BAILII [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 >> Halawi v WDFG UK Ltd (t/a World Duty Free) (Rev 1) [2014] EWCA Civ 1387 (28 October 2014)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/1387.html
Cite as: [2015] IRLR 50, [2014] EWCA Civ 1387, [2015] 1 CMLR 31

[New search] [Context] [View without highlighting] [Printable RTF version] [Help]


Neutral Citation Number: [2014] EWCA Civ 1387
Case No: A2/2013/3278

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE EMPLOYMENT APPEAL TRIBUNAL
Mr Justice Langstaff
UKEAT/0166/13GE
BAILII: [2013] UKEAT 0166_13_0410

Royal Courts of Justice
Strand, London, WC2A 2LL
28/10/2014

B e f o r e :

LADY JUSTICE ARDEN
LORD JUSTICE CHRISTOPHER CLARKE
and
MR JUSTICE BARLING

____________________

Between:
Halawi
Appellant
- and -

WDFG UK Ltd T/A World Duty Free
Respondent

____________________

Mr Paul Diamond (instructed by Cameron Solicitors LLP ) for the Appellant
Ms Diya Sen Gupta (instructed by Lewis Silkin LLP) for the Respondent
Hearing date: 25 June 2014

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lady Justice Arden:

  1. EU equality law, now principally found in the Framework Directive 2000/78 ("the Framework Directive"), provides a number of protections, including protection from discrimination, for employees within the extended meaning of that term applicable for the purposes of EU law. It is, therefore, often important to know whether a person is an employee for this purpose. Some people provide their services under a contract of employment. Others, however, may provide their services through a third party and/or a company which they control. EU law sometimes uses the term "worker", but our domestic legislation uses the term "employment" and cognate expressions, so I shall use the term "employee" throughout even when referring to the concept of "worker" in EU law.
  2. The issue on this appeal is whether a person, who provided her services through an employee-controlled company to a service company, is an employee. The appellant seeks to establish that she is an employee, not of either of those companies, or the client of the service company for whom the service company provided her services but, on the particular facts of this case, of the respondent ("WDF"), which managed the workplace for the client for whom her services were engaged.
  3. The issue on this appeal is to be answered under the provisions of domestic law which implement EU equality law. In England and Wales, the principal rights conferred by EU equality law are to be found in the Equality Act 2010 ("EA 2010").
  4. In my judgment, for the reasons given below, the appellant was not an employee of WDF. The existence of the relationship of employment does not turn on whether the parties entered into a formal contract which would be recognised in domestic law as constituting employment but on whether it meets the criteria laid down by EU law. These criteria are capable of being applied even in the complex situation described in the preceding paragraph. The criteria include a requirement that the putative employee should agree personally to perform services, and a requirement that the putative employee should be subordinate to the employer, that is, generally be bound to act on the employer's instructions. In determining whether the relationship is one of employment, the court must look at the substance of the situation. In this case, the Employment Tribunal ("the ET") made clear findings of fact that the two criteria I have just set out were not satisfied. Accordingly, in my judgment, this appeal must fail.
  5. Before I go to the law, I shall set out the context in which this issue arises.
  6. Background

  7. The appellant, Mrs Halawi, is a beauty consultant. She appeals from the dismissal on 4 October 2013 by the Employment Appeal Tribunal ("the EAT") (The Hon Mr Justice Langstaff P) of her appeal against the decision of the ET dated 15 May 2012 that, when providing her services through a limited company for the purpose of selling Shiseido cosmetic products in a duty free outlet managed by WDF, she was not an employee of WDF for the purposes of section 83(2) of the EA 2010. In consequence, her complaint that WDF had discriminated against her on religious grounds when it dismissed her by removing the pass which she needed to obtain access to that store, failed and her proceedings were dismissed.
  8. The store was beyond the security gates and was, therefore, in the jargon "airside".
  9. The respondent, WDF, operates retail outlets at airports. It has about sixty airside outlets. In these outlets it offers space to (among others) cosmetic companies for the exclusive storage of the products of the company. These spaces are normally staffed by uniformed specialist staff on behalf of the cosmetics company. WDF had such an agreement with Shiseido, a Japanese cosmetics company.
  10. In 2000 Shiseido entered into an agreement with Caroline South Associates ("CSA"). CSA provides management services to cosmetic companies who occupy space by permission of WDF. By the agreement, CSA agreed to provide management services to Shiseido. This included dealing with the staffing of Shiseido's outlet spaces.
  11. In 2001, the appellant, Mrs Nohad Halawi, began working as a uniformed beauty consultant in an area of a duty-free outlet selling Shiseido products on the airside of Heathrow Terminal 3. Initially she worked there through an agency. According to the ET, this was with assistance of CSA. This changed in 2002 when the appellant set up a limited company called Nohad Ltd ("N Ltd"). N Ltd thereafter invoiced CSA for the appellant's time and services at an hourly rate set by CSA and CSA in turn invoiced Shiseido. The appellant's case is that CSA had forced her to set up a company but the ET found that the appellant had exercised her free choice to operate through N Ltd.
  12. The appellant required two authorisations to work. First, she needed the 'store approval' of WDF. This was simply a statement from WDF that she had approval to work in an outlet. Second, WDF made arrangements to 'sponsor' the appellant's airside pass, which was issued by the British Airports Authority.
  13. In June 2011 WDF withdrew the appellant's airside pass. This effectively prevented the appellant from continuing with her work at WDF's outlet. The appellant brought proceedings against both WDF and CSA in the ET on the basis that the withdrawal was discriminatory on the grounds of race and/or religion, but the present appeal is brought solely against WDF. She characterised the withdrawal by WDF of her airside pass as a dismissal from employment. I am not concerned with her claim against CSA. I shall next set out the important findings of fact by the ET.
  14. Findings of the ET (Judge R Lewis)

  15. Only the principal findings relevant to this appeal need to be set out in this judgment.
  16. The evidence filed on behalf of the appellant included witness statements which the appellant contends shows the measure of control which WDF exercised over the way she carried out her duties as a beauty consultant. In her detailed witness statement, the appellant stated that, when she started to work on the Shiseido counter, she signed "WDF business partner guidelines" which contained details of the health and safety policy and confidentiality policy of WDF, among a number of other matters. Before she could start, she had to have an interview with WDF and to obtain their "store approval", as well as an offer from Shiseido because WDF liked to maintain a consistent image for its outlets. Furthermore, according to her statement, WDF had the right to warn her if she was late for her work, or did not do an appropriate number of hours. Moreover, the appellant stated that WDF could dismiss her by removing her "airside pass". Furthermore she had to get permission from WDF to take holidays. In addition, the Shiseido products available in the outlet at which she worked were bought and sold as WDF's stock. That meant that WDF profited from the appellant's services.
  17. The appellant further explained in her statement that, if a customer wanted a product produced by a rival cosmetic manufacturer, for whom an assistant was not available, she had to assist in that sale. The object was "the sale from WDF's stock and a happy customer first, and the promotion of Shiseido was secondary." Furthermore, WDF operated a mystery shopper scheme in which mystery shoppers were hired by WDF to score staff individually on their customer service performance. If staff scored below store standards three times, WDF had the right to remove store ID passes and dismiss people. WDF was not obliged to consider the reasons why somebody failed the mystery shopper test. The mystery shopper could specifically want a specialised product or a product sold by another house and this would test the sales person's capacity to sell and whether they could assist in a sale from another house. (The appellant undertook the test and scored well.)
  18. The ET saw the case rather differently. It noted that there was only limited documentation. None of the following relationships had been reduced to writing: that between WDF and Shiseido; that between WDF and CSA; that between N Ltd and the appellant (apart from the company's constitution); that between N Ltd and CSA, and that between the appellant and CSA. The only documentation recording the relationship between the appellant and WDF was a handbook described as containing business partner guidelines. This drew a distinction between employees and business partners, so though the appellant could not have been unaware of this difference. WDF set the times when the Shiseido space had to be staffed, which was generally when the outlet was open to the public. It was CSA's responsibility to make arrangements through N Ltd for the appellant's attendance. The appellant worked in tandem with at least one other consultant to ensure cover.
  19. The appellant had no holiday pay entitlement or right to sick pay. If she did not work, she would not get paid.
  20. The ET attached importance to the arrangements for substitution. The appellant could change shifts or withdraw from shifts and could send a substitute. In selecting a substitute, she had to choose someone who had store approval and an airside pass and she had to tell WDF the name of the substitute but she did not have to give reasons for the substitution or seek approval for it. The ET was satisfied that substitution in accordance with these arrangements could be (and indeed had been) made in practice.
  21. As to the provision of work, neither WDF nor Shiseido gave the appellant work. The ET found that, if work were provided by anyone, it was by CSA. However, CSA was not under an obligation to provide work and the appellant was at all times free to refuse an assignment.
  22. The ET rejected the argument that the business partner guidelines constituted a contract of employment between the appellant and WDF. There was no mutuality of obligations. The ET drew a distinction between WDF's control of the premises and control at work. The ET found that WDF did not have control of the appellant beyond its control of the premises.
  23. The ET concluded that the appellant was not an employee for the purposes of section 83 of the EA 2010.
  24. The appellant appealed the order of the ET to the EAT on the question whether she was an employee within the meaning of section 83 of the EA 2010. Before I summarise the judgment of the EAT, I shall describe the basic principles of this area of law.
  25. The Law

  26. Part 5 of the EA 2010 contains various prohibitions making it unlawful to discriminate against employees and others. Section 83 contains definitions which apply for the purpose of Part 5. These include a definition of "employment". It provides so far as material:
  27. " (2)     "Employment" means—"
    (b) employment under a contract of employment, a contract of apprenticeship or a contract personally to do work;..
  28. It is the third type of category of employment within section 83(2) that is relevant in this case, that is employment under "a contract personally to do work."
  29. We have not been taken to any case on service companies but there are some recent authorities which throw light on the meaning of section 83(2). In Jivraj v Hashwani [2011] 1 WLR 1872, the Supreme Court considered whether arbitrators appointed pursuant to a contract were within the third category. The Supreme Court examined section 83 in detail. It concluded that there had to be more than simply the personal performance of work. There had also to be a contract under which that work was provided. Lord Clarke, with whom the other members of the Supreme Court agreed, held:
  30. "As I read Percy, it sought to apply the principles identified by the Court of Justice, as indeed did this court in O'Brien [2010] 4 All ER 62. The essential questions in each case are therefore those identified in paragraphs 67 and 68 of Allonby [2004] IRLR 224, 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. …" (at [34])
  31. Arbitrators did not meet the requirements of the definition in the third group in section 83(2) of the EA 2010 because the nature of their function was to act independently of their appointors. There was no basis on which it could be said that they were bound to act under the direction of their appointors. Therefore they could not complain of discrimination in their appointment.
  32. Lord Clarke recognises that the meaning of "employee" is to be determined in accordance with EU law. In Case C-256/01 Allonby v Rossendale & Accrington College [2004] ICR 1328, the Court of Justice of the EU ("CJEU"), in answer to a reference for a preliminary ruling from this Court, held that the term "employee" should not be interpreted restrictively. In that case, the national court had to determine whether a University lecturer, who had previously been employed directly by her college but who was required to set up a service company and agree to provide her services through a third party, was "an employee" for the purposes of discrimination law or whether she was a self-employed person. The Court of Justice held:
  33. "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, joined cases C-270/97 and C-271/97 Deutsche Post [2000] ECR I- 929, paragraph 57). As the Court held in Defrenne (No.2), cited above (paragraph 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 case 66/85 Lawrie-Blum [1986] ECR 2121, paragraph 17, and Martínez Sala, paragraph 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 decision 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, case C- 337/97 Meeusen [1999] ECR I-3289, paragraph 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, case 344/87 Bettray [1989] ECR 1621, paragraph 16, and case C-357/89 Raulin [1992] ECR I-1027, paragraph 10).
    71 The formal classification of a self-employed person under national law does not exclude the possibility that a person must be classified as a worker within the meaning of Article 141(1) EC if his independence is merely notional, thereby disguising an employment relationship within the meaning of that article.
    72 In the case of teachers who are, vis-à-vis an intermediary undertaking, under an obligation to undertake an assignment at a college, it is necessary in particular to consider the extent of any limitation on their freedom to choose their timetable, and the place and content of their work. The fact that no obligation is imposed on them to accept an assignment is of no consequence in that context (see to that effect, in relation to free movement of workers, Raulin, paragraphs 9 and 10)."
  34. Key factors, therefore, are the element of subordination and the receipt of remuneration. In the present case, the appellant was paid by CSA not WDF. However CSA was paid by Shiseido, and Shiseido was in turn paid by WDF for stock which it sold at a profit. So it is arguable that WDF indirectly provided for the appellant's remuneration.
  35. Decision of the Employment Appeal Tribunal

  36. On 4 October 2013 Langstaff J, the President of the EAT, dismissed the appellant's appeal. He rejected the appellant's case that the web of relationships in the present case was a disguise and that, in substance, she was in a relationship of employment with WDF.
  37. The judge went through the authorities with great care and in depth. Those cases included Case 232/09 Danosa v LKB Lizings SIA [2011] 2 CMLR 2, in which the CJEU applied Allonby to a case involving the sole director of a public company.
  38. The judge held that the simple answer to the case was that there was no contract of employment which was relevant and that, if there was a contract, it was not a contract "personally" to do work, given the substitution provisions. He rejected the appellant's further arguments, which involved purposive interpretation of section 83(2) so as to facilitate the application of the rights which EU law conferred on an employee. The judge did not consider that section 83(2) could be read so as to enable subordination to displace the requirements for personal service, as submitted by the appellant. The appellant prayed in aid the provisions of the Charter of Fundamental Rights and Freedoms, but the judge did not find it necessary to make any ruling on that submission.
  39. At the start of his conclusions, the judge held that three matters were axiomatic:
  40. "[34] First, whether a person is an employee or a worker is essentially a question of fact, unless it is one of those cases in which there is a complete written contract; plainly, not this. That approach is not only the approach taken in domestic law but it is that taken by the Court of Justice of the EU. As was said in Allonby, whether an employment 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.
    [35] It may rightly have been said that the question of whether someone was working as an employee or as an independent contractor, using the domestic phrases is one that has proved a most elusive question (see Lord Griffiths in Lee Ting Sang v Chung Chi-Kyeung [1990] 2 AC 374, [1990] IRLR 236, [1990] ICR 409 and that, in a case that was cited to me, of Hospital Medical Group v Westwood [2012] EWCA Civ 1005, [2013] ICR 415, in which it was recognised that there is no single test that can ultimately decide the issue). It seems that the same is true of the European landscape as it is the domestic, because different factors are bound in different contexts to have different weight and different considerations are always liable to be of greatest relevance. Secondly, that said, a Judge must be in this area in particular alert to the need to reflect the realities of any employment situation. It would be a tragedy if employment was too readily "disguised" in the sense identified by Allonby and referred to by Mr Diamond. Here, I note that the Judge made no findings as to the motivation of WDF, CSA, Shiseido and Nohad as to the arrangements into which they entered, save that Nohad did so freely of the Claimant's own volition.
    [36] Thirdly, I note that although "worker" does not have a single meaning for the purposes of EU law, it does have a meaning, which I take to be settled, subject to further developments, as Mr Diamond points out, in the cases of Allonby, Danosa and Coleman v Attridge Law [2008] 3 CMLR 27. What governs me, I accept, is the way in which those cases and that law have been considered by the Supreme Court in Hashwani. None of the cases that fed into Hashwani were cases in which the question of whether there was a contract in the sense of there being any relations that might be contractual was central unless one regards Percy as such, and in no case was there a specific consideration of the requirement of personal service. But I accept Ms Sen Gupta's submissions that the statute requires there to be a contract personally to do work. An employment relationship under which one party is paid by another, directly or indirectly, will ultimately involve contractual questions if analysed through English eyes. I see here no reason under the Marleasing principle to interpret the words "contract personally to do work" as if the word "contract" and the word "personally" were not present."
  41. The judge then essentially reverted to what he had called the simple answer to the case. He held that the ET considered all the relevant facts. He continued:
  42. "[The ET's] conclusion was that the relationship was not one that created a relationship under which the Claimant personally would do her work for either of the Respondents. The absence of control over the Claimant feeds into the issue of subordination. There was no evidence directly of economic dependence, whereas I share strongly the suspicion of Judge Richardson as to the way in which the ordinary person passing through Heathrow might see a person in the uniform that the Claimant wore. The fact that she might be seen working there in that role does not answer the questions posed either under domestic law or by the European approach in a way that would permit her to succeed on this claim."
  43. The judge reached this conclusion despite having an "uneasy feeling… that the arrangements here were such that the Claimant could have been the victim of discrimination and yet have no right to complain to a tribunal about it." But that was, he recognised, in principle no different from those cases that have involved agency arrangements in various areas of the labour market. The courts had also held that the legal tests must be satisfied as necessary prerequisites for a claim even in the case of those agency arrangements.
  44. Discussion

    Grounds of appeal

  45. The appellant has filed extensive grounds of appeal. The principal grounds of appeal can be summarised as follows: the judge erred in law because his decision did not give effect to EU law; employment has an autonomous meaning in EU law; the correct approach in EU law was that there was a relationship of employment if the appellant was in a relationship of subordination, meaning a relationship of economic dependency and economic value to the enterprise, and personal service was not required.
  46. There is no doubt that section 83(2) of the EA 2010 must be interpreted so as to be compatible with EU law, as the Supreme Court interpreted it in Hashwani. Likewise there is no doubt that there is an autonomous meaning in EU law of the term "employee", and Member States' domestic legislation cannot diminish this meaning. But the remaining grounds of appeal are controversial.
  47. The nature of the required subordination satisfied: economic dependency on its own not enough

  48. Mr Paul Diamond, appearing in this Court as well as below for the appellant, developed the principal grounds of appeal as follows. He submits that the Allonby test was developed by the CJEU in Danosa to remove the need to show a contract between the parties, and that the real question is one of subordination. In Danosa, the CJEU held that a sole director of a company could be an employee for EU law purposes even though she had no contract of employment and even though, under the national law (Latvian), the relationship was of agency (see [38] to [42] and [67] to [71] of the CJEU's judgment).
  49. Mr Diamond also places reliance on Case C-81/12 Asociatia Accept v Consiliul National Pentru Combaterea Discriminarii [2013] IRLR 660 as showing that a contract is not necessary. This case concerned a claim for discrimination arising out of a statement by a football club's shareholder and banker that he would not employ a gay football player. The CJEU held that the club could be liable for this statement. Mr Diamond submits that this shows that EU law does not insist on there being a contract of employment. However, as Barling J swiftly pointed out in argument, the crucial point about this case is that the statement was made in circumstances from which the club could not disassociate itself (paragraphs 48-50). I agree. In this appeal, the question is whether the appellant was an employee for the purposes of EU law. I need say no more about this case.
  50. Mr Diamond went on to submit that the CJEU found that the director in Danosa was an employee without the requirement for subordination. On his submission, this meant that EU law applied to all manner of economic activity. I would reject that submission as inconsistent with the CJEU's judgment in Allonby and in Danosa itself. There was an issue in Danosa as to whether the requirement for subordination was fulfilled. However, the question whether this requirement was fulfilled was a question of fact (which the national court would have to determine on the basis of the evidence). The CJEU held that board members were capable of being employees if in return for remuneration they provided services, carried out those services under the direction or control of another organ of the company, and the company had an absolute power of removal by which they could at any time be removed from their duties (see [46] to [50] of the CJEU's judgment).
  51. Mr Diamond seeks to avert the difficulty for the appellant of this conclusion by challenging the ET's finding that WDF did not control the appellant. Mr Diamond submits that the findings of the ET gives rise to a contract of some sort, even if it would not satisfy English law. He submits that EU law is equally confused. He attempted to argue that this finding was perverse but he accepted that he could not pursue this ground in this court. It is outside the grounds for which he has been given permission.
  52. Relevant to the question of economic dependency and economic value to the enterprise is the recent case of Bates van Winkelhof v Clyde & Co LLP [2014] 1 WLR 2047, on which Ms Diya Sen Gupta, for the respondent, relies. In this case, the Supreme Court held that subordination was not a "freestanding and universal" element in employment. Mr Diamond submits that this holding supports his case.
  53. The context in Bates was that a member of a limited liability partnership claimed protection as a whistle-blower and contended that she was a worker for the purpose of section 230 of the Employment Rights Act 1996. This contains an extended definition of "employment" which includes persons who undertake personally to perform services for a client of any undertaking carried on by them. Lady Hale, in [39] of the judgment of the majority on the Supreme Court, held that subordination was not a "freestanding and universal" requirement of being a worker:
  54. "I agree with Maurice Kay LJ that there is 'not a single key to unlock the words of the statute in every case'. There can be no substitute for applying the words of the statute to the facts of the individual case. There will be cases where that is not easy to do. But in my view they are not solved by adding some mystery ingredient of 'subordination' to the concept of employee and worker. The experienced employment judges who have considered this problem have all recognised that there is no magic test other than the words of the statute themselves. As Elias J recognised in Redcats, a small business may be genuinely an independent business but be completely dependent upon and subordinate to the demands of a key customer (the position of those small factories making goods exclusively for the 'St Michael' brand in the past comes to mind). Equally, as Maurice Kay LJ recognised in Westwood, one may be a professional person with a high degree of autonomy as to how the work is performed and more than one string to one's bow, and still be so closely integrated into the other party's operation as to fall within the definition. As the case of the controlling shareholder in a company who is also employed as chief executive shows, one can effectively be one's own boss and still be a 'worker'. While subordination may sometimes be an aid to distinguishing workers from other self-employed people, it is not a freestanding and universal characteristic of being a worker."
  55. Lady Hale therefore holds that the absence of subordination may not in some cases mean that there is no relationship of employment: for example, in the case of an employed solicitor or barrister. In addition, she makes it clear that economic dependency may amount to subordination in fact but not a relevant form of subordination: see Lady Hale's reference to the "St Michael" brand. In determining whether the employment relationship exists, the court has to assess all the facts but an important factor is the measure of integration into the putative employer's business.
  56. Does Bates mandate a different result in this case from that reached by the EAT? Although Bates concerned the meaning of employment for the purposes of a different statutory provision, I shall proceed, as Ms Sen Gupta invited us to do, on the basis that EU law would equally recognise the need to fine tune the requirement of subordination laid down by the Supreme Court and that this holding applies equally to discrimination law. But there is no need to fine tune the element of subordination in this case. The ET found that the appellant was not subject to WDF's control in the way she carried out her work. There was no documentation to support the existence of employment. Moreover, independence was not a necessary feature of her work. In those circumstances, the requirement for subordination does not need to be qualified, and the requirement must be satisfied for employment to be found. The lack of subordination is consistent with her lack of integration into WDF's business. While the court must look at the substance and reality of the situation, it must not disregard the findings of the ET. Contrary to the submissions of Mr Diamond, Bates therefore does not lead to any different result in this case.
  57. Need for agreement personally to perform services: not satisfied

  58. Mr Diamond's next submission is that EU law does not contain a requirement for personal work. In the light of the authorities to which I have already referred, this argument is not open to Mr Diamond. Nor is it relevant that conventions of the International Labour Organisation ("ILO") may use a wider definition. In X v Mid Sussex Citizens Advice Bureau [2013] IRLR 146, the Supreme Court held that volunteers were not employees, in part in reliance on an ILO Convention, but in that case the Convention was expressly referred to in the recitals to the Framework Directive. Mr Diamond also cited Case C-393/10 O'Brien v Ministry of Justice [2012] IRLR 421 as support for the proposition that employee is an autonomous term in EU law, but it is unnecessary to go to that authority for that proposition.
  59. In the alternative, Mr Diamond submits that, if the Allonby test applies, there was in this case a contract which required personal work. He submits that the ET gave too much weight to the appellant's power to substitute others for herself. This power was rarely exercised. Mr Diamond submits that the factual matrix supports the degree of control, as shown by the evidence adduced on behalf of the appellant, to which I refer in paragraphs 14 and 15 above.
  60. The submissions of Ms Sen Gupta are principally directed to upholding the EAT's decision. Her submissions extend to showing the statutory genealogy of section 83(2) of the EA 2010, but I do not consider it is necessary to go through this. I would, however, accept that it follows that case law on these earlier provisions continues to be relevant, including Percy v Board of National Mission of the Church of Scotland [2006] 2 AC 28. In the light, however, of the recent decisions in Allonby and Hashwani, I do not consider that it is necessary for the purpose of dealing with this appeal to go to those cases.
  61. Ms Sen Gupta submits that the CJEU in Allonby held that there must be some obligation to perform work personally. The appellant did not satisfy this test. On her submission, the appellant had a contract with N Ltd to work as an agent for Shiseido on the terms that she works at the place controlled by WDF.
  62. In my judgment, the short answer to Mr Diamond's submissions on this point is that the ET made clear and in law indisputable findings: it did not in all respects accept the evidence of the appellant and her witnesses. The ET found that the appellant had a power of substitution which was inconsistent with the personal performance of services. Although rarely used, the power of substitution was not found to be a sham or something that could be disregarded.
  63. No basis to challenge to the approach of the ET and EAT to the facts

  64. The appellant's grounds of appeal contend that the EAT followed too closely the findings of the ET. In particular, the EAT had wrongly failed to take into account that the appellant's power of substitution was rarely exercised. Mr Diamond argues that this court ought itself to make findings, alternatively that there ought to be a new trial at which the evidence would be considered again. This ground cannot be pursued in this court as this court can only entertain an appeal from the EAT on a point of law. Subordination is a question of fact: the contrary has not been suggested.
  65. Mr Diamond further submits that the EAT did not give sufficient weight to the reality of the situation: WDF in effect used the withdrawal of the appellant's airside pass in order to dismiss her.
  66. Ms Sen Gupta submits that the EAT correctly applied the law to the facts. It might be a disguised relationship if WDF had required her to enter into a web of contracts to make her an employee. Instead, the ET found that the appellant chose to set up her own limited company. She had near unrestricted rights of substitution. She was paid direct from CSA before N Ltd was set up.
  67. Ms Sen Gupta concedes that the burden of proof is on WDF. She also accepts that, if the facts are open to different interpretations, there would have to be a remission to the ET to make further findings. But she submits that that was not necessary in this case. An important factor was the appellant's power of substitution.
  68. In my judgment, the ET gave careful consideration to the facts. It concluded that WDF did not have control of the appellant beyond the control it exercised over the workplace. Like Langstaff J, I too have an uneasy feeling that the complex arrangements have the effect that the appellant has no remedy for discrimination even if she has been a victim of discrimination (an issue which has not been determined at any stage of these proceedings), but am bound to hold that the legal conclusions of the ET flow from the findings it made.
  69. Doctrine of effectiveness takes the matter no further

  70. Mr Diamond argues that in effect the principle of effectiveness requires a remedy to be given in this case. However, that principle can only apply where there is a breach of a right which is conferred by the law against another person. That is not the case here.
  71. Charter argument no assistance to appellant

  72. At the conclusion of Ms Sen Gupta's submissions, Mr Diamond applied for permission to amend his grounds of appeal to argue the court must apply the Framework Directive in accordance with the Charter. He relies on article 15 (right to work), article 21 (principle of non-discrimination) and article 47 (right to effective remedies). The court refused this application for reasons to be given in this judgment.
  73. It is sufficient to give two reasons. First, although the original grounds complained that the EAT had failed to give effect to rights conferred by the Charter and indeed by the concept of EU citizenship (a submission not pursued orally), it was unclear how that argument was made good, and the application to amend was clearly made too late in this appeal.
  74. The second reason relates to the nature of the rights relied on. Mr Diamond sought to introduce CJEU case law on the issue of the effect of the Charter and on the scope of EU law. There is no doubt that this court must give appropriate effect in this case to the CJEU's jurisprudence on the Charter. However, the Charter does not alter the meaning of "employee" (or worker) in EU law, and so it would not assist the resolution of this appeal to investigate that jurisprudence on this appeal. Jurisprudence on the reach of EU law is superfluous because it is common ground that this appeal is concerned with the meaning of "employee" as an autonomous term of EU law. For that second reason, reliance on the Charter and citizenship (to the extent that was pursued) serve no purpose in this appeal.
  75. Conclusion and refusal to order reference

  76. For the reasons given above and summarised in paragraph 4 of this judgment, I consider that the appellant's arguments must be rejected. Mr Diamond has not established that there is any incompatibility between section 83(2) of the EA 2010 and EU law. In those circumstances, I do not need to deal with Mr Diamond's application for this court to refer this case to the CJEU for a preliminary ruling on the requirements of EU law.
  77. Lord Justice Christopher Clarke

  78. I agree.
  79. Mr Justice Barling

  80. I also agree.


BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/1387.html