Secretary of State for Justice v Windle & Arada

Hearing date: 26 January 2016

INTRODUCTION

The Claimants in these proceedings, Dr Windle and Mr Arada, are professional interpreters. Dr Windle is of Czech origin and Mr Arada Algerian. At the time with which we are concerned both worked for Her Majesty's Courts and Tribunals Service ("HMCTS"), though also for other institutions. Although both did a good deal of work for HMCTS, they did so only on a case-by-case basis. HMCTS was under no obligation to offer them work; nor were they under any obligation to accept it when offered. They were paid simply for work done, with no provision for holiday pay, sick pay or pension. They considered themselves self-employed and were so treated for tax purposes.

In 2012 each of the Claimants brought proceedings against the Ministry of Justice ("the MoJ") in the Employment Tribunal complaining of racial discrimination contrary to Part 5 of the Equality Act 2010, which prohibits discrimination against "employees". In essence their claims were that in various specific respects their terms were less generous than those accorded to British Sign Language interpreters. The background to the claims was HMCTS's decision in 2011 to outsource the provision of interpreter services in the courts and tribunals under a "Framework Agreement" with a company called Applied Language Solutions ("ALS"); but that does not affect the legal issue.

The MoJ took a preliminary point that the Claimants were not its employees within the meaning of the 2010 Act. The two claims were listed together before an Employment Tribunal sitting at Leeds (chaired by EJ Starr) for that issue to be determined. There was in fact a third claimant, Ms Szwarckopf, and Dr Windle also had a claim against the West Yorkshire police; but we are not concerned with those claims. By a reserved judgment dated 3 April 2013 the Tribunal decided the issue in the MoJ's favour and dismissed their claims.

The Claimants appealed. By a judgment dated 3 July 2014 the EAT (HH Judge Peter Clark presiding) allowed their appeals and remitted the claims to the ET.

The Secretary of State appeals to this Court with the permission of Hallett LJ. He is represented by Mr Clive Sheldon QC. The Claimants are represented by Mr Mark Humphreys of counsel, acting pro bono through the Free Representation Unit, as he also did in the EAT (though not in the ET, where the Claimants were unrepresented); the Court is most grateful to him for doing so, as I am sure the Claimants are also.

THE BACKGROUND LAW

As will appear, the issue raised by this appeal is a narrow one, and I need do no more than set out the legal background which is necessary to understand how it arises. Accordingly, what follows is not intended as a comprehensive analysis of the law in this field.

Part 5 of the Equality Act, as I have said, prohibits discrimination against "employees": see section 39. Section 83 (2) defines "employment", so far as relevant for present purposes, as:

"(a) employment under a contract of employment, a contract of apprenticeship or a contract personally to do work;

(b)-(d) …"

Section 83 (4) provides that a reference to an employee is to be read with sub-section (2). The same language appears in the predecessor legislation.

Section 83 (2) (a) identifies three kinds of contract. The first – "a contract of employment" – means a contract of service. The Claimants accept that they were not employed under such a contract. It is their case that they were employed under the third kind of contract listed, namely "a contract personally to do work". The best explanation of what that phrase refers to appears in Bates van Winkelhof v Clyde & Co. [2014] UKSC 32, [2014] 1 WLR 2047. In that case the Supreme Court was concerned with whether the claimant was a "worker" within the meaning of section 230 (3) of the Employment Rights Act 1996, but Lady Hale, who delivered the majority judgment, reviewed the field more widely. Limb (b) of section 230 (3) refers to employment under

"… any other contract … whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".

Lady Hale pointed out, at para. 25 (p. 2055 B-C), that that formulation distinguished between two kinds of self-employed people:

"One kind are people who carry on a profession or a business undertaking on their own account and enter into contracts with clients or customers to provide work or services for them. The arbitrators in Hashwani v Jivraj (London Court of International Arbitration intervening) [2011] 1 WLR 1872 were people of that kind. The other kind are self-employed people who provide their services as part of a profession or business undertaking carried on by someone else. The general medical practitioner in Hospital Medical Group Ltd v Westwood [2012] EWCA Civ 1005; [2013] ICR 415, who also provided his services as a hair restoration surgeon to a company offering hair restoration services to the public, was a person of that kind and thus a 'worker' within the meaning of section 230(3)(b) of the 1996 Act."

She then, at paras. 31–32, went on to observe that the same distinction was recognised for the purpose of discrimination law, even though section 83 (2) (a) of the 2010 Act does not contain anything equivalent to the elaborate words of exception in the second half of section 230 (3) (b). She said:

"31. As already seen, employment law distinguishes between three types of people: those employed under a contract of employment; those self-employed people who are in business on their own account and undertake work for their clients or customers; and an intermediate class of workers who are self-employed but do not fall within the second class. Discrimination law, on the other hand, while it includes a contract 'personally to do work' within its definition of employment (see, now, Equality Act 2010, s 83(2)) does not include an express exception for those in business on their account who work for their clients or customers. But a similar qualification has been introduced by a different route.

32. In Allonby v Accrington and Rossendale College ( Case C-256/01) [2004] ICR 1328: [2004] ECR-I873 the European Court of Justice was concerned with whether a college lecturer who was ostensibly self-employed could nevertheless be a 'worker' for the purpose of an equal pay claim. The Court held at para. 67, following Lawrie-Blum v Land Baden-Wurttemberg ( Case C-66/85) [1987] ICR 483; [1986] ECR 2121: that 'there must be considered as a worker a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration'. However, such people were to be distinguished from 'independent providers of services who are not in a relationship of subordination with the person who receives the services' (para 68). The concept of subordination was there introduced in order to distinguish the intermediate category from people who were dealing with clients or customers on their own account. It was used for the same purpose in the discrimination case of Jivraj v Hashwani. [2011] 1 WLR 1872 "

As Lady Hale there acknowledged, the qualification on the apparently broad scope of the phrase "a contract personally to do work" had in fact already been recognised in the decision of the Supreme Court in Hashwani v Jivraj [2011] UKSC 40, [2011] 1 WLR 1872, although the discussion is less explicit. In that case the issue was whether an arbitrator was an employee for the purpose of the Employment Equality (Religion or Belief) Regulations 2003, which had an identical definition. Lord Clarke, with whose judgment the other members of the Supreme Court agreed, emphasised that it was not enough that the putative employee should be a party to a contract personally to do work: he or she must be "employed under" such a contract (see para. 36, at p. 1887 B-C).

It has become common to refer to persons employed under contracts falling within the terms of section 230 (3) (b) of the 1996 Act as "limb (b) workers". Because, inconveniently, the 2010 Act uses different language, it is inapt to refer to employees of the third kind listed under section 83 (2) (a) by the same label. I will refer to them as "employees in the extended sense".

As to how the distinction is to be made between the two kinds of self-employment – that is, between employees in the extended sense and the "truly self-employed", as it is sometimes put – in Hashwani Lord Clarke said, at para. 34 (p. 1886 E-G):

"… The essential questions … are … those identified in paras 67 and 68 of Allonby [2004] ICR 1328, namely whether, on the one hand, the person concerned performs services for and under the direction of another person in return for which he or she receives remuneration or, on the other hand, he or she is an independent provider of services who is not in a relationship of subordination with the person who receives the services. Those are broad questions which...