Case Name:

REDROW HOMES (YORKSHIRE) LTD v (1) CB BUCKBOROUGH (2) P SEWELL (2008) (full text available here)

Court:

EAT (Judge Burke QC, DJ Jenkins, M McArthur) 10/10/2008

Subject:

EMPLOYMENT - CONTRACTS

CELEX:

CONSTRUCTION INDUSTRY : CONTRACT TERMS : EMPLOYMENT STATUS : WORKERS : WORKING TIME : EFFECT OF PROVISION PERMITTING BRICKLAYERS TO PROVIDE ALTERNATIVE LABOUR : reg.2(1) WORKING TIME REGULATIONS 1998

Summary:

A provision in a contract for bricklayers to work for a builder, which stated that the bricklayers were not required to personally perform the work but were required to provide other labour if necessary, was a sham, and the bricklayers were workers within the meaning of the Working Time Regulations 1998 reg.2(1). Case law did not require a joint intention of the parties to deceive a third party for a sham to be found.

The appellant builder (R) appealed against a decision that the respondent bricklayers (B) were workers within the meaning of the Working Time Regulations 1998 reg.2(1) and were therefore entitled to compensation in respect of accrued holiday entitlement.

B had worked as bricklayers for R under the terms of a document which stated that they were self-employed and that they were not required to personally perform the work, but would be obliged to provide other labour if they did not do it themselves.

The employment tribunal found that the provision allowing B to provide other labour was a sham designed to give the appearance that B were not workers within the meaning of the Regulations.

The tribunal held, alternatively, that the contract contained an obligation of personal service which brought B within the definition of worker.

R argued that (1) the tribunal's conclusion that neither side expected that B would refuse work offered was insufficient to justify the finding of a sham.

Snook v London and West Riding Investments Ltd (1967) 2 QB 786 CA (Civ Div) and Consistent Group Ltd v Kalwak (2008) EWCA Civ 430, (2008) IRLR 505 required the parties to have jointly intended to deceive a third party or court for a sham to be found; (2) the contract had permitted B to sub-contract the bricklaying work, and the tribunal had erred in holding that the dominant purpose of the contract was the provision of work or services, rather than bricklaying.

HELD: (1) The tribunal had been entitled to conclude that the substitution provision was a sham.

The authorities showed that there were two contexts in which a contractual provision could legitimately be described as a sham: one in which the documents the parties created appeared to give rise to rights and obligations which neither party intended to exist in order to deceive third parties or the court, as in Snook, and another in which neither party intended the relevant provision to be effective.

Consistent Group did not narrow the circumstances in which a contractual provision might be found to be a sham: the ratio of that judgment had been that there had been insufficient reasons to support the conclusion that there had been a sham, rather than a narrowing of the sham doctrine.

It had therefore been open to the tribunal to ask whether the relevant provision provided for unrealistic possibilities or reflected what might realistically be expected to happen: that was a question of fact for the tribunal, Snook, Consistent Group, Redrow Homes (Yorkshire) Ltd v Wright (2004) EWCA Civ 469, (2004) 3 All ER 98, Express & Echo Publications Ltd v Tanton (1999) ICR 693 CA (Civ Div) and Street v Mountford (1985) AC 809 HL considered.

(2) The contract had not merely entitled B to provide a substitute to carry out bricklaying in their place; it expressly obliged B to provide such labour as was necessary to carry out the work, either by doing the work themselves or by providing other labour.

The definition of worker in reg.2(1) of the Regulations included an obligation to perform "work or services": although the obligation to provide labour was not an obligation personally to perform work, it was an obligation personally to perform a service for R.

Therefore, the dominant purpose of the contract was not bricklaying, but the provision of work or services to ensure that bricklaying was achieved, Gunning v Mirror Group Newspapers Ltd (1986) 1 WLR 546 CA (Civ Div) applied.

Appeal dismissed

Appearances:

Counsel:

For the appellant: David Reade QC

For the respondent: John Samson

Solicitors:

For the appellant: In-house solicitor

For the respondent: OH Parsons & Partners

References:

LTL 16/10/2008 (Unreported elsewhere)

Judgement:

Official - 33 pages

Document No.

AC0118604