Nethermere (St. Neots) Ltd v Gardiner

JurisdictionEngland & Wales
JudgeLORD JUSTICE STEPHENSON,LORD JUSTICE KERR,LORD JUSTICE DILLON
Judgment Date03 May 1984
Judgment citation (vLex)[1984] EWCA Civ J0503-2
Docket Number84/0188
CourtCourt of Appeal (Civil Division)
Date03 May 1984

In The Matter of An Appeal Under S.36(4) (A) of The

Employment Protection (Consolidation) Act 1978 From

The Reserved Judgment of The Employment Appeal

Tribunal Given on The 12th Day of November 1982

Between:
Nethermere (St. Neots) Limited
Appellants (Appellants)
and
Maria Taverna

and

Linda Ann Gardiner
Respondents (Respondents)
Before:

Lord Justice Stephenson

Lord Justice Kerr

and

Lord Justice Dillon

84/0188

Appeal No. EAT 32/82

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT

APPEAL TRIBUNAL

Royal Courts of Justice

MR. E. TABACHNIK QC and MR. C. JEANS (instructed by Messrs. Polden Bishop & Gale, Solicitors, London W1M 2BP) appeared on behalf of the Appellant (Appellant)

MR. G. JONES (instructed by Messrs. Wilkinson & Butler, Solicitors, St. Neots PE19 1BH) appeared on behalf of the Respondents (Respondents)

LORD JUSTICE STEPHENSON
1

This appeal arises from the decision of an industrial tribunal in November 1981 unanimously deciding a preliminary issue in favour of the applicants, Mrs. Taverna and Mrs. Gardiner, that they were both employees of the respondent company. The Employment Appeal Tribunal—by a majority—upheld that decision in November 1982 and gave leave to appeal: 1983 Industrial Cases Reports 319. The appeal tribunal thought the company's appeal should come on for hearing in this court at the same time as the appeal in the case of O'Kelly & Others v. Trusthouse Forte plc, which was decided on the same preliminary issue but quite different facts and allowed by a majority decision of this court in July last: (1984) 1 Queen's Bench 90. Would that this appeal had come on with that. Unhappily it did not and we have to decide, in the light of this court's decision in O'Kelly's case, the difficult question whether, in agreement with the minority opinion of Mr. Justice Tudor Evans in the appeal tribunal but contrary to the opinion of all the other members of both tribunals, the preliminary issue should have been decided in favour of the company, and whether we can and should reverse the industrial tribunal's determination of the preliminary issue and hold that the applicants were not employees of the company.

2

S.54(l) of the Employment Protection (Consolidation) Act 1978 provides:

"In every employment to which this section applies every employee shall have the right not to be unfairly dismissed by his employer".

3

S.153(l) provides that "employment" means "employment under a contract of employment"; "employee" means "an individual who has entered into or works under a contract of employment" and "contract of employment" means "a contract of service or apprenticeship, whether express or implied, and (if not express) whether it is oral or in writing". It is hardly necessary to add that "employer" means "the person by whom the employee is (or….. was) employed".

4

Therefore to be an employee with a right not to be unfairly dismissed you must be employed under a contract of service or apprenticeship. These applicants complained to the industrial tribunal under s.67 that they had been unfairly dismissed by the company. The company's answer was in one case that "the applicant was not an employee", in the other that she "was not an employee but was self-employed and therefore was not capable of being dismissed". Hence the preliminary issue. If the applicants were not employed under a contract of service—there is no question of apprenticeship here—the industrial tribunal would have no jurisdiction to entertain their complaints of unfair dismissal. If the applicants were employed under a contract for services the industrial tribunal would have no jurisdiction. But it should be pointed out that the only question of jurisdiction which the industrial tribunal had to determine was whether they were employed under a contract of service; unless they were it did not matter whether they were employed under a contract for services, or self-employed (if that is different) or employed under any other contract (if that is possible) or under no contract. They had no right to complain of unfair dismissal unless the industrial tribunal was satisfied that they were employed under a contract of service. This is important, because I think that the formulation of the preliminary issue as a choice between alternatives led the industrial tribunal into error, at least in its approach to deciding that the applicants were employed under a contract of service. It may also have led the appeal tribunal into a similar error; but that tribunal's approach to its decision has been condemned by the majority in O'Kelly's, case for a more radical error which I shall have to consider later.

5

First I must state shortly the facts, and I gratefully take them from the judgment of the appeal tribunal given by Mr. Justice Tudor Evans:

"The Appellants manufacture boys' trousers in a factory where they employ about 70 employees from whose wages they deduct tax and national insurance contributions. The Tribunal found that the Appellants also made use of the services of a number of home workers from whose remuneration it was not the practice to make such deductions.

"Mrs. Taverna had worked in the factory until she left to have a baby in 1977. Before leaving, she arranged with the factory manager that, when her child was old enough, she would do home work for the Appellants. She started in January or February 1978. Her work consisted mainly of putting pockets into trousers for which she used a machine provided by the Appellants. The Tribunal accepted her evidence that she worked for about 4 or 5 hours a day and put on 100 pockets. Later, the work changed and she put artificial flaps on to trousers. She then worked for about 6 or 7 hours a day. Mrs. Taverna had no fixed hours for doing her work. In the financial year 1979/1980 she did no work for 12 weeks. In the year 1980/1981 she did not work for 9 weeks. The arrangement came to an end in July 1981 in circumstances which we shall describe later. During the shortened period of the financial year 1981/1982 she worked every week. The Tribunal found that the arrangement between the Appellants and Mrs. Taverna was such that she was paid according to the number of garments she did. She was paid weekly and her remuneration was determined from time sheets sent to her by the Respondents which she filled in weekly. The garments were delivered to her daily and sometimes twice a day. According to paragraph 10 of the Tribunal's decision:

"When cross-examined by Mrs. Taverna, Mr. Weisfeld (the Appellants' Managing Director) agreed that he had never told them that they were self-employed, but he had told them that he was not deducting any tax or national insurance. He agreed that the work which the home worker was doing was similar to what was being done in the factory and they were generally paid the same rate'.

"Mrs. Gardiner had also worked in the factory as an employee. She left in 1976. In September 1979, she was asked by the Appellants if she would do home work. She began about Christmas 1979. At first, she used her own machine but after a month or so the Appellants supplied a machine. In paragraph 6 of the decision, the Tribunal say that:

'In general work was delivered to her and collected twice a day or daily. She usually put 200 pockets on trousers per day which took her 5 hours. If she wanted less she would say so. She asked the van driver about tax and he told her that he did not think she was eligible (perhaps liable would have been a more appropriate word)'.

"After she had started home work at about Christmas 1979, Mrs. Gardiner worked all 15 weeks in the financial year 1979/1980. In the next financial year, she did not work for 4 weeks and in the financial year until the arrangement came to an end in July 1981 she worked all but one week".

6

In July 1981 a dispute about holiday pay led to the termination of the applicants' employment by the company.

7

The appeal tribunal called attention to the difficulty created by the industrial tribunal not having clearly set out its findings of fact, but decided that the industrial tribunal was accepting as fact the whole of paragraph 8 of its decision. That paragraph reads:

"Mr. Weisfeld in evidence has told us that he made no stipulation as to what hours they should work and no stipulation as to how many garments they should complete in any specific period. It was up to the home workers to decide how much work they did, but subject to making it worthwhile for the driver to call. He did not consider that he was under any obligation to the home workers or they to him. They could take time off as they liked and we accept that evidence".

8

After referring to further evidence by Mr. Weisfeld, includinghis agreement that the work the home workers were doing was similar to what was being done in the factory and they were generally paid the same rate, the industrial tribunal stated its conclusion thus in paragraph 11 of its decision:

"Those are the facts on which we have to determine whether or not these ladies are employees. We understand that the fundamental test laid down by the Court of Appeal in Young and Wood Ltd. v. West (1980) Industrial Relations Law Reports 201 (Court of Appeal) is whether the person who has engaged himself to perform services performed them in business on his own account. If the answer is 'Yes' then the contract is a contract for services; if the answer is 'No' then the contract is a contract of service. Quite clearly the ladies in this case were not in business on their own accounts and according to that fundamental test they are employees. It appears to us that the case is very much on all fours with ...

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