On Line Design and Engineering Ltd v Engineering Construction Industry Training Board
| Jurisdiction | England & Wales |
| Judgment Date | 22 October 2010 |
| Neutral Citation | [2010] EWHC 2776 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CO/569/2010 |
| Date | 22 October 2010 |
[2010] EWHC 2776 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Before: MR JUSTICE OUSELEY
CO/569/2010
Mr A Hogarth Qc Appeared On Behalf Of The Appellant
Mr D Martin ( Ms C Davies, at Judgment) Appeared on Behalf of the Respondent
MR JUSTICE OUSELEY: On Line Design and Engineering Limited, the appellant, operates a business with two components both in the field of engineering. It provides an engineering and design service to clients from its own premises. It also operates an employment agency, supplying designers, CAD operators, chartered and project engineers to its clients, at whose premises and under whose daily control the employees of the appellant work. The clients of the agency side of the business include the operators of large oil refineries, off-shore platforms and major gas installations.
The Engineering Construction Industry Training Board, the respondent, is a statutory charity charged with raising an annual levy for the purposes of training construction engineers. It is one of two such bodies, the other being the Construction Industry Training Board. Its levy is raised on engineering construction companies, putting it very simply, and the sum levied is calculated by reference to the total emoluments of a company's work force. But the rate of levy varies according to whether an employee is “site” or “off site”. The rate is higher for site or on site employees than it is for off site employees.
The Board raised the levy on the appellant in the sum of £138,474 for the year 2007 and £137,196 for the year 2008. It treated a substantial proportion of the appellant's employees as site employees and thus applied the higher rate to them. The appellant appealed to the Employment Tribunal under the provisions of the Levy Order raising a wide variety of issues, almost all of which are not now pursued. After a number of case management hearings, concerned amongst other matters with disclosure by the appellant of the details of the work done by its employees and where, the hearing of the appeal took place over 7 days in November 2009, following which the Employment Tribunal Chairman, Employment Judge Manley, produced a careful and thorough judgment. It held that the appellant operated a single business and was a “leviable establishment”. It held that the employees based at the appellant's own premises, carrying out design work there, attracted the lower rate of levy as off site employees but that the rest, including all the agency employees, were site employees. It reduced the levy for 2007 to £132,927 and increased the levy for 2008 to £181,675.
The appellant appeals from that decision on a point of law, directly from the Employment Tribunal to the High Court by virtue of section 11(1) of the Tribunals and Inquiries Act 1992, such an appeal not being one of those required to go via the EAT to the Court of Appeal. The appellant contends that the Employment Tribunal erred in law in concluding that its agency workers were all site employees. It had adopted an erroneous approach; it should have concluded that they were off site employees. The respondent contends that the Tribunal was correct in its approach, and in any event that the appellant had provided no evidential basis to the Employment Tribunal, as the Employment Tribunal had found, on which it could properly conclude that the agency employees were indeed off site.
The statutory provisions
The Industrial Training Act 1982 set up the Industry Training Board and created the power, by Levy Order, for the Board to raise a levy, and provided for appeal against the levy to the Employment Tribunal. The basis for the imposition of the levy and for its rate is contained in the then annual Levy Order. The Industrial Training Levy (Engineering Construction Industrial Training Board) Order 2007, SI609, is in the same terms as the 2008 Order, SI535, so far as material. There is a change in the wording of the 2009 Order, SI548, to which I shall come.
A levy can only be imposed on a “leviable establishment”, which, by Article 3(1)(a) means:
“An establishment engaged during the necessary period wholly or mainly in the Engineering Construction Industry …”.
It is accepted that the Employment Tribunal was entitled to conclude, as it did, that the appellant was a leviable establishment and a single leviable establishment. I shall return to the meaning of “Employment Construction Industry” in another context.
The levy has to be calculated in accordance with Article 4. Article 4.3 provides that the levy is 1.5 per cent of the total emoluments of a site employee and 0.18 per cent of the total emoluments of off site employees of the leviable establishment. Clearly, potentially significant sums may turn on the numbers in each category.
Site employees are defined as follows:
“‘Site’ employee means an employee (…) the activities of whose employment take place wholly or mainly at the site where activities falling under paragraph 1(a) of schedule 1 to the Industrial Training Order are carried on”.
An off site employee is an employee “other than a site employee”.
Paragraph 1(a) of schedule 1 to the Industrial Training (Engineering Construction Board) Order 1991 SI3005 provides, as far as material:
“1. Subject to the provisions of this Schedule, the activities of the engineering construction industry are the following activities …
(a)the activities of—
(i)fabrication, assembly, construction, erection, installation, fitting, testing, inspection, maintenance, repair, replacement or dismantling on site of any chemical, electrical or mechanical apparatus, machinery or plant of a chemical works, gas making or gas treatment works, nuclear or thermal power station, nuclear waste reprocessing site, hydro-electric station, oil refinery or oil terminal or other apparatus, machinery or plant concerned with exploration for or exploitation of oil or gas, metal smelter, steel mill, paper mill or brewery, the processing and production of human and animal food, pharmaceutical, cosmetic and petrochemical products, cement, concrete bricks, distilling alcohol or other products, glass, paper and sewerage or any other installation involving processing of any product;
(ii)planning, designing, commissioning or procuring by way of contract or otherwise of any apparatus, machinery or plant mentioned in head (i) above carried on in association with any activity mentioned in that head or in association with any project for such an activity;
(iii)supervision of the fabrication, assembly, construction, erection, installation, fitting, testing, inspection, maintenance, repair, replacement or dismantling of any apparatus, machinery or plant mentioned in head (i) above when carried out on site;
(iv)the erection and/or dismantling of the main framework of buildings, being framework of steel or other metallic construction, or of other structures consisting wholly or mainly of steel and/or other metal, not being either structures forming part of a building, electric lines or structures designed for the support thereof, walls, fencing, hoardings, exhibition stands, scaffolding or contractors’ plant; …”
The order also contains provisions demarcating the line between engineering construction and non-engineering construction, which has its own training board.
I make two observations at this stage. First, on the face of the Order, the fact that an employee is off site and levied at a lower rate, unless he falls into the site category and is levied therefore at a higher rate, would require the Training Board to show why an employee fell into the category on which the higher rate would be levied. However, it is not in dispute that the employer alone knows or has the ready means of ascertaining the nature and location of the employee's work and it is for the employer to provide the evidence to justify not classifying an employee as a site employee.
Second, one possible reading of the definition of site employee would mean that someone who carried on paragraph 1(a)(ii) work in planning and design, in an office block remote from any place where physical engineering construction work was actually carried on, was an on site employee; but the Training Board before the Tribunal accepted that the use of the word “site” and the definition of site employee was not intended to cover those who carried out the activity in paragraph 1(a)(ii) of planning and design on a site where none of the activities in paragraph 1(a)(i), (iii) and (iv) were carried on. The Training Board's approach to the statutory interpretation of site employee was accepted by the Employment Tribunal as one which favoured the levy payer. This distinction was enacted in the 2009 Order where, in the definition of site employee, the reference to paragraph 1(a) of schedule 1 to the 1991 Order is now qualified by the addition of “(i), (iii) and (iv)”, obviously omitting what might otherwise have been the crucial reference to (ii).
The submissions
In brief, Mr Hogarth QC, for the appellant, submits that the Employment Tribunal found, or should have found, that most of the appellant's agency employees were undertaking work that fell within paragraph 1(a)(ii). The Tribunal should therefore have also found that they were doing so in the office premises of the appellant's client, that those office premises were not a site where engineering construction activities within 1(a)(i), (iii) or...
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