 2010, s 83(2)) does not include an express exception for those in business on their account who work for their clients or customers. But a similar qualification has been introduced by a different route.
32. In Allonby v Accrington and Rossendale College (Case C-256/01)  ICR 1328:  ECR–I873 the European Court of Justice was concerned with whether a college lecturer who was ostensibly self-employed could nevertheless be a 'worker' for the purpose of an equal pay claim. The Court held at para. 67, following Lawrie-Blum v Land Baden-Wurttemberg (Case C-66/85)  ICR 483;  ECR 2121: that 'there must be considered as a worker a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration'. However, such people were to be distinguished from 'independent providers of services who are not in a relationship of subordination with the person who receives the services' (para 68). The concept of subordination was there introduced in order to distinguish the intermediate category from people who were dealing with clients or customers on their own account. It was used for the same purpose in the discrimination case of Jivraj v Hashwani.  1 WLR 1872 "
"... The essential questions ... are ... those identified in paras 67 and 68 of Allonby  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 ... . The answer will depend upon an analysis of the substance of the matter having regard to all the circumstances of the case."
"64. The term 'worker' within the meaning of article 141(1) EC is not expressly defined in the EC Treaty. It is therefore necessary, in order to determine its meaning, to apply the generally recognised principles of interpretation, having regard to its context and to the objectives of the Treaty.
65. According to article 2 EC, the Community is to have as its task to promote, among other things, equality between men and women. Article 141(1) EC constitutes a specific expression of the principle of equality for men and women, which forms part of the fundamental principles protected by the Community legal order: see, to that effect, Deutsche Post AG v Sievers (Cases C-270 and 271/97)  ECR I-929, 952, para 57. As the court held in Defrenne v Sabena (Case 43/75)  ICR 547 , 566, para 12, the principle of equal pay forms part of the foundations of the Community.
66. Accordingly, the term "worker" used in article 141(1) EC cannot be defined by reference to the legislation of the member states but has a Community meaning. Moreover, it cannot be interpreted restrictively.
67. For the purposes of that provision, there must be considered as a worker a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration: see, in relation to free movement of workers, in particular Lawrie-Blum v Land Baden-Württemberg (Case 66/85)  ICR 483, 488, para 17, and Martínez Sala, para 32.
68. Pursuant to the first paragraph of article 141(2) EC, for the purpose of that article, 'pay' means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer. It is clear from that definition that the authors of the Treaty did not intend that the term 'worker', within the meaning of article 141(1) EC, should include independent providers of services who are not in a relationship of subordination with the person who receives the services (see also, in the context of free movement of workers, Meeusen v Hoofddirectie van de Informatie Beheer Groep (Case C-337/97)  ECR I-3289, 3311, para 15).
69. The question whether such a relationship exists must be answered in each particular case having regard to all the factors and circumstances by which the relationship between the parties is characterised.
70. Provided that a person is a worker within the meaning of article 141(1) EC, the nature of his legal relationship with the other party to the employment relationship is of no consequence in regard to the application of that article: see, in the context of free movement of workers, Bettray v Staatssecretaris van Justitie (Case 344/87)  ECR 1621, 1645, para 16, and Raulin v Minister van Onderwijs en Wetenschappen (Case C-357/89)  ECR I-1027, 1059, para 10."
"10. An issue that arises in this case is the significance of mutuality of obligation in the employment contract. Every bilateral contract requires mutual obligations; they constitute the consideration from each party necessary to create the contract. Typically an employment contract will be for a fixed or indefinite duration, and one of the obligations will be to keep the relationship in place until it is lawfully severed, usually by termination on notice. But there are some circumstances where a worker works intermittently for the employer, perhaps as and when work is available. There is in principle no reason why the worker should not be employed under a contract of employment for each separate engagement, even if of short duration, as a number of authorities have confirmed: see the decisions of the Court of Appeal in Meechan v Secretary of State for Employment  IRLR 353 and Cornwall County Council v Prater  IRLR 362.
11. Where the employee working on discrete separate engagements needs to establish a particular period of continuous employment in order to be entitled to certain rights, it will usually be necessary to show that the contract of employment continues between engagements. (Exceptionally the employee can establish continuity even during periods when no contract of employment is in place by relying on certain statutory rules found in section 212 of the Employment Rights Act.)
12. In order for the contract to remain in force, it is necessary to show that there is at least what has been termed "an irreducible minimum of obligation", either express or implied, which continue during the breaks in work engagements: see the judgment of Stephenson LJ in Nethermere (St Neots) v Gardiner  ICR 612, 623, approved by Lord Irvine of Lairg in Carmichael v National Power plc  ICR 1226, 1230. Where this occurs, these contracts are often referred to as "global" or "umbrella" contracts because they are overarching contracts punctuated by periods of work. However, whilst the fact that there is no umbrella contract does not preclude the worker being employed under a contract of employment when actually carrying out an engagement, the fact that a worker only works casually and intermittently for an employer may, depending on the facts, justify an inference that when he or she does work it is to provide services as an independent contractor rather than as an employee [emphasis supplied]. This was the way in which the employment tribunal analysed the employment status of casual wine waiters in O'Kelly v Trusthouse Forte plc  ICR 728, and the Court of Appeal held that it was a cogent analysis, consistent with the evidence, which the Employment Appeal Tribunal had been wrong to reverse."
As will appear, the words which I have italicised are central to the argument before us.
THE REASONING OF THE ET
(1) At para. 121 it found that a contract was entered into on each occasion that the Claimants accepted a specific assignment from HMCTS. At para. 122 it found that each such contract was, literally, a contract personally to do work, but – correctly – it did not regard that as the end of the question, for essentially the reasons explained at paras. 8 and 9 above.
(2) At paras. 123-166 it set out the factors relevant to the question of whether the Claimants should be regarded as what it described as "Equality Act employees". These were wide-ranging, but it is unnecessary that we itemise them here.
(3) As part of that review, it considered at paras. 157-162 whether there was an "umbrella contract" between the Claimants and the MoJ. It held, inevitably in the light of the absence of any obligation on the MoJ to offer assignments or the Claimants to accept them, that there was not. Having reached that conclusion, it said, at paras. 163-165:"163. As Lord Justice Elias said in the Stringfellow case, the fact that there is no umbrella contract does not preclude the individual from being employed under a contract of employment (or, in our view, under a contract personally to do work) when actually carrying out each assignment. We therefore return to that question for the purposes of determining whether the individual assignments constituted Equality Act employment for the Claimants.164. In our view, the absence of mutuality of obligation between assignments points away from employee status under the rubric of section 83 (2) for the times when these Claimants were engaged on assignments.165. The assignments of Dr Windle and Mr Arada could not be described as intermittent. In our view, they were casual, in the sense that there was no obligation to accept any next assignment. That was also true for Ms Szwarckopf. That is a factor which, in this case, does suggest a lack of direction and subordination at the hands of the Respondents or, put another way, supports the conclusion that these Claimants were independent providers of services."
(4) The Tribunal then proceeded to its conclusions. At para. 167 it found that Dr Windle and Ms Szwarckopf were not employees of the West Yorkshire police (who were the First Respondent) but "self-employed professionals". It then turned to the Claimants' relationship with the MoJ. It said, at paras. 168-170:"168. In Dr Windle's case, we reached the same conclusion in respect of her relationship with the Second Respondent. Although there were many more indicia of employment in her relationship with the Second Respondent than with the First Respondent, when viewed overall, it was clear that she was self-employed and not employed under her contracts with the Second Respondent.169. Mr Arada's relationship with the Second Respondent was closer than the other relationships arising for consideration in these cases. He was recruited to the Tribunals Service and subject to a number of aspects of control found in employment relationships. On the other hand, at no stage before the Framework Agreement and ALS came on the scene had Mr Arada (or any of these Claimants or, as far as our evidence suggested, any interpreters) challenged the commonly held view that he was (or they were) self-employed. The Claimants had all organised their affairs as self-employed people. Mr Arada was quite clear in the witness box that he was free. Whilst recognising that none of the Claimants was free to disregard certain instructions in the performance of an assignment after accepting it, nonetheless it would be wrong in our view to conclude on the totality of the evidence that Mr Arada was employed under each contract he had with the Second Respondent or that Dr Windle or Ms Szwarckopf were employed under any of their contracts.170. Strong relationships existed between the Respondents and these Claimants. Their contribution to police stations, courts and tribunals was valued. One way or another, the Respondents needed and continue to need such services, suggesting a level of integration. In our view those factors do not suffice to render the Claimants Equality Act employees in these cases either before or after the implementation of the Framework Agreement in November 2011. They were not in a relationship of subordination with those Respondents and were, in the ultimate analysis, independent providers of services."
THE DECISION OF THE EMPLOYMENT APPEAL TRIBUNAL
"In the course of argument Mr Sheldon maintained his position that a lack of mutuality between engagements was relevant not only to the contract of employment question but also the separate question of employment under a contract personally to do work. We disagree. In our judgment that lack of mutuality is relevant to the former and not to the latter. In rejecting Mr Sheldon's submission we have concluded that the Employment Tribunal fell into error, taking into account, at paragraph 164, an irrelevant factor when considering the category (b) employee question. It was relevant to the contract of employment question, as to which the Employment Tribunal correctly found that these Claimants were not employed under contracts of employment."
Mr Sheldon submitted that although the distinction being made by the EAT in that passage is clear no reasons are given for why it is made – that is, why the absence of mutuality of obligation should be relevant to the question whether a claimant is employed under a contract of employment but not to the question whether he or she is an employee in the extended sense. However, it may be fair to refer to an earlier passage in the judgment, at paras. 15-18, where Judge Clark is setting out the background law. He observes there that issues about the mutuality of obligation have arisen in the unfair dismissal cases because of the need to show a qualifying period of continuous employment, and he says at para. 18 that that is not a problem which arises in the context of "limb (b) worker" or employees in the extended sense.
"This will require an enquiry, founded on the contract, into the scope of that direction and the extent of any limitation on the putative employee's independence in that context. The absence of mutuality of obligation between engagement can add nothing to that enquiry … . "
Lord Justice Lindblom:
Lord Justice Jackson: