The claimant had commenced work with the mosque's weekend school in October 1997. In February 1998 she was asked to work as their nursery manager, which was run by a separate limited company formed in May 1997. Her employment was terminated in 2010.  The original claim contended that she had been unfairly dismissed by the nursery but she later sought to join the mosque as a respondent, apparently after she became aware that the nursery was in financial difficulty.  The ET held that she was employed by the nursery at a pre-hearing review.

Silber J upholds that decision noting that

'it is settled law that in the same way as a term in a contract of employment can be varied by implication such as by a course of dealing, so the identity of the employer can also be altered by an implied agreement constituted by conduct'

and that the factors that lead to the variation included the fact that the Claimant's pay slips, P46 and time sheets were headed made out to the nursery and the original claim contended that she had been unfairly dismissed and that she was the victim of race and sex discrimination by Al Madina Nursery Ltd. Given that, there was no error of law and the ET was entitled to reach the conclusion it did.
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Appeal No. UKEAT/0110/12/MAA

EMPLOYMENT APPEAL TRIBUNAL

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

At the Tribunal

On 3 July 2012

Judgment handed down on 17 July 2012

Before

THE HONOURABLE MR JUSTICE SILBER

MR G LEWIS

MR D NORMAN

MRS Z F KHATRI APPELLANT

(1) THE LONDON CENTRAL MOSQUE TRUST LTD

(2) THE AL-MADINA NURSERY LTD RESPONDENTS

Transcript of Proceedings

JUDGMENT

For the Appellant
MR DANIEL TATTON BROWN (of Counsel)

Instructed by:
DWFM Beckman Solicitors
33 Welbeck Street
London
W1G 8LX

For the Respondents
MR RICHARD REES (Consultant)

Peninsula Business Services Ltd
The Peninsula
2 Cheetham Hill Road
Manchester
Lancashire
M4 4FB

CONTRACT OF EMPLOYMENT - Incorporation into contract

The Claimant was hired by the Mosque as a teacher of the Mosque's weekend school in 1997. In 1998 the Claimant agreed to work as the Nursery Manager and continued to do so until the termination of her employment. A company called Al Madina Nursery School Limited was incorporated. The issue arose as to whether the Claimant was employed at the termination of her contract in 2010 by the Mosque or by the Nursery. The Employment Tribunal held that she was employed by the Nursery. She appealed.

Held: dismissing the appeal.

The Employment Tribunal was entitled to reach that decision as the identity of the Claimant's employer was varied so that she ceased to be employed by the Mosque and this was shown by the facts that:-

a) Her payslips, her P46 and her time sheet all had the name of the Nursery on it;

b) She was paid by the Nursery;

c) When asked to draft some terms and conditions for her staff, the draft referred to the employer as being the Nursery;

d) Initially in her claim to the Employment Tribunal, the Claimant said that she had been employed by the Nursery but she only amended her claim to contend that the Mosque as her employer at a time when it appeared that the Nursery had suspended its operations; and

e) The Claimant wrote letters about the Nursery and signed herself as Nursery Manager.

1. Zaibunnisa Farouq Khatri ("the Claimant") appeals against a decision of an Employment Tribunal sitting at Central London and dated 27 September 2011 by which it held that the Claimant was employed by the London Central Mosque Trust Limited ("the Mosque") rather than Al Madina Nursery School Limited ("the Nursery").

1. This question had been identified as an issue for a pre-hearing review after the Claimant had presented a complaint contending that she had been unfairly dismissed and a victim of race and sexual discrimination by the Nursery. She subsequently sought to add the Mosque as the respondent at or after the case management hearing on the basis that it was her employer. The Employment Tribunal explained in paragraph 50 of its Reasons that this occurred at the time:-

"when it appears that the nursery had suspended its operation, and was in need of a loan from an individual to pay its outstanding debts, and so might not be able to satisfy Judgment."

1. The relevant findings of fact of the Employment Tribunal were that:-

(a) The Claimant was hired as a teacher of the Mosque's weekend school in October 1997. No contract was produced at the hearing;

(b) The Nursery had been formed in the late 1980's. A limited company called "Tec-Al Madina Nursery School Limited" ("Tec") was formed in May 1997;

(c) In February 1998, the Claimant was asked to work as the nursery manager from Mondays to Thursdays with her employment commencing on 10 February 1998. At that point the Nursery was struggling with only two children and it was the Claimant's task to build it up. She was successful and recruited more children and more teachers as well as obtaining a grant from Westminster Council;

(d) Because of public funding rules a further company called "Al Madina Nursery School Limited" was incorporated in September 2000 and Tec was dissolved in 2002. The Claimant's payslips for her nursery work are headed Al Madina Nursery School Limited as was her P46;

(e) In 2007 the Claimant drafted some contracts and the Employment Tribunal saw the statement of terms and conditions dated 2009 and which states that the employer is "Al Madina Nursery School Limited". The Respondent relies on this as evidence that the Nursery was her employer and not the Mosque. The Claimant says that she assumed that the Nursery was her employer because that was the name on her payslip but she never signed the draft contract;

(f) In determining how the nursery operated, the Employment Tribunal noted that the Claimant said that the arrangements were informal and that the nursery as a department of the Islamic Cultural Centre (which was how the Mosque described itself) and that she was employed by the Mosque as were all other staff at the Centre;

(g) The nursery was held in a large hall at the Mosque and was charged rent by the Mosque, although it had not been paid for some time. The Mosque had its own budget and was responsible for internal matters; and that

(h) Of the three directors of the Nursery, one was a director of both the Nursery and the Mosque, while the Managing Director of the Nursery was an employee of the Mosque.

1. It is common ground that the Claimant:-

(i) was an employee, as opposed to an independent contractor;

(ii) was employed by either the Mosque or the Nursery; and that

(iii) when she started in her employment in October 1997 her employer was the Mosque.

1. The issue is whether the Employment Tribunal erred in law in deciding that before the termination of her employment in 2010, the Claimant ceased to be employed by the Mosque and instead she became an employee of the Nursery.

1. Mr Daniel Tatton Brown submits that the Employment Tribunal erred in law in reaching that conclusion because:-

(a) it failed to ask itself a legally relevant question, namely whether and, if so, when and how the Claimant's employment ever transferred from the Mosque to the Nursery; and

(b) it erred in its approach to the task of determining that the Claimant was employed by the Nursery.

1. The skeleton for the Respondents contended that the Claimant had been employed by the Nursery following a TUPE transfer. This point was correctly abandoned by Mr Richard Rees, the advocate for the Respondents, as this point had not been raised before the Employment Tribunal and there was no evidence of a transfer of any undertaking.

1. Mr Tatton Brown contends that without any written contract or statutory statement of employment, the fact that the Claimant was initially employed by the Mosque, is highly relevant because it provides a valuable initial "fixed point" especially as the Employment Tribunal did not address the question of when, if at all, the identity of the Claimant's employer changed, but that it nevertheless found that it had changed to become the Nursery. He says that if the Employment Tribunal had considered this matter, it would inevitably have found that there was no change of employer when the Claimant started work in the Nursery as there had been no discussion, still less agreement, about a change in the identity of her employer.

1. Mr Tatton Brown contends that the Tribunal's decision to hold that the Claimant was employed by the Nursery appears to have been determined by the facts that the Claimant's payslip indicated that she was paid by the Nursery and that she believed she was employed by it. He contends that this information is not enough to justify a decision that the Claimant became an employee of the nursery.

1. Our starting point has been that it is important to bear in mind that decisions of the Employment Tribunal must be construed not on the basis that they are the judgments of the standard required in the High Court. It is settled law that as Bingham LJ explained in Meek v City of Birmingham District Council [1987] IRLR 250, the Employment Tribunal's decision "should contain an outline of the story which has given rise to the complaint and a summary of the Tribunal's basic, factual conclusions" [but the reasons are] "not required to create an elaborate product of refined legal draftsmanship."

1. Donaldson LJ said in Union of Construction, Allied Trades and Technicians v Brain [1982] IRLR 22:-

"I think it would be a thousand pities if these reasons began to be subjected to a detailed analysis and appeals were to be brought upon any such analysis. This, to my mind, is to misuse the purpose for which reasons are given."

1. In this case, we have borne those principles in mind and we have come to the conclusion there are a number of important factors which, individually and more importantly cumulatively, show that the Employment Tribunal was entitled to find that the employer of the Claimant became the Nursery.

1. It is settled law that in the same way as a term in a contract of employment can be varied by implication such as by a course of dealing, so the identity of the employer can also be altered by an implied agreement constituted by conduct.

1. We have concluded that it was not an error of law for the Employment Tribunal to hold that the Nursery had become the employer of the Claimant. We must not forget that our task is not to decide if we would have reached the same conclusion as the Employment Tribunal but the different issue which was to ascertain if the Employment Tribunal had made an error of law.

1. We do this against the background that in order to obtain public funding, a separate company had to be formed and it was called Al Medina Nursery School Limited, which has a different name from that of the Respondent. It appears that the Second Respondent uses combinations of the names Al Medina and "nursery" or "nursery school" as the names under which Al Medina Nursery School Limited trades or holds itself out. In any event, the real issue is whether the Claimant continued to be employed by the Mosque as at the date of the termination of her employment.

1. The factors which led to the conclusion that a variation can be implied so that the Claimant's employer ceased to be the Mosque are that:-

(a) The Claimant's pay slips for her nursery work were headed "Al Madina Nursery School Ltd" and her evidence was that she was paid by Al Madina Nursery;

(b) The Claimant's P46, which must have been prepared by her employer identified her employer as being "Al Madina Nursery School Limited" and gave the Park Road address;

(c) Time sheets were prepared and the Claimant had signed one dated April 1998 and it was headed "Al Madina Nurseries and Pre-school Play Group Trust";

(d) The Claimant was asked to draft some statement of terms and conditions for her staff in 2007, and a draft was produced to the Employment Tribunal dated 2009 in which it said that her employer was "Al Madina Nursery School Limited" of 146 Park Road, London NW8 and she explained that she assumed this was her employer because that was the name of the pay slip, but she never signed the contract;

(e) The Claimant's original claim to the Employment Tribunal contended that she had been unfairly dismissed and that she was the victim of race and sex discrimination by Al Madina Nursery Ltd. She subsequently sought to add the Mosque as the respondent at or after the case management hearing on the basis that it was her employer. The Employment Tribunal explained in paragraph 50 of its Reasons that this occurred at the time "when it appears that the nursery had suspended its operation, and was in need of a loan from an individual to pay its outstanding debts, and so might not be able to satisfy Judgment";

(f) A letter from Mr Abdullah Muhammed Abdou, who was the Managing Director of the Nursery and an employee of the Mosque and written on a letterhead of Al Madina Nursery School Limited and addressed to the Claimant and the other four Nursery staff, it was explained that "the Director General Dr A Al-Dubayan [who was a director of the Nursery and Director General of the Mosque] will be meeting with you on his return. The meeting will deal with the management and organisation of the nursery". This indicates that the nursery was regarded as a separate unit;

(g) The Claimant regarded her line manager as the Nursery Director, Mr A Abdou, but he was also an employee of the Mosque; and that

(h) The parents were invoiced by Al Madina Nursery School Limited and the Claimant wrote letters about the Nursery including a letter headed "Al Madina Nursery School Limited" with the Park Road address and in which she signed herself as nursery manager.

1. Pausing at this stage, we conclude that the facts set out in sub-paragraphs (d), (e) and (g) in paragraph 16 show that the Claimant did not regard her employer as being the Mosque but the nursery while many of the facts set out in that paragraph show that the Respondents regarded the Claimant as an employee of the Nursery. In both cases, different names were used to describe the Respondent but all were incorporating in their title the words "Al Madina" and "nursery" and or "school" .

1. The Employment Tribunal also correctly in our view considered the issue of who controlled the Claimant in her work and having considered a business model in order to ascertain the degree of control over her, it concluded that:-

"53...Against this model, it seems far less clear cut that the claimant was employed by the Mosque and not the nursery. The evidence was consistent with being employed by the nursery while being integrated into the ICC".

1. The Employment Tribunal then stated that:-

"54. In the absence of clear documentary evidence as to who employed the Claimant, we had to look at how the arrangement operated. We noted that there was a company whose aims and objects were to run the nursery of which she was the manager, which invoiced parents for fees for that nursery, and whose directors controlled her operations. This is more than just paying the claimant, as in Muscatt. We found it hard to say that the nursery was not the employer unless there was clear evidence to suggest that."

1. In reaching the conclusion that the Employment Tribunal did not commit an error of law in deciding that Claimant was not employed by the Mosque, we have not overlooked and have taken into account some of the specific points made on behalf of the Claimant, such as a memorandum from the Mosque's Director General headed "to all staff". There was also an overlap between the Mosque and the Nursery in 2003 when the Claimant was asked to run a cr?che for children of those attending a course by the Mosque for which she was not paid but authorised to take off some time in lieu from work for the nursery. This is consistent with a close connection.

1. We must remind ourselves that our task is to ascertain if there was an error of law, and we have come to the clear conclusion that the Employment Tribunal was entitled to conclude that the Claimant was employed by the Nursery and not by the Mosque. The appeal must be dismissed.