|[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 >> Autoclenz Ltd v Belcher & Ors  EWCA Civ 1046 (13 October 2009)
Cite as:  EWCA Civ 1046,  IRLR 70
[New search] [Context] [View without highlighting] [Printable RTF version] [Help]
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE SMITH
LORD JUSTICE AIKENS
| Autoclenz Ltd
|- and -
|Belcher & Ors
Mr Timothy Brennan QC & Mr Peter Edwards (instructed by Thompsons) for the Respondent
Hearing dates : 3 & 4 June 2009
Crown Copyright ©
Lady Justice Smith:
"In this Act 'worker' … means an individual who has entered into or works under …
(a) a contract of employment, or
(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, 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."
The Legal Framework
"A contract of service exists if these three conditions are fulfilled. (i) the servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service".
"In a case involving a written contract, the tribunal will ordinarily regard the documents as the starting point and will ask itself what legal rights and obligations the written agreement creates. But it may then have to ask whether the parties ever realistically intended or envisaged that its terms, particularly the essential terms, would be carried out as written. By the essential terms, I mean those terms which are central to the nature of the relationship, namely mutuality of obligation: Carmichael v National Power  IRLR 43 and the obligation of personal performance of the work."
For the purpose of providing car valeting services to its client's garages, Autoclenz wishes to engage the services of car valeters FROM TIME TO TIME on a sub-contract basis.
We understand that YOU ARE AN EXPERIENCED CAR VALETER and might be prepared to offer your services to Autoclenz. If so would you please complete and return to us the form of agreement set out below, which is intended to confirm that any contractual relationship between Autoclenz and yourself is one of client and independent contractor and not of employer/employee and to protect Autoclenz against any claim on Autoclenz for Income Tax and/or National Insurance contributions in respect of payments made to yourself.
For the avoidance of doubt, as an independent contractor, you are entitled to engage one or more individuals to carry out the valeting on your behalf, provided that such an individual is compliant with Autoclenz's requirements of sub-contractors as set out in this agreement, including, in particular, that the individual:
- Is capable of providing the services and has been fully trained to valet a vehicle
- Holds a current full UK Driving Licence free of endorsements DR10 and IN10 and provides a copy to Autoclenz prior to carrying out work
- Complies with the Health & Safety guidance in operation at the site at which he/she will work and
- Has permission to work in the UK
Please note that:
(a) For security reasons, when working on the premises of a client's garage you, and those who work for you, are required to wear a protective overall, which will identify you/them as a contractor of Autoclenz. Overalls may be purchased from Autoclenz.
(b) You are required to provide cleaning materials for yourself and those who work for you. Autoclenz has negotiated the supply of a range of high quality materials, which are available for purchase at competitive rates. Details will be given to you at the garage by the Autoclenz representative.
(c) Given the nature of the work it may be necessary for you/those who work for you to drive motor vehicles, which are the property of or in possession of clients garages. Accordingly you/they must hold a current valid Driving Licence free of endorsements DR10 and IN10. If you/they do not hold a current valid Driving Licence, under no circumstances should you/they drive any motor vehicle whilst providing services for Autoclenz. Should you/they do so, you will be held fully liable for any damage caused
If you wish to provide services to Autoclenz would you please sign and return to Autoclenz the form agreement attached.
YOU WILL NOT BE OBLIGED TO PROVIDE YOUR SERVICES ON ANY PARTICULAR OCCASION NOR, IN ENTERING INTO SUCH AGREEMENT, DOES AUTOCLENZ UNDERTAKE ANY OBLIGATION TO ENGAGE YOUR SERVICES ON ANY PARTICULAR OCCASION.
The Sub-contractor confirms that he is not suffering and has never suffered from back trouble, skin rashes, eczema, dermatitis, asthma or epilepsy and has never been refused work or been terminated from work due to ill-health.
The ET decision
"I do not think it can be said that Mr Huntingdon and his colleagues are businessmen on their own account. They have no control over the way in which they do their work. They have no real control over the hours that they work, save and except they can leave when their share of the work on site has been completed. They do not have any real economic interest in the way in which the work is organised, other than the fact that the more work they do the more they earn. They cannot source material for themselves. They are subject to the direction and control of the respondent's employees on site. ….The claimants have no say in the terms upon which they perform work, the contracts which are placed before them are devised entirely by the respondent and the services they provide are subject to a detailed specification. The invoices they submit are prepared by the respondent (Autoclenz). The respondent determines the deductions which are applied to those invoices and the amounts charged in respect of insurance and materials. There has been no evidence to confirm that these deductions bear any real relation to the actual cost of the services to which they refer. Rates of pay are determined by the respondent and the respondent has felt able to increase or reduce those rates unilaterally. Really there is nothing that these claimants can do to make their putative businesses any more profitable by the way in which they organise themselves.
36. …. I accept the claimants' evidence that they are fully integrated into the respondent's business and that they have no real other source of work. I accept that occasionally individual claimants might work elsewhere but only on days when the respondent has no work for them to do.
37. I am satisfied that the claimants are required to provide personal service under their agreements with the respondent notwithstanding the substitution clause that was introduced in 2007. I do not find that that this clause reflects what was actually agreed between the parties which was that the claimants would show up each day to do work and that the respondent would offer work provided that it was there for them to do. Mr Hassall confirmed in evidence that this was the true nature of the agreement between the parties and that his work could not have been done without an understanding that the valeters could be relied on to turn up and do the work put in front of them. I have of course noted that in 2007 the respondent introduced a clause saying that there was no obligation on it to offer work or on the claimants to accept work. I find that this clause was wholly inconsistent with the practice described in paragraph 18 of Mr Hassall's witness statement where he refers to a requirement for valeters to notify him in advance if they were unavailable for work. This indicates that there was an obligation to attend for work unless a prior arrangement had been made. In my judgment, these factors place these new clauses within the proposition identified at paragraph 58 in the judgment in Consistent Group Ltd v Kalwak supra and I find that the substitution clause and the right to refuse work were unrealistic possibilities that were not truly in the contemplation of the parties when they entered into their agreements.
38 Accordingly I find that the claimants entered into contracts under which they provided personal service, where there were mutual obligations, namely the provision of work in return for money, that these obligations place the contracts within the employment field and that the degree of control exercised by Autoclenz in the way that those contracts were performed placed them in the category of contracts of employment.
39. Were I wrong in this, I would have no hesitation to the concluding (sic) that these claimants were workers. There is nothing on the evidence before me to suggest that there were in business on their own account; they cannot be said to be similar to the jobbing tradesman on a building site or a barrister or management consultant. These claimants are in exactly the same position as the stonemason in the case of Lee v Chug  IRLR 236. In fact it might be said that these claimants did not even provide their own tools. "
"In other words, if the reality of the situation is that no one seriously expects that a worker will seek to provide a substitute, or refuse the work offered, the fact that the contract expressly provides for these unrealistic possibilities will not alter the true nature of the relationship. But if these clauses genuinely reflect what might realistically be expected to occur, the fact that the rights conferred have not in fact been exercised will not render the right meaningless."
The appeal to the EAT
"It is not the function of the court or an employment tribunal to recast the parties' bargain. If a term solemnly agreed in writing is to be rejected in favour of a different one, that can only be done by a clear finding that the real agreement was to that different effect and the term in the contract was included by them so as to present a misleadingly different impression."
The appeal and cross-appeal to this Court
"Of course, it is important that the industrial tribunal should be alert in this area of the law to look at the reality of the obligations. If the (written) obligation is a sham, it will want to say so."
"The kernel of all these dicta is that the court or tribunal has to consider whether or not the words of the written contract represent the true intentions or expectations of the parties, not only at the inception of the contract but, if appropriate, as time goes by."
'I do not find that this clause reflects what was actually agreed between the parties, which was that the claimant would show up each day to do work and that the respondent (Autoclenz) would offer work provided that it was there for them to do'.
"The reality, therefore, in this case is that no one seriously expected any of the valeters to provide a substitute."
"The sub-contractor shall perform the services, which he agrees to carry out for Autoclenz within a reasonable time and in a good and workmanlike manner."
That seems to me clearly to impose an obligation to carry out the work personally.
Lord Justice Aikens :
Lord Justice Sedley :