Appeal No. EAT/436/91

	EMPLOYMENT APPEAL TRIBUNAL
	58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

		At the Tribunal
		On 27 July 1993
	Judgment delivered on 7 October 1993

	Before

	THE HONOURABLE MR JUSTICE KNOX

	MR J D DALY

	MR T C THOMAS CBE

MR J SCARAH & 31 OTHERS	APPELLANT

FISH CONTAINER SERVICES LTD	RESPONDENTS

	Transcript of Proceedings

	JUDGMENT

Revised

	APPEARANCES

For the Appellants	MR P ELIAS QC
	     and
MR M CASWELL
(Of Counsel)
Messrs Stamp Jackson & Procter
Solicitors
5 Parliament Street
Hull HU1 2AZ

For the Respondents	MR A PARDOE QC
	Solicitors
	17 Parliament Street
	Hull, HU1 2BH

	MR JUSTICE KNOX:   This appeal raises a familiar question in an unfamiliar setting.  The question is whether the relationship between the appellants, who worked as bobbers in Hull docks unloading fish, and the respondent, Fish Container Services Ltd ("the Company"), was a contract or series of contracts of service on the one hand or a contract or series of contracts for services, on the other.  It is common ground that the jurisdiction of the Industrial Tribunal to hear the appellants' originating applications for unfair dismissal depended upon the appellants establishing that they were employed by a contract or series of contracts of service.  If there was no contract of service but only contracts for services, then there was no jurisdiction in the Industrial Tribunal.  This is indeed what the decision under appeal decided when the Industrial Tribunal sitting at Hull on 25, 26 and 27 March 1991 held that the applications of all 32 applicants failed for want of jurisdiction.  The decision was sent to the parties on the 17th June 1991.

	The unfamiliar setting is the framework within which bobbers at the Hull fish dock worked.  The Industrial Tribunal described the system operated at Hull at some considerable length.  The essentials were as follows.  The Company maintained a list of bobbers among whom the work of unloading fish from trawlers was allocated.  The bobbers worked in gangs of ten.  There was only work for them if there were trawlers in the dock to unload.  Each bobber and latterly each gang had a number allocated to him or it.  To find out whether there was work on a given work day bobbers would ring a number listed in the telephone directory under "Bobbers Orders" at about 1 p.m. the previous day and would listen to a recorded message of the numbers of those required.

	If no trawler was expected there would be no work.  Sometimes "all hands" would be required and that meant that all bobbers could answer the call if they so desired.  Otherwise just the numbers of those required would be given on a recorded message.  Some bobbers had special duties to perform which required their attendance earlier than the rest of the gang.  In particular, those who set up the winches used to unload the baskets or boxes of fish had to come earlier.  Ordinary members would come to the dock and find a black-board upon which their numbers were allocated to particular vessels.  The allocation of men to ships and the filling of vacancies in gangs was done by the labour foreman or his deputy, both employees, in the ordinary sense, of the Company.  The work, particularly that of the man known as the swinger who was responsible for swinging the line lifting the container onto the quay, was skilled work and not subject to detailed control by the Company.

	Other features of the relationship were the following:-

(a)The bobbers were paid under deduction of tax by PAYE and their National Insurance stamps were on the employed person rates.  There is nothing in the Industrial Tribunal decision to suggest that this was done because of Revenue insistence.

(b)The plant and equipment including protective equipment was not provided by the bobbers, but so far as the unloading equipment was concerned, by the vessel.  The bobbers also received a protective equipment allowance, latterly of £60 a year.

(c)The bobbers were allowed, with the knowledge of the Department of Employment, to sign on for the dole when they had worked the appropriate number of days or weeks.  When they were not able to claim dole payments, as much as £50 per week was paid by the Company when there was no work to tide them over a period of non-entitlement of the dole.

(d)Bobbers were not allowed to provide substitutes to work in their stead.  The right to allocate gang places remained with the labour foreman or his deputy.

(e)There was no sick pay.

(f)There was no holiday pay in the ordinary sense but the Industrial Tribunal found that for every day worked £1.25 or possibly £1.30 was put aside into a holiday fund.  It was not a deduction from pay but was a fund to be claimed on by the bobbers as and when they saw fit.

(g)So far as obligations to work on the bobbers' side was concerned the Industrial Tribunal said this:
"10.		The applicants felt that they had a duty to go to work, having got themselves to a state where they were known and recognised as regular men.  We can well understand, for example, Mr Batty telling us that he regarded himself as "duty bound" to go to work.  He felt obliged to do so.  But equally it is right that he and others before us, have said that if they did not want to work, either because they were on holiday or because of personal reasons, indeed illness perhaps as well, that (sic) they did not go to work, and the "right" thing to do was to telephone and say they were not available and that they were not coming to the dock.  The finding we make, on balance, is that if non-availability happened too often, then others in the gang that these men would work in would make representations in their own inimitable way to the man concerned to find out why that man was not coming to work, and so reinforce the solidarity of the gang members, the one to the others. ............. We find that if men did not attend regularly and it became noticed, then they were certainly disciplined, as it were, by their peers and if they persisted in not attending there was no disciplinary procedure that inevitably followed from these respondents.  You voluntarily let your status slip from a regular casual, to a casual casual, by your non attendance, we find."
	
	We have had some difficulty in assessing exactly what degree of obligation to work there was placed upon the bobbers if there was not any such impediment as sickness or reasonable holidays to prevent it.  Equally it is less than clear whether the Company did or did not have a power to discipline persistent non-attendance without good cause, by removing them from the list of regular bobbers.  The word "inevitably" quoted above was relied upon by Mr Elias, for the bobbers, as indicating by clear implication that there was a residual disciplinary power in the Company to deal with non-attendance without due cause.

(h)On the positive side of disciplining, that is dealing with sins of commission, the Industrial Tribunal said this:
" Disciplining, as such, by way of positive sanction has been subject to some argument before us.  Certain it is that stealing of fish was always viewed as being an important matter and was not overlooked.  Dock police, as well as others interested, did take action about fish stealing.  We are not satisfied that the disciplinary sanctions really amounted to part of a structured arrangement in that the disciplining committee had a true power to stop men working; rather they had the power to say "Do not show your face again because if you do you will not be taken on.  Your (sic) not wanted here."  It was not a dismissing situation; it was an indication that your welcome on the dock had been ended, and that you were no longer accepted as part of the community of the fish dock."

	This passage too is not entirely clear on the question whether the Company, as opposed to the disciplinary committee, which it was common ground before us was a bobbers' committee and not part of the Company's organisation, had any residual power to discipline for misconduct.

(i)There were no pension arrangements while the Company was operative.  The Company was the third organisation to engage the bobbers.  One of its predecessors, the Hull Fish Landing Co., which was owned and formed in one third shares by the bobbers, the trawler owners and the fish merchants, and engaged the bobbers between 1980 and 1988, did use part of its profits in a pension fund arrangement for the benefit of the bobbers.  The Industrial Tribunal found that this was a gift to them but did not make findings regarding the legal basis for this distribution.  We do not think it possible to draw any particular conclusions regarding the relationship between the bobbers and the Company from this earlier and ill defined pension provision by a predecessor of the Company.

(j)Finally, the method of pay of the bobbers was calculated by reference to the number of kits (or crates) moved by the gang and the price agreed per kit moved.  The rates fluctuated but the Industrial Tribunal said:
"....... essentially it was a payment at so much per unit, kit, basket or whatever, times the amount agreed."

	There were two separate issues before the Industrial Tribunal.  The first was whether the relationship between the bobbers and the Company was one of service or for services.  The second and distinct question was whether there was an overall contract of service.  If there was no overall contract of service that did not necessarily mean that there was not a series of contracts of service.  If that was the situation then the additional question arose whether as between those several contracts of service there was continuity of employment.  This was a question which would be largely, if not entirely, governed by para 9 of the 13th Schedule to the Employment Protection (Consolidation) Act 1978.  As to this, the Industrial Tribunal's only utterance which can perhaps best be described as Delphic, was this:
"Mr Pardoe" (he appeared for the Company both in the Industrial Tribunal and before us) "had certain strong words to say about Schedule 13 and paragraph 9 thereof, that perhaps are not truly germane to our decision:  we have noted them but not forgotten them."
	On this material Mr Elias accepted that if we allowed the appeal of the bobbers on the question whether the contracts were contracts of service but did not find that there was an overall contract of service a remission was inevitable in order to decide the question of continuity of employment.

	The Industrial Tribunal's conclusion at the end of its lengthy decision which included lengthy résumés of the arguments addressed to it was contained in para 17 of the decision which reads:
"We take the view, looking at the whole of this situation and all its variable and manifold features, that we cannot find here any minimum of mutuality of obligation between the respondent and the applicants.  The bobbers provided services as and when required, they were under no duty to answer the call if they did not wish to do so.  There is no irreducible minimum of mutual obligation we are satisfied.  There are many features in this case, of course, which are traditionally pointers to be taken into account but there is not one individual nor even a group of pointers which together outweigh the others.  They are all, we feel, of equal status and importance and we hope we have treated them accordingly.  It seems to us that when they are all looked at together, or indeed if they are all looked at individually, nonetheless they do not indicate in our judgement a contract of service, nor when the men were not at work was there still remaining and in force an umbrella or global contract between themselves and the respondents.  We have considered the authorities and the principles that they have embodied and explained.  We trust that we have applied them correctly and fully, but the proper label we say, as a matter of fact on the relationship between these men and this respondent is that each man was providing services as and when required.  It was a good job while it lasted and many of the men, not all of them, were content because it did provide them with 2 or 3 days work per week with a good level of earnings for many years.  It however did not provide them with contractual employment.  The applicants brought along their services and skills as and when required, but there was no mutuality of obligation of such a minimum sort which, we are satisfied, must be and is on authority, the bedrock of all relationships that properly labelled "employment".  We cannot find that minimum irreducible amount, although there are many pointers and interesting and even unique factors in this case.  Nonetheless, at the heart of it all and at the end, there were individual contracts of service, and we cannot see, and do not find that overall there was a global or umbrella contract obtaining here.  For the above reasons and unanimously these applications are dismissed."
	A preliminary point to be decided is whether there is a clerical error in the penultimate sentence in the phrase "there were individual contracts of service" which should read "contracts for 

services".  Mr Pardoe persuaded us that this was indeed a clerical error.  The whole trend of the decision is that the relationship was one which is usually described as a contract for services.  That normal phraseology is indeed sometimes used by the Industrial Tribunal elsewhere in its decision.  For example, in recording Mr Pardoe's submission, in paragraph 13 they said:
"There was no irreducible minimum; there was no contract of service; there must be and can only be a contract for services, and that is beyond our jurisdiction."
	On the other hand the expression "contract of services" is also used because the preceding paragraph ends with the sentence:
 "Mr Pardoe took us through the various elements like holiday, tax, clothing, and suggested that none of these really was sufficient in themselves or communitively (sic) to produce a finding that these men were working under a contract of service rather than a contract of services."
	In the circumstances one cannot avoid the conclusion that it would not be safe to place much reliance upon the proof reading of the Industrial Tribunal's decision.  This makes it easier to conclude that there is indeed a clerical error in the penultimate sentence of paragraph 17.  The strongest argument, which we find conclusive, is that there is earlier in the same paragraph a categoric statement that there was not here a contract of service in a context which makes it clear enough that the Industrial Tribunal was not limiting itself to the question whether there was an umbrella or overall contract.  The sentence reads:
"It seems to us that when they are all looked at together, .......... they do not indicate in our judgement a contract of service, nor when the men were not at work was there still remaining and in force an umbrella or global contract between themselves and the respondents."
	- and we therefore supply the letter "s" after the word "service" to make the decision coherent.

	Making that small but vital correction we turn to the question whether, as Mr Elias submitted to us, there has been an error of law in running together and effectively confusing the two separate issues mentioned above, that is first whether the relationship was one of service or for services and secondly whether there was an overall or umbrella contract.  Mr Pardoe submitted that there was no such confusion and that the sentence which was quoted by us in the last paragraph of this judgment, as showing that there was indeed a clerical error later on, quite accurately and clearly stated separate conclusions in the Company's favour on the two separate issues.  We would agree if that sentence stood alone but there are other sentences on either side which in our judgement do indicate sufficiently clearly that there was indeed a confusion between the two problems.  Our reason is that the Industrial Tribunal decision both before and after the sentence relied upon by Mr Pardoe treats the absence of mutuality of obligation as conclusive both of the absence of an overall or umbrella contract and of the absence of any relationship that can properly be labelled "employment".  As regards the former conclusion it is plainly entirely correct as Mr Elias accepted on the authority notably of Hellyer Bros Ltd v McLeod [1987] ICR 526.  but while the question of mutuality of obligation during the intervals between contractual relationships is critical to the existence of a continuing contactual relationship covering both the individual periods of contract and the intervals between the contracts, it is of no help in identifying the nature of the individual contracts between the several intervals.  They have to be examined on their own merits and the non-existence of mutual obligations before and after each contract is neither here nor there.  There is no doubt that there were some mutual obligations during the individual contractual relationships.  The Company was bound to pay the bobbers and the bobbers were bound to work with reasonable skill and in accordance with the lawful directions of the labour foreman or his deputy.  We are driven to the conclusion that the repeated emphasis at each end of paragraph 17 of the Industrial Tribunal decision upon the absence of a minimum of mutuality of obligation as conclusive of the whole problem set before the Industrial Tribunal shows that they did indeed treat that consideration both rightly as showing there was no overall or umbrella contract and wrongly as of itself solving conclusively the difficult question whether there were in the several individual contractual relationships contracts of service or contracts for services.  In our judgement the decisions in Airfix Footwear Ltd v Cope [1978] ICR 1210 and Nethermere (St Neots) Ltd v Gardiner [1983] ICR 319 show that workers in a situation where there is no obligation on the employer to provide work or for the worker to accept the offer of work can in appropriate circumstances be employed under a contract of service.  For this reason we propose to allow the appeal and remit the matter for reconsideration before a differently constituted tribunal.

	This involves our rejection of Mr Elias' submission that the Industrial Tribunal's decision that there were no contracts of service was perverse.  He invited us to take the course laid down by Lord Radcliffe in Edwards v Bairstow [1956] A.C.14 regarding cases where the facts do not, in the judgement of the appellate tribunal, warrant a decision either way and that is to do what the House of Lords did in that case namely give effect to what their Lordships considered was the only possible conclusion on the facts found although it was exactly the opposite of what the fact finding tribunal had decided.

	Mr Pardoe reminded us of the judgments of Sir John Donaldson MR and Fox LJ in O'Kelly v Trust House Forte plc [1983] ICR 728 which describe the very qualified sense in which it can be said that the question whether a contract is one of employment or for services is a question of law.  Sir John Donaldson at page 762 said:
"The test to be applied in identifying whether a contract is one of employment or for services is a pure question of law and so is its application to the facts.  But it is for the tribunal of fact not only to find those facts but to assess them qualitatively and within limits, which are indefinable in the abstract, those findings and that assessment will dictate the correct legal answer.  In the familiar phrase "it is all a question of fact and degree."

It is only if the weight given to a particular factor shows a self-misdirection in law that an appellate court with a limited jurisdiction can interfere."
	Mr Elias, relying upon the Privy Council decision in Lee v Chung [1990] ICR 409, sought to persuade us that on the facts found only a contract of service or a series of contracts of service could be found to exist.  Mr Pardoe in reliance largely on O'Kelly v Trust House Forte plc supra contended the opposite.  We accept that the O'Kelly case is plainly distinguishable not least because there were there clear findings of an acceptance both on an individual basis and on the basis of what was accepted in the trade generally that the contracts were contracts for services and not contracts of service.  We are not however persuaded that the case before us falls into the Edwards v Bairstow category of only admitting of one possible answer on the facts found.

	In those circumstances we accept that it is not open to us to give effect to what would have been our decision upon the facts found.  However, because we are satisfied that the weight given to the absence of mutuality of obligation shows a self misdirection in law, there must be a remission for reconsideration of the cases as a whole.  Where there is such a misdirection shown, we are satisfied that it is the duty of this Tribunal to set aside the decision thus made unless the facts found make it clear that the Industrial Tribunal properly directing itself could only have reached the same conclusion as that which it did reach by the , ex hypothesi, flawed process of reasoning.  Where, as here, the case was one which intrinsically could have been decided either way it is not appropriate for an Appellate Tribunal to disregard the flawed reasoning and say that because on the facts found the conclusion reached was a possible one therefore the decision below should stand.  Neither Varndell v Kearney & Trecker Marwin Ltd [1983] ICR 683 nor U.C.A.T.T. v Brain [1981] ICR 542, to which Mr Pardoe referred us, so decide.

	As already indicated we are not satisfied that the facts found point inevitably to a conclusion that there was indeed an overall or umbrella contract.  As Mr Elias pointed out, the fact that on individual occasions the workers were entitled to decline the work proffered does not of itself establish that there was no overall contract.  The decision in Nethermere (St Neots) Ltd v Gardiner, supra, shows that.  But it does not follow that on the facts found the only possible conclusion was that there was an overall or umbrella contract.  Mr Pardoe persuaded us that the points of similarity to the facts of Hellyer Bros Ltd v McLeod, supra, were sufficiently numerous and important to make it at least arguable that there was indeed no overall or umbrella contract.  So that issue remains one for decision on the authority notably of the two Court of Appeal decisions Hellyer Bros Ltd v McLeod supra, and Nethermere (St Neots) Ltd v Gardiner, supra.  We do not think that the Industrial Tribunal's task would be lightened by our making comments upon these two authoritative cases.