Protectacoat Firthglow Ltd v Szilagyi
| Jurisdiction | England & Wales |
| Judge | Lady Justice Smith,Lord Justice Keene,Lord Justice Sedley |
| Judgment Date | 20 February 2009 |
| Neutral Citation | [2009] EWCA Civ 98 |
| Docket Number | Case No: A2/2008/1069 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 February 2009 |
Lord Justice Sedley
Lord Justice Keene
and
Lady Justice Smith
Case No: A2/2008/1069
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE ELIAS (PRESIDENT)
UKEAT/0435/07/DA
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr George Foxwell (instructed by PJH Law) for the Appellant
Mr Miklos Szilagyi appeared in person
Hearing date:2 December 2008
Lady Justice Smith:
Introduction
This is an appeal from the decision of the Employment Appeal Tribunal (EAT) dated 26 April 2008 in which it dismissed, in part, the appeal of Protectacoat Firthglow Ltd (Protectacoat) from the decision of an employment tribunal (ET).
The business of Protectacoat is the application of protective coatings to the external walls of domestic dwellings. In proceedings begun in the ET, Mr Szilagyi claimed that he had been employed by Protectacoat and that he had been unfairly dismissed for refusing to work in what he alleged were unsafe conditions. In its ET3, Protectacoat claimed that Mr Szilagyi was not an employee but an independent contractor. It alleged that he worked in partnership with another man, his assistant, and that the partnership contracted with Protectacoat. It relied on documents signed by Mr Szilagyi which, it said, demonstrated the nature of the contractual relationship between it and the partnership.
Protectacoat also alleged that Mr Szilagyi's claim had been lodged too late.
A preliminary hearing was held at which the employment judge decided that Mr Szilagyi was an employee and that, although his claim had been lodged late, time for lodging the claim should be extended.
Protectacoat appealed to the EAT on both issues. The EAT allowed the appeal on the time point but upheld the ET's decision that Mr Szilagyi was an employee and not an independent contractor. Protectacoat now appeals to this court on that issue, with the permission of Mummery LJ.
Background to the Hearing
Before the date of the preliminary hearing, the appellant's solicitor, Mr Hyland, wrote to the ET requesting that Mr Szilagyi provide particulars of why he considered himself to be an employee. Mr Hyland drew attention to the company's contractual documentation on which it would rely and mentioned the case of Protectacoat Firthglow v Descombes [2004] UKEAT/0916/03/ILB in which the EAT had held that two men who claimed to be employees of Protectacoat had in fact been partners in firms which had contracted to do work for Protectacoat and, as such, could not be employees. The documentation scrutinised by the EAT in that case was similar to that which would be in issue in the present case.
A tribunal chairman refused the application for particulars saying that they were not necessary and that the issue of employment would be decided at the hearing. Thus it was that, prior to the preliminary hearing, Protectacoat did not know exactly what Mr Szilagy was going to say about how he came to be taken on or how he was going to put his claim that he was an employee rather than an independent contractor.
The Hearing
At the hearing, in April 2007, Mr Szilagyi appeared in person. He gave evidence, as follows, of the way in which he had begun to work for Protectacoat in March 2006. He had seen a Protectacoat van in the car park at Tesco's and had asked the driver if work was available. He was given a business card. He followed up this enquiry by going to Protectacoat's yard at Crawley where he met the depot manager, Simon Squires. Mr Squires said that work was available. He asked Mr Szalgyi if he had any experience of health and safety matters to which the reply was negative. Nonetheless, Mr Squires told him to sign a health and safety induction card, which he (Mr Squires) described as 'a load of bollocks'. After that, Mr Szilagyi was sent out in a van with two other men to learn the job. He worked alongside them and received cash in hand for two or three weeks. Mr Foxwell, counsel for Protectacoat, told us during the hearing that these two men were other subcontractors and that the appellant had arranged and paid for an experienced team to train Mr Szilagyi.
Although it is not recorded in the ET's decision, it appears that Mr Squires told Mr Szilagyi that he would need to find someone to work with him as his assistant. Mr Szilagyi found a man called Glen Nesbitt. Mr Szilagyi said that Mr Squires told him he must sign some documents. These documents were not explained to him. Mr Squires just said: 'Mick get in here and sign this. You are looking for work, wife to support, men to pay, sign these'.
Although the decision does not describe these documents, it is apparent that the employment judge read them and it is convenient to describe them at this stage. We were told that the proforma documents were drafted by or on behalf of Protectacoat.
The first document was a partnership agreement. As completed it was an agreement between Mr Szilagyi as 'installer' and Mr Nesbitt as 'assistant'. The partnership was given the name M & G Coatings. The Partnership Act 1890 was to apply. Either party could terminate the partnership upon two weeks notice. If the assistant gave notice or died, the installer could acquire the assistant's share or interest. The installer could give notice to the assistant to terminate the assistant's interest in the partnership and would then automatically acquire the assistant's interest. The installer could then transfer the assistant's interest to a new assistant of his own choice, in which case the partnership would not be dissolved but would continue as between the installer and the new assistant. Under the heading of 'Capital and Profits' it was said that the installer would make such contributions to capital as he deemed fit and the assistant should not be required to make any such contribution. The installer would be entitled to all the partnership capital. The partnership profits were to be divided in the proportion set out in the schedule, which in the case of Mr Szilagyi and Mr Nesbitt was 60% to the installer and 40% to the assistant. The accounts were to be calculated 'on an annual basis'. Each partner could draw weekly sums as agreed between them. The assistant was to devote the whole of his time to the business of the partnership. Mr Szilagyi's signature was witnessed by Mr Squires. Mr Nesbitt's signature was also witnessed but not by Mr Squires. The deed was dated 20 April 2006.
The second document was a contract whereby the partnership (M&G Coatings) undertook to provide services to Protectacoat (the company). I will call this document the services agreement. It provided that the partnership was retained to provide services in the form of application of exterior textured coating to buildings. The company would notify the partnership where the services were to be carried out. The partnership was to be responsible for travel arrangements to the place at which the services were to be carried out. The agreement was to commence on 18 April 2006 and would continue until terminated in accordance with clause 4. That provided that either side could give one week's notice of termination but, in addition, the company could terminate the agreement without notice on the happening of various events, which included the refusal or failure by the partnership without reasonable cause to perform the service.Clause 5 entitled 'Mutual Obligations' provided:
“Save to the extent that the Company is required to give the partnership notice to terminate this Agreement in accordance with clause 4 the company is under no obligation to provide the Partnership with work.”
Clause 6 provided that the fee for services to be provided in respect of each customer would be agreed in advance between the company and the partnership. Once agreed, the fee would only be varied in exceptional circumstances. If rectification work were required, this was to be carried out by the partnership at its expense. Payment of fees would be made gross on completion of the provision of the service to each customer on receipt of an invoice from the partnership in the week following completion. The partnership would be liable to account to the Inland Revenue for tax and National Insurance contributions but the company reserved the right to deduct income tax under the 'subcontractor's tax deduction scheme'.
Clause 7 provided that the partnership was required to provide the necessary equipment. By Clause 8 the partnership promised that it would perform the services diligently and with reasonable skill and care, comply with the company's health and safety guidelines and not do anything 'to jeopardise the safety of the partnership, the client or members of the public'. By clause 9 it was provided that the partnership was not required to work any specific hours, save that the hours worked must be convenient to the client. By clause 10, the partnership was not prevented from providing services to others. This document appears to have been signed on 18 April 2006.
Although we have not seen it, Mr Szilagyi also apparently signed a 'hire agreement' whereby he purported to hire a van, and various tools and equipment from Protectacoat for £210 per week.
Before working for Protectacoat, Mr Szilagyi had a Construction Industry Scheme Registration Card, issued by the Inland Revenue. We were told that Mr Szilagyi re-registered in the name of the partnership, although there is no reference to this in the decision.
From about 8 April 2006, Mr Szilagyi was sent out with...
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