MJ Quinn Integrated Services Ltd v Jones UKEAT/0301/16/JOJ
Appeal against a decision that the Claimant was an employee as defined by section 230 of the Employment Rights Act 1996, with sufficient qualifying service to enable him to complain of unfair dismissal, unlawful deductions from wages and breach of contract. Appeal allowed and remitted to the same Tribunal.
The Claimant started working for the Respondent in July 2013. Just about two years later, after a period when he refused to accept a number of installation jobs that were offered to him in July 2015, the Respondent terminated its relationship with the Claimant. The preliminary issues being decided by the ET were both as to status and as to the Claimant's continuity of employment, which could be the necessary two-year period providing various periods of absence could be deemed not to break that continuity. The ET determined that during the weeks when the Claimant did not carry out any work he was regarded by custom as continuing in the employment of the Respondent and thus he had sufficient continuity of employment in order to be qualified to make an unfair dismissal claim. The Respondent appealed.
The EAT allowed the appeal. The matter was remitted to the same EJ to reconsider what his findings are in relation to control and integration and how it is that those findings can nullify the terms of the contract. The EJ would also have to decide what he regarded as being the custom and explain how that was supported by the factual material.
Appeal No. UKEAT/0301/16/JOJ
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
On 25 April 2017
HIS HONOUR JUDGE HAND QC
MJ QUINN INTEGRATED SERVICES LTD (APPELLANT)
Transcript of Proceedings
For the Appellant
MR DANIEL TATTON-BROWN (One of Her Majesty's Counsel)
MS CHARLENE ASHIRU (of Counsel)
Hill Dickinson LLP
No 1 St Paul's Square
For the Respondent
MR ANDREW MacPHAIL (of Counsel)
Blake Morgan LLP
New Kings Court
JURISDICTIONAL POINTS - Worker, employee or neither
JURISDICTIONAL POINTS - Continuity of employment
Whilst the judgment of MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance  2 QB 497 at pages 515 and 516 and that of Peter Gibson LJ in Express and Echo Publications Ltd v Tanton  IRLR 367 at paragraphs 21 to 23 still provide a framework for considering the nature of the contractual obligations, it could not be accepted that the Employment Tribunal had been wrong to consider the factual matrix more broadly. [Autoclenz Ltd v Belcher ]() UKSC 41,  ICR 1157 means they are not the whole picture and a rather broader view of the approach to contractual construction needs to be taken in the employment context than might be the case in other contracts. The overarching question is likely to be whether the written agreement (or agreements) is the real and true agreement between the parties or whether the parties have reached some other agreement. Thus the factual matrix needs to be explored with considerable care, not only on substitution and but also on other relevant issues.
But although Employment Judge Reed indicated that he had adopted the approach of balancing various factors, it was a sustainable criticism that he had not explored or explained the extent to which his findings on integration and control negated the terms of the agreement, which appeared inherently inconsistent with a contract for services and what lead to the conclusion at paragraph 33 of the Reasons that all of those terms could be put to one side with result that the Respondent was an employee on the occasion of the carrying out of each assignment. The matter was remitted to Employment Judge Reed to consider and further explain that conclusion.
The crucial issue was whether in some weeks the Respondent was absent from work in circumstances which "by … custom" he was regarded as continuing in employment so that under section 212(3)(c) of the Employment Rights Act 1996 such weeks counted in computing continuity. Employment Judge Reed held that there had been no "arrangement" but there had been a "custom" but it was accepted that the evidential basis for this finding was, at best, unclear and the matter was remitted with a direction that, if so advised, the parties could call further evidence,**HIS HONOUR JUDGE HAND QC****Introduction**
- This is an appeal from the Judgment and Written Reasons of an Employment Tribunal, comprising Employment Judge Reed ("EJ Reed") sitting at Southampton on 26 April 2016, sent to the parties on 12 July 2016. The Employment Tribunal concluded on a Preliminary Hearing that the Respondent (the Claimant below) was an employee as defined by section 230 of the Employment Rights Act 1996, with sufficient qualifying service to enable him to complain of unfair dismissal, unlawful deductions from wages and breach of contract. Today the Appellant has been represented by Mr Tatton-Brown QC of leading counsel, leading Ms Ashiru of counsel. Mr Tatton-Brown did not appear below, Ms Ashiru did (she was then Miss Hawkins). Mr MacPhail appeared on behalf of the Respondent; he also appeared below.
- The Respondent started working for the Appellant in July 2013. Just about two years later, after a period when he refused to accept a number of installation jobs that were offered to him in July 2015, the Appellant terminated its relationship with the Respondent. The preliminary issues being decided by the Employment Tribunal were both as to status and as to the Respondent's continuity of employment, which could be the necessary two-year period providing various periods of absence could be deemed not to break that continuity. The Respondent, who worked as a Telecommunications Engineer had entered into an agreement entitled "contract for services". Pursuant to a separate agreement he was supplied with a vehicle, tools and equipment and what EJ Reed called "company clothing". In some (but not all) circumstances, as to which see below, he paid £50.00 per day in order to be able to use the vehicle, the tools and the clothing.
- There was a third document which was described as an employment contract (see paragraph 5 of the Reasons) between himself and JMK Group UK Ltd, which later changed its name to Arion. This was the company that paid him for the work he did for customers of the Appellant. The sums received by the Respondent were net of Income Tax and National Insurance contributions and the fee, presumably some kind of administration charge, payable to Arion, was also deducted. The Respondent was remunerated by being paid a fee in respect of each installation. On any one day he would typically carry out between five and twelve installations (see paragraph 6 of the Reasons). When he was absent, either through illness or on holiday he was not paid, although he was expected to notify the Appellant in either event.
- EJ Reed first considered, at paragraph 12 of his Reasons, which of the activities carried out by the Respondent could be said to have "involved significant integration" into the business of the Appellant. He found what might be called the livery of the vehicle and the clothing as identifying an association with the Appellant. He found that the Appellant provided the necessary equipment and he said at paragraph 12 that the Appellant dictated the precise nature of the work, which had to be carried out, according to the standards required by the Appellant's client, BT.
- It should be said this is a finding that occurs in a paragraph apparently about integration but Mr Tatton-Brown in his submissions emphasised that, in reality, this was a finding as to the degree of control. After some debate between myself and Mr Tatton-Brown, he submitted that it was, at best, a very ambiguous finding. After all, a requirement to adhere to professional standards might be just as much evidence of self-employment as of employment. EJ Reed also noted at paragraph 12 that there was an obligation on the part of the Respondent to tell the Appellant when he was going to take holiday and at paragraph 13 EJ Reed said this:
"13. In those respects it could easily be seen that this was not an arrangement typical of a truly "arms length" relationship."
I would understand that comment to be an indication by EJ Reed that he did not regard the degree of integration to be such as one might have expected were the relationship to be one of self-employment.
- Having dealt with the question of integration and, to some extent, if Mr Tatton-Brown's analysis is correct, also control, EJ Reed then turned to the contentions that have been made today by Mr MacPhail on behalf of the Respondent. The first, at paragraph 14 of the Reasons, was that there was an umbrella contract. At paragraph 15 EJ Reed looked at the circumstances at the time the contract was entered into. He rejected the contention the Respondent had been told that it was a contract of employment and he found that the Respondent had signed it and, therefore, was bound by it, even if he did not read it in any detail. EJ Reed recognised at paragraph 16 that the contract contained terms that would be emblematic of the Respondent being self-employed: there was the freedom to work for others, the obligation to remedy defective work without payment, the method of payment being by the job rather than on a time basis. He concluded that mutuality of obligation was, as he put it, of particular relevance; see paragraph 16 of the Reasons, the last sentence of which reads:
"16. … It was the Company's case that it was not obliged to offer work to Mr Jones and nor was he obliged to accept any work that was offered to him."
- At paragraph 17 he rejected the contention that as a matter of construction the agreement in fact gave rise to an obligation on the part of the Appellant to offer work. That analysis continues into paragraph 18, which, in effect, repeats the conclusion EJ Reed had already arrived at in the last sentence at paragraph 16.
- At paragraph 19 EJ Reed made a finding that the contract was not a sham. The company had offered work to the Respondent and he had done it for two years, but that did not, on the analysis of EJ Reed, give "rise to an inference, however, that the document itself was a sham". The next sentence in paragraph 19 provides evidential support for that conclusion. The context clearly is mutuality of obligation and EJ Reed found the fact that there had been occasions when the company had no work available and no jobs had been offered to Mr Jones to be supportive of his conclusion that there was no obligation to offer work. He appears to have confined the question as to whether the agreement was a sham to this issue of mutuality of obligation.
- Likewise on the same theme, continued at paragraph 20, he found there was no obligation on the part of the Respondent to accept work offered. There had been occasions when work had been declined. He did not accept that the Respondent would not decline work because he was at risk of the engagement being terminated and he would be financially penalised.
- At paragraph 21 EJ Reed dealt with the issue of sanction. This arose because there was a £50.00 charge made in respect of the hire of various equipment. This was a daily charge, but it was waived if the Respondent accepted work and only imposed in circumstances where he was off work. If he was off work through illness and produced a sick note then he would be charged at the rate of £25.00 per day, otherwise the £50.00 charge would be levied.
- At paragraph 22 EJ Reed rejected this as amounting to an obligation on the part of Mr Jones to accept work. He reasoned that although there was an obvious incentive to accept work, namely that he would not be paid if he did not accept work, and that he was financially disadvantaged to that extent, the further disadvantage he might suffer by taking days off or, for that matter, by being unwell, did not have the impact of amounting to pressure or incentive to the point of obligating the Respondent always to accept work.
- At paragraph 23 EJ Reed recognised the inevitability of the situation that if there was a repeated refusal to undertake work, at some point the Appellant might take the view there was no point in continuing with the arrangement and so terminate it. But that too did not, in the mind of EJ Reed, amount, as he put it at the end of paragraph 23, to "a legal obligation on Mr Jones to accept any offers of work". He summarised the matter at paragraph 24 by concluding that the agreement, which was entitled "contract for services", did not amount to a contract of employment.
- Mr Tatton-Brown does not complain about any of this. It is the next steps in the analysis that have led to this appeal. Between paragraphs 25 and 33 EJ Reed considers the alternative argument put forward by Mr MacPhail on behalf of the Respondent and also addressed in written submissions after the oral hearing had ended. This proceeded on the basis that the contract for services agreement could not be regarded as an umbrella contract and did nothing more than define the terms upon which each individual assignment would be carried out. EJ Reed was persuaded by the reasoning that starts at paragraph 25 and ends at paragraph 33 of the Reasons that there was a contract of employment in respect of each individual assignment. He made reference in that passage to the Court of Appeal's decision in Cornwall County Council v Prater  EWCA Civ 102,  IRLR 362 and also to a judgment of a division of this Tribunal presided over by the then President, Elias J, in Vernon v Event Management Catering Ltd UKEAT/0161/07/LA.
- In the course of that analysis EJ Reed drew attention to other features of the "contract for services". At paragraph 30 he said there was clearly control exercised by the company over the work carried out. It is not clear, however, what he had in mind. Mr Tatton-Brown pointed back to paragraph 12 and submitted that the only finding of control in the Reasons was as to the standard of work referred to there. Also at paragraph 30 EJ Reed concluded that Mr Jones was significantly integrated into the Respondent in a way that one would not have expected an independent subcontractor to be.
- Then at paragraph 31 he lists some of the provisions of the "contract for services" that might be regarded as difficult to reconcile with a contract of employment. These were a right in the Respondent to work for others. It was not an unqualified right, being subject to the proviso that it should not adversely affect his work under an assignment. Also the Respondent had to install telecommunications at a specific time of day and EJ Reed clearly had in mind that there could be a number of assignments completed in a day. On the other hand, the Respondent could not carry out other work during an assignment. EJ Reed therefore concluded that the right to undertake other work was not relevant because it must relate to the period in between the assignments. By that I would understand him to mean in the period between one assignment and another, otherwise I am not clear as to exactly what period he had in mind.
- At paragraph 32 EJ Reed lists the fact that the Respondent was subject to Schedule D taxation and National Insurance contributions on that basis, that he would have to remedy defects at his own expense, that he carried his own public liability insurance, that he was paid by the job and that he had no paid sick leave or holiday.
- He said this:
"32. … All these matters would suggest that even during an assignment he was working "on his own account" and as a genuine subcontractor. Furthermore, he had turned down the Company's offer to be regarded by them as an employee."
However, he followed this by his conclusion at paragraph 33 in these terms:
"33. On balance, however, and particularly in the light of the issues of control and integration to which I have referred, I concluded that he was indeed an employee in respect of each assignment."
- He turned, then, to the question of continuity. He dealt at paragraph 35 with times when the Respondent was not at work. These broadly fell into the categories where he had not been offered any work, where he had refused work that was offered, and where he was on holiday. EJ Reed must also have had in mind, although he did not add it, periods when the Respondent was ill.
- EJ Reed directed himself in terms of section 212 of the Employment Rights Act, which deals with what weeks count in computing periods of employment. Section 212(1) deals with weeks during which an employee's relations with his employer are governed by a contract of employment. Those weeks count. On the findings made by EJ Reed, weeks when the Respondent was not carrying out any assignments would not be weeks in which the relations were governed by a contract of employment and, therefore, the Respondent could not rely on section 212(1).
- Section 212(3) sets out other circumstances when such weeks might count. One circumstance would be weeks where the employee is incapable of work in consequence of sickness or injury. There is no difficulty about that in this case. If there were such weeks, they would count. The other matters set out in section 212(3)(b) and (c) were plainly under consideration in this case. Indeed, EJ Reed says in the last two sentences of paragraph 35:
"35. … It could be argued that there was a temporary cessation of work in the weeks when no work was offered but that argument could not apply to the other two categories. I had to consider whether in those weeks it could be said that by arrangement or custom, Mr Jones was regarded as continuing in the employment of his employer for any purpose - was he "on the books"."
So EJ Reed was there accepting that weeks in which no work was offered by the employer might count by virtue of section 212(3)(b).
- There was then a discussion by EJ Reed of the Respondent's reason for rejecting jobs related to the location of the jobs. The question that arose was whether there was an arrangement that he would not undertake such work. EJ Reed rejected that in paragraph 36:
"36. … I could not see how that was the case. I saw no document and heard no evidence to suggest that the parties had agreed that there would be a geographical limitation on the work offered to Mr Jones. He was clearly at liberty to accept it."
EJ Reed found at paragraph 37 that there was no temporary cessation in weeks when work was available and was offered but rejected and in weeks when Mr Jones was on holiday. The sentence refers only to "offered" but, having regard to what had gone before, I think the sentence only makes sense if one reads "offered" as "offered and rejected".
- EJ Reed took the view that Mr Jones was still on the books during such breaks and when work was not offered. He gives as his reasons the retention of the company vehicle and equipment, and the financial obligations relating to them. He says this:
"37. … There was a clear understanding and expectation that he would work for the Company again. Had that not been the case there would have been no need for the Company to formally terminate the engagement in July 2015 (and seek return of its property)."
Then he says this at paragraph 38:
"38. In my view during the weeks when Mr Jones did not carry out any work he was regarded by custom as continuing in the employment of the Company."
He concluded that he had sufficient continuity of employment in order to be qualified to make an unfair dismissal claim.**The Course of the Hearing**
- This was a one day case and, therefore, it is possible that not much evidence was heard; but plainly that was a matter in the hands of the parties and it must be presumed that they brought to the Tribunal as much evidence as they wanted to be heard on the points. It is true, as is set out in the Appellant's skeleton, that this case is an example of the difficulties that can arise when the parties run short of time and are constrained by circumstances to deal with the case by way of written submissions, and the remarks made by the Court of Appeal in [Pimlico Plumbers Ltd v Smith ]() EWCA Civ 51 no doubt can apply to this case. It should be remembered, of course, as, indeed, Mr Tatton-Brown does in the skeleton argument, that the remarks made by the Court of Appeal in Pimlico post-dated the hearing of the instant case. So, EJ Reed cannot be criticised for adopting a course that no doubt all the parties were content with and which, whilst eliminating the advantage of oral debate, was thought of as an expedient way of dealing with the matter.
- Mr Tatton-Brown submitted that in this case the Employment Tribunal had failed to have in mind that the starting point for any analysis of this kind should be page 515 of the judgment of MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance  2 QB 497. At page 515, starting at side letter C and going down to D, is a summary of the conditions necessary for a contract of employment to exist. The second of those relates to control by what, in the language of those days, although it might be regarded as old fashioned by then, was a master's control of the servant's performance. The third is that terms of the relevant agreement must be consistent with it being a contract of service.
- The Supreme Court in Autoclenz Ltd v Belcher  UKSC 41,  ICR 1157 accepted at paragraph 18 of the judgment of the court given by Lord Clarke JSC that (as had been recognised by Smith LJ in the Court of Appeal) the classic description of a contract of employment is to be found at page 515 of the judgment of MacKenna J in the Ready Mix case. At paragraph 90 Lord Clarke goes on to deal with other propositions, which he says are not contentious, such as an irreducible minimum of mutual obligations and whether or not there is a right of the right of substitution, and he refers to another case relied upon by Mr Tatton-Brown, namely Express and Echo Publications Ltd v Tanton  IRLR 367.
- Mr Tatton-Brown particularly emphasised the passage at paragraphs 21 to 23 in the judgment of Peter Gibson LJ where he sets out three steps that an Employment Tribunal should take. Firstly, the Tribunal should establish what the terms of the agreement are; secondly, it should consider whether any of them are inherently inconsistent with the existence of a contract of employment; and, thirdly, if there are terms inherently inconsistent then the Tribunal should go on to decide whether the contract is a contract of service or a contract for services. That third question is, said Peter Gibson LJ, a mixed question of law and fact. Those three steps, submitted Mr Tatton-Brown, essentially create a template as to how the matter should be approached.
- It should also be mentioned, going back to the judgment of MacKenna J, when dealing with the issue of control as he does at the foot of page 515, that he said this at side letter A on page 516:
"To find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matter one may look no further. …"
- What had gone wrong in this case, submitted Mr Tatton-Brown, was that EJ Reed had failed to look carefully enough at his own findings and so had failed to recognise that the "contract for services" here was inherently inconsistent with a contract of employment of any kind, whether overarching or, as he found, one apposite to individual tasks. In other words, he should have stopped at step two as identified by Peter Gibson LJ in Tanton.
- For example, one significant oversight was to fail to recognise the absolute inconsistency of the terms of clause 1.4 of the agreement (see page 69 of the appeal bundle) which provides that the agreement could be "transferred, sub-contracted, assigned or made over to a third party" with a contract of employment. Although included in the bundle, for reasons of economy, Mr Tatton-Brown did not feel it necessary to spend much time on the seminal decision of the House of Lords in Nokes v Doncaster Amalgamated Collieries Ltd  AC 1014. The proposition is so well-known as to be trite; a contract of employment cannot be transferred without the contracting party's consent. Yet here is a clause providing for transfer.
- This was but one example of EJ Reed failing to recognise the fact that the agreement was, in the words of Peter Gibson LJ, inherently inconsistent with a contract of service. That issue cannot be decided by a balancing exercise, which is the way in which EJ Reed characterised it. It was clearly an error of approach on his part to take any other course. Indeed, it was abundantly clear, submitted Mr Tatton-Brown, taking account of the terms of the agreement, that it was inherently inconsistent with a contract of employment. So if I accepted the submission that EJ Reed had really started from the wrong point of embarkation, then this was a case where the answer was obvious and notwithstanding the strictures of the Court of Appeal in [Jafri v Lincoln College ]() ICR 920, I should interfere and substitute my own conclusions. This was an error of law so stark that it would justify the exceptional course of this Tribunal interfering and reaching the opposite conclusion.
- Alternatively, Mr Tatton-Brown argued that if the issue was one of perversity, because, whilst matters of construction may be matters of law, they are set in a factual matrix and I concluded this was a decision that was essentially more a factual decision than a decision taken as a result of documentary construction, then Mr Tatton-Brown did not shrink from the proposition that the decision taken by EJ Reed was one which no reasonable Tribunal, properly directing itself on the evidential material, could have arrived at. In other words, in common parlance it was a perverse decision.
- Mr MacPhail submitted the contrary. This was essentially a question of fact and the Employment Tribunal could not be criticised so long as the findings that it had made were within an area within which reasonable disagreement might be possible. In short, this was a factual matter and the high threshold necessary in order for perversity to be established could not be surmounted in this case.
- On the question of continuity, Mr Tatton-Brown submitted that this was a case in which the Employment Tribunal had rejected "arrangement" as being apposite and had reached a conclusion based on the alternative concept of "custom" in section 212(3)(c). Not only had this been arrived at without there being any evidence to support it, but had been arrived at on a basis contrary to any understanding of the word "custom" that ordinary use of English would give rise to. It had no element either of a practice that applied generally outside the scope of this individual contract or of a repeated pattern of behaviour even within the individual contractual situation.
- Mr MacPhail submitted that this was a case in which the Employment Tribunal had been entitled to use the expression "on the books" as a convenient shorthand covering both the concept of arrangement and custom. "On the books" simply related to being regarded as continuing in the employment and it was perfectly sensible in the context of the factual matrix for EJ Reed to regard the Respondent in this case as remaining on the books in periods between the assignments.
- Cases of this kind are ever-present in this Tribunal nowadays. Whether it is wise to deal with them by one day Preliminary Hearings is, as I have said earlier in this Judgment, essentially a matter for the parties. If they accept such a course then they may well be at risk of having a short consideration of issues that might be somewhat complex and at risk of an analysis that is relatively brief. The Employment Judge's Reasons in this case run to some six pages and some thirty nine paragraphs. Nevertheless, whatever mode of resolving these issues the parties adopt, the question that arises is whether the Employment Judge has got it right as a matter of law.
- On the question of status I have come to the conclusion that whilst it can be said that EJ Reed plainly engaged in a balancing exercise and plainly took account of a number of factors, although this is not an appeal on inadequacy of reasons, I have found some of his reasoning rather difficult to follow. I accept Mr Tatton-Brown's submission that it would be better if the Employment Tribunal adopted a slightly more formal approach along the lines of considering the issues as set out by MacKenna J at page 515C to 515D in the Ready Mixed Concrete case and some of the approach suggested by Peter Gibson LJ at side numbers 21 to 23 of the Tanton report. I do not, however, think that on the current state of the law it be regarded as any longer correct that provided one can find expressions as to control in the contract (see page 516A of the Ready Mixed Concrete case) or if there are concepts inconsistent with a contract of service in the written agreement then one should look no further.
- The approach in my judgment is a more nuanced one nowadays. I bear in mind what my colleague, HHJ David Richardson, said in [Drake v Ipsos MORI UK Ltd ]() IRLR 973. He approached that case, having considered the Supreme Court's judgment in Autoclenz v Belcher and a list of other authorities, some of which I have been referred to and some of which I have not been referred to. He certainly suggested that one should pay attention to what MacKenna J had to say in Ready Mixed Concrete v Minister of Pensions and at paragraph 24 of the judgment of his division of this Tribunal he referred to those precepts as being the governing principles, something which he regarded as confirmed in Autoclenz v Belcher. But I would add a note of caution. It seems to me that whilst Ready Mixed Concrete and Tanton lay down important matters to be considered, Autoclenz v Belcher means they are not the whole picture. In Autoclenz v Belcher the inequality of the bargaining power of the parties was very much at the forefront of the judgment of the Supreme Court, and a great deal was said about how, in relation to contracts of employment, one might need to take a rather broader view of the approach to contractual construction than might be the case in the areas of some other contracts.
- To that extent I accept Mr MacPhail's submission that the court should now adopt a multifactorial test or approach. But I have this reservation. By itself, to say that something is multifactorial is somewhat too open-ended. The right approach, in my judgment, is to start with the contract, analyse it and consider whether it has been freely entered into. On one view EJ Reed did do that, and having looked at the contractual provisions, it seems to me that it cannot have been wrong for him to go on and examine the reality of the situation and how the contract worked in practice. That is an essential step in any analysis as to whether a contract is a contract of employment or not. But the overarching question is whether the written agreement (or agreements) is the real and true agreement between the parties or whether the parties have reached some other agreement.
- What Peter Gibson LJ said in Tanton, in my judgment, is not to be taken to be an indication that if what is expressed on paper is inherently inconsistent with a contract of employment, then one need look no further. The Tanton issue was after all a question of substitution. I accept, as was pointed out both by Peter Gibson LJ in Tanton and by Lord Clarke at paragraph 19 of Autoclenz v Belcher, the fact that the term is not enforced does not mean that the term can be disregarded or is not part of the agreement. But the significance of a substitution clause is very likely to be effected by an analysis of the evidence in the case as to whether or not there has been substitution in fact and how realistic the provision of a substitute might be. Thus it seems to me that the factual matrix needs to be explored with considerable care not only on substitution and but also on other relevant issues.
- But I accept Mr Tatton-Brown's criticism of EJ Reed's Reasons that he has not explored or explained the extent to which his findings on integration and control negate the inherently inconsistent terms of the contract for services and lead to the conclusion at paragraph 33 of the Reasons that all of those terms can be put to one side and that the Respondent was an employee on the occasion of the carrying out of each assignment.
- It does not seem to me, however, that the evidential picture is so clear that I can decide the issue on the existing material. I bear in mind what Laws LJ said at paragraph 21 of his judgment in the Court of Appeal in Jafri v Lincoln College. Consequently it seems to me that the matter must go back to the Employment Tribunal for EJ Reed to reconsider what his findings are in relation to control and integration and how it is that those findings can nullify the terms of the contract so that on the question of status, in my judgment, the matter ought to go back for a complete rehearing on that issue.
- Mr Tatton-Brown submitted that it should go to a differently constituted Employment Tribunal and he referred me to the way in which HHJ Richardson had dealt with the remission in the Ipsos MORI case. In dealing with the remission of that case he referred to the familiar authority of Sinclair Roche & Temperley v Heard  IRLR 763 where at paragraph 36 the then President, Burton J, set out all the matters that should be taken into account in deciding on the terms of a remission.
- I do not accept that the fact that this was only a one day case means that the process of another Judge having to pick up the papers and familiarise himself or herself with the case means that remission to a differently constituted might mean that any duplication of work would not be a significant factor. It seems to me Mr Tatton-Brown is not correct to say that this is a short case and, therefore, anybody else can hear it. This Judge has looked at it once, the criticism that is made of his Judgment is that he has not adopted entirely the correct approach and I have accepted that criticism. He ought to have analysed the matter in terms of the contract and then explained why the factual material meant that the parties had, in fact, reached a different agreement. He is best placed to do that and his looking at it again eliminates the need for somebody else to tackle it from scratch. Nor do I think there is anything in the second bite of the cherry argument. EJ Reed is an experienced Judge who can be expected to deal with the matter with complete impartiality.
- As to the continuity point, I accept that "custom" was not a matter dealt with evidentially. Again, the issue really is whether, if I take the view that there was no exploration of the concept, can I decide the issue myself? I am somewhat troubled by paragraph 36 of the Judgment. It seems to me that in paragraph 36 EJ Reed is dealing very specifically with a submission about an arrangement relating to the rejection of jobs. Whether that means that he eliminated the concept of an "arrangement" altogether from the rest of his considerations is not absolutely clear to me. He certainly decided this matter by reference to the noun "custom", and there is no cross-appeal against the finding that there was no "arrangement". Whether in fact he meant to decide that there was no arrangement generally is probably a matter not open to me, although it does cause me an element of disquiet.
- The learned Judge must, in my view, decide what he regarded as being the custom and explain how that was supported by the factual material. I regard it as only fair to the parties for there to be an opportunity, if they wish to do so, to call further evidence on this point and for the Judge to decide the point afresh after he has heard evidence, if the parties wish to call that evidence, about what usually happened in this case and other cases.
- Accordingly, the appeal will be allowed on both points and the matter remitted in the terms that I have indicated.
Published: 09/06/2017 11:13