EMPLOYMENT APPEAL TRIBUNAL

 

COSTAIN BUILDING  CIVILENGINEERING LTD. v. SMITH and Another

 

1999 May 25;

 

Nov. 29

 

Morison J., Mrs. R. Chapman andMr. A. C. Blyghton

 

Employment - Contract of employment - Agency worker – Engineer supplied by agency working on temporary basis for building contractors - Whether employed or self-employed - Appointment by union as health and safety representative - Whether entitled to protection from dismissal as representative - Health and Safety at Work etc. Act 1974 (c. 37), s. 53(1)[1] - Employment Rights Act 1996 (c. 18), s. 100(1)(b)[2] - Safety Representatives and Safety Committees Regulations 1977 (S.I. 1977 No. 500), regs. 2(1), 3(1)3[3]

 

The applicant, an engineer, was registered with an employment agency which supplied labour to building contractors. In June 1998 the applicant began working for the appellant contractors, pursuant to a contract for the provision of temporary staff between the agency and the contractors and an oral agreement between himself and the agency. He was subsequently appointed by his union as a safety representative at the site, but, following a number of reports by the applicant criticizing the contractors' management of the site, he was dismissed by the agency on the instructions of the contractors. On his complaint to an employment tribunal that he had been unfairly dismissed for performing the functions of a health and safety  representative, contrary to section 100(1)(b) of the Employment Rights Act 1996, the tribunal considered as a preliminary issue whether the applicant was self-employed or an employee. It found that, although there were a number of factors which were inconsistent with a contract of service between the applicant and the contractors, including the facts that he submitted invoices for payment, was paid gross with no deduction for tax and insurance, had not been issued with a grievance procedure and did not receive sick or holiday pay and there was no provision for notice to terminate his work at the site, the applicant's apparent position of self-employment was a device used by the contractors to avoid their statutory duties and the reality was that the applicant was an employee of the contractors.

 

On an appeal by the contractors: -

 

Held, allowing the appeal, (1) that the only contracts governing the responsibilities of the parties were between the agency and the contractors and between the agency and the applicant, and there was no contract of employment between the applicant and the contractors; and that, by determining that the applicant's position of self-employment was a device used by the contractors to avoid their statutory duties, the tribunal had lost sight of the facts that clearly indicated that the applicant could not be an employee of the contractors, and the tribunal's finding that the applicant was an employee of the contractors was perverse (post, pp. 218H-219B).

 

(2) That, since under regulation 3(1) of the Safety Representatives and Safety Committees Regulations 1977 a recognised trade union might appoint safety representatives from amongst "the employees" and "employee" was defined, in regulation 2 by reference to section 53(1) of the Health and Safety at Work etc. Act 1974, as an individual who worked under a contract of employment, a safety representative had to be an existing employee; that the appointment of the applicant as a safety representative did not mean that he had been elevated to the status of an employee; and that the union's appointment of the applicant as a safety representative was ineffective in law, as at the time he was not an employee of the contractors, and, accordingly, he did not come within the protection afforded by section 100 of the Employment Rights Act 1996 (post, pp. 220A-B).

 

No cases are referred to in the judgment and none were cited in argument.

 

Interlocutory appeal from an employment tribunal sitting at Stratford.

 

By an originating application dated 27 July 1998, the applicant, David Smith, made a claim of unfair dismissal against the first respondents, Costain Building  Civil Engineering Ltd. ("the contractors"), and by subsequent amendment Chanton Group Plc., an employment agency, were joined as second respondents. On the applicant's application for interim relief pursuant to section 128 of the Employment Rights Act 1996, the tribunal found that the applicant was an employee of the contractors and adjourned the hearing of the substantive complaint. By a notice of appeal dated 18 December 1998, the contractors appealed on the  ground that the tribunal had misdirected itself in law in categorising the relationship between the applicant and themselves as one of employment.

 

The facts are stated in the judgment.

 

Ingrid Simler for the contractors.

 

Andrew Hogarth for the applicant.

 

Cur. adv. vult.

 

29 November. The following judgment of the appeal tribunal was handed down.

 

Morison J. This appeal raises important questions as to whether an agency worker in the construction industry was an employee of the building contractors and whether he was eligible to be a health and safety representative.

 

1. The appellant contractors carry out building and civil engineering services. Mr. Smith, the applicant, is an experienced engineer. For the whole of his career in the construction industry he was what he described as "nominally self-employed." He was on the books of a number of agencies who supplied labour to building contractors. One of those agencies was Chanton Group Plc. ("the agency"), the second respondents, with whom the applicant had been registered for about 10 years.

 

2. On 12 June 1998 the agency telephoned the applicant to say that the contractors required a site engineer to work at the site of a new Tesco store being built at Goodmayes, Essex.

 

3. The relationship between the agency and the applicant was not governed by a written agreement, but there was an oral agreement made some time prior to the applicant's engagement with the contractors. It was agreed that the agency would pay the applicant ú13 per hour, and that this money would be paid by the contractors to the agency and from the agency on to the applicant.

 

4. On 15 June the applicant attended at the Goodmayes site. Mr. Kraus, the contractors' project manager, explained the site hours but there was no discussion as to employment status. There was no written agreement with the contractors and the applicant did not receive any disciplinary or grievance procedure documentation, he did not expect to receive sick pay or holiday pay and there was no provision for notice to terminate his work at the site.

 

5. The relationship between the agency and the contractors was governed by a written contract for the provision of temporary staff including the applicant. The contract agreed, inter alia, that the contractors would pay the agency ú16 per hour (as varied) in respect of the services provided by the applicant and that the applicant would come under the strict supervision of the contractors.

 

6. After raising a number of health and safety issues, the applicant contacted his trade union representative and after discussion the applicant was appointed as the UCATT safety representative on the site. The contractors were informed of the appointment on 10 July 1998. The applicant completed a number of safety reports which were critical of the contractors' management of the site.

 

7. On 24 July the applicant was informed by the agency that the contractors had indicated that they did not want the applicant to work on the site anymore. By an originating application dated 27 July 1998, the applicant claimed that he had been unfairly dismissed contrary to that being a representative of workers on matters of health and safety at work, by reason of being acknowledged as such by the employer, he performed functions as such a representative.

 

8. This appeal relates to an employment tribunal decision promulgated on 24 November 1998, after a hearing on 16 and 17 September 1998, which was for interim relief pending determination of the application of the complaint of unfair dismissal. The matter for determination was whether or not the applicant was an employee, and, if he was, to determine the identity of his employer.

 

9. Having considered a number of authorities and having considered the control, organisational, economic reality and multiple tests for determining employment status, the tribunal came to the following conclusion:

 

"Weighing up all the facts that we have found and having considered the submissions made to us we find the applicant was not a self-employed person but was an employee of the contractors at the material times."

 

10. The tribunal did identify six indicia which were inconsistent with a contract of service between the applicant and the contractors. Those elements were: the method of payment; the applicant was treated as self-employed by the Inland Revenue; his relationship with the contractors was not permanent; the applicant was not issued with a disciplinary code, received no holiday pay and  had no pension and there was no provision for notice; he delivered invoices for payment to the agency; and his dismissal was brought about by the contractors informing the agency that they would not require the applicant's service.

 

11. The tribunal addressed each concern and dismissed them. In relation to the facts that the applicant was paid tax-free by the agency and that the dismissal was brought about by the agency, the tribunal considered these to be artificial devices "designed to foster the image that the applicant was not an employee of the contractors." The method of payment was dismissed as "mere mechanics" set up by the contractors to escape from the statutory liabilities which would result if the applicant was an employee.

 

12. The tribunal concluded by indicating that it considered it likely that the applicant would succeed in showing that the reason for his dismissal was a reason identified in section 100(1)(b) of the Employment Rights Act 1996.

 

13. The contractors were ably represented by Ms Simler, for whose cogent arguments and skeleton we were grateful. In summary she argued that the tribunal had fallen into a fundamental error of law in its consideration of the relationship between the applicant and the contractors. She argued that, on the facts, particularly those identified by the tribunal as inconsistent with a contract of service, the applicant could not have been employed by the contractors. The reason for the tribunal's error was its misplaced concern that the contractors were attempting to evade their responsibility by treating the applicant as self-employed.

 

14. Mr. Hogarth, whom we must also thank for his helpful arguments, submitted that the tribunal decision was correct and could not be interfered with. He argued that the tribunal correctly directed itself on the case law on employment status and identified the applicant as an employee of the contractors on sufficient facts. There were almost no indicia that the applicant was anything but an employee of the contractors; in any event, the Employment Rights Act 1996 should be applied purposively in order to grant protection to agency workers, who can be put in an invidious position without the protection derived under that Act.

 

15. Defining the status of agency workers, who may be employees or independent contractors, can be a particularly difficult task. Having carefully considered the parties' arguments in this case, we have no doubt that the tribunal did err in law in finding that the applicant was an employee of the contractors. There were two relevant contracts which governed the responsibilities of the parties to this case: there was a contract between the agency and the contractors, and a contract between the agency and the applicant. There was not, however, any contract of employment between the contractors and the applicant.

 

16. We are of the opinion that the essential facts in this case are clear: the applicant chose to operate on a self-employed agent basis, as he was paid tax free and had to submit invoices to the agency, he did not receive holiday or sick pay, had no notice provisions and was provided with no other benefits associated with being an employee. By determining that the applicant's position of self-employment was a "device" used by the contractors to avoid their statutory duties, we consider that the tribunal lost sight of the facts that clearly indicated that the applicant could not be an employee of the contractors.

 

17. Proper consideration of the tests and criteria of service also indicate that the applicant was not an employee of the contractors. They sought a site engineer for a temporary period and they went to the agency to supply them with a worker. They did not identify the applicant nor did they specifically request him. Indeed, the identity of the required site engineer was immaterial, all they required was a worker to fill a temporary vacancy for four weeks. Although the tribunal was right to state that the applicant was required to work site hours and there was an obligation to perform the work, either side could terminate the arrangement without notice without further obligations and the contractors had a "supervisory" role only, which is inconsistent with the applicant working as an employee. We also accept Ms Simler's argument that the fact that termination was effected by the agency cannot be dismissed as "an artificial device" in the light of the facts and that the tribunal's concern about "devices" clouded its interpretation of the facts.

 

18. On the basis of the facts as presented, we have been persuaded that the tribunal's finding that the applicant was an employee of the contractors was perverse. It was, perhaps, the applicant's position as a union safety representative that persuaded the tribunal that the contractors were seeking to evade their responsibility for unfair dismissal. Accordingly, we will turn our attention to the claim for unfair dismissal and the applicant's position as a union safety representative.

 

19. The position of health and safety representatives is governed by the Safety Representatives and Safety Committees Regulations 1977 which were made under the Health and Safety at Work etc. Act 1974. The appointment of safety representatives is contained in regulation 3(1):

 

"For the purposes of section 2(4) of the [Health and Safety at Work etc. Act 1974], a recognised trade union may appoint safety representatives from amongst the employees in all cases where one or more employees are employed by an employer by whom it is recognised . . ."

 

The definition of "employee" is contained in regulation 2: "'employee' has the meaning assigned by section 53(1) of the 1974 Act and 'employer' shall be construed accordingly . . ."

 

20. The definition in section 53(1) of the Act of 1974 is that an employee "is an individual who works under a contract of employment," which is defined as "a contract of employment or apprenticeship . . ."

 

21. Therefore, to come within the protection afforded by section 100 of the Employment Rights Act 1996, a safety representative has to be an employee.

 

22. The question that arises is whether the appointment of a health and safety representative can be used by the union as a device so that the worker is accorded the status of an employee and consequently enjoys the protection under section 100 of the Act of 1996. Did the appointment of the applicant as a safety representative mean that he was an employee or that he was elevated to the status of an employee? The answer must be "No." A health and safety representative must be an individual who is already an employee. Independent contractors cannot be appointed under the auspices of the Safety Representatives and Safety Committees Regulations 1977.

 

23. It would be wrong of a tribunal to consider that, because an applicant was a union safety representative, he must also automatically be an employee. That would be to approach the matter in the wrong way. The applicant's status must be established first and then the position with regard to the union can be considered.

 

24. Accordingly, we find that UCATT's appointment of the applicant as a safety representative was ineffective in law, as at the time of the purported appointment he was not an employee of the contractors. Moreover, the purported appointment did not alter the applicant's status as he did not become an employee of the contractors on the basis that he was a union representative. Whether or not the applicant was employed by anyone other than the contractors is not a matter before us for determination and will have to be considered before an employment tribunal.

 

25. We therefore allow the contractors' appeal and dismiss the applicant's claim of unfair dismissal.

 

Appeal dismissed.

 

Solicitors: Solicitor, Costain Group Plc.; O. H. Parsons  Partners.

 

J. W.