Appeal No. UKEAT/0476/07/RN
UKEAT/0538/07/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 23 September 2008
	            Judgment handed down on 4 November 2008

Before
THE HONOURABLE LADY SMITH
MR D BLEIMAN
MR B M WARMAN

EAST LIVING LTD	APPELLANT

(1)  MR R SRIDHAR	RESPONDENTS
(2)  TSG SERVICES LTD

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MS AKUA REINDORF
(of Counsel)
Instructed by:
Messrs Trowers & Hamlins LLP Solicitors
Sceptre Court
40 Tower Hill
London EC3N 4DX
	
For the First Respondent	MR R SRIDHAR
(The Respondent in Person)	
For the Second Respondents	No appearance or representation by or on behalf of the Respondent	

SUMMARY

JURISDICTIONAL POINTS
  Worker, employee or neither
  Agency relationships

Tribunal found that Claimant was employed by end – user.  On appeal, the Employment Appeal Tribunal held that the Tribunal had not applied the correct test in law (James v Greenwich  London Borough Council [2008] ICR 545)  and that on their findings in fact, the circumstances whereby the Claimant’s services were provided to the end- user were adequately explained by the express contractual arrangements.  The Claimant had not become an employee of the end – user. 

THE HONOURABLE LADY SMITH

INTRODUCTION 
1.	This is an appeal from a judgment of the Employment Tribunal sitting at Stratford, Employment Judge Mr J Goodrich, finding that the First Respondent’s claim that he had been victimised by the Appellants on racial grounds and on grounds of sexual orientation succeeded. That judgment was registered on 12 July 2007.  The Appellants were the Second Respondents before the Tribunal and the First Respondent was the Claimant and we will continue to use the same descriptions.  The First Respondents below did not participate in this appeal. 

2.	Before the Tribunal and before us, the Claimant represented himself and the Second Respondents were represented by Ms A Reindorf of counsel. 

Background 
3.	The Claimant’s claims of victimisation by the Second Respondents were brought under the provisions of s.2 and s.4(2) of the Race Relations Act 1976 and regulations 4 and 6(2) of the Employment Equality (Sexual Orientation) Regulations 2003.  Under and in terms of those provisions an employer acts unlawfully if he discriminates against an employee by victimising him by reason of his having alleged that the employer has committed racial discrimination or discrimination on grounds of sexual orientation.  If it is established that the employer has committed such victimisation then the employee is entitled to a remedy, including compensation (see: ss. 54 and 56 of the 1976 Act and regs 28 and 30 of the 2003 Regulations).  

4.	The Claimant worked for the Second Respondents in circumstances where he had been placed with them by an employment agency, the First Respondents. To put it in what is now well recognised language, he was a worker supplied by an agency to an end user and the issue for the Tribunal was that of whether or not he had a contract of employment with the end user. The end user was the Second Respondents and they did not accept that they were the Claimant’s employer in a contract of employment.  

5.	The Second Respondents provide care and support services to the tenants of the East Thames Housing Association. The Claimant was a care worker and he is of Asian origin.  In August 2005, he was placed with the Second Respondents by the First Respondents to work at their Kensington Gardens project. He signed a contract with the First Respondents on 20 August 2005 which was entitled:

“Contract for Services for Bank Care Workers (Terms of Engagement)” 

the terms of which included:

“Definitions
…….
“Client” means the person, service user, firm or corporate body requiring the services of the Care Worker together with any subsidiary or associated company as defined by the Companies Act 1985.
“Employment Business” means the Trinity Solutions Group, Trinity Care Solutions or Enterprise PLC or any other company trading under Trinity Group Holdings Limited;
……….
“Care Worker” means Raman Sridhar 
……………….
The Contract 
1.1	These Terms constitute a contract for services between the Employment Business and the Care Worker undertaken by the Care Worker.  However, no contract shall exist between the Employment Business and the Care Worker between assignments.
1.2	For the avoidance of doubt, these terms shall not give rise to a contract of employment between the Employment Business and the Care Worker.  The Care Worker is engaged as a self employed worker, although the Employment Business is required to make statutory deductions from the Care Worker’s remuneration in accordance with clause 3.1.
 …
Assignments
2.1	The Employment Business will endeavour to obtain suitable Assignments for the Care Worker as a Support Worker.  The Care Worker shall not be obliged to accept an Assignment offered by the Employment Business.
 … 
2.7	If … the Client wishes to employ the Care Worker direct or through another Employment Business, the Care Worker acknowledges that the Employment Business will be entitled either to charge the Client a fee or to agree an extension of the hiring period with the Client at the end of which the Care Worker may be engaged directly by the Client or through another Employment Business without further charge to the Client.  In addition the Employment Business will be entitled to charge a fee to the Client if the Client introduces the Care Worker to a third party who subsequently engages the Care Worker within the Relevant Period.

Remuneration 
3.1	The Employment Business shall pay the Care Worker remuneration calculated at a minimum rate of remuneration that the Employment Business reasonably expects to achieve, for all hours worked.  The actual rate will be notified on a per Assignment basis … subject to deductions in respect of PAYE … and Class 1 National Insurance Contributions and any other deductions which the Employment Business may be required by law to make.

3.2	Subject to any statutory entitlement under the relevant legislation, the Care Worker is not entitled to receive payment from the Employment Business or Clients for time not spent on Assignment, whether in respect of holidays, illness or absence for any other reason unless otherwise agreed.

Sickness Absence 
5.1	The Care Worker may be eligible for Statutory Sick Pay provided that s/he meets the relevant statutory criteria.
 …
Time Sheets
6.1	At the end of each week of an Assignment … the Care Worker shall deliver to the Employment Business a time sheet duly completed to indicate the number of hours worked during the preceding week … and signed by an authorised representative of the Client or Service User.
6.2 	Where the Care Worker fails to submit a properly authorised time sheet the Employment Business shall, in a timely fashion, conduct further investigations into the hours claimed by the Care Worker and the reasons that the Client or Service User has refused to sign a timesheet in respect of those hours …
6.4	The Employment Business shall pay the Care Worker for all hours worked regardless of whether the Employment Business has received payment from the Client for those hours. 

Conduct on Assignments:
7.1	The Care Worker is not obliged to accept any assignment offered by the Employment Business but if s/he does so, during every Assignment and afterwards where appropriate, s/he will: …”

6.	There then followed a list of various respects in which the Claimant was obliged to conduct himself when on an ‘Assignment’ including:

“a) Co-operate with the Client’s reasonable instructions and accept the direction, supervision and control of any responsible person in the Client’s organisation.
 … 
 g) Co-operate with the Employment Business’ Qualified Staff and accept their direction, supervision and control … .”

7.	The Claimant was also obliged to comply with the First Respondents’ business policy and procedure and with the standards of conduct and ‘all organised matters’ set out in their handbook (see clause 7.1.1).  The handbook set out various requirements of the First Respondents including those relating to dress code, punctuality at the client’s workplace, refraining from making personal calls from work, notifying the First Respondents if sick or absent for any reason so that they could inform the client and timesheet procedures to be complied with so as to enable the First Respondents to pay their Care Workers promptly.  The document also contains a Code of Practice, the introductory paragraph of which states:

“The purpose of this section is to set down the conduct expected of Care Workers and to inform Purchasers of the standards that they can expect from Care Workers. Care Workers are responsible for ensuring that their conduct does not fall below the standards set out in the code and that they safeguard the well- being of Service Users. Your Consultant will supply a personal copy of the General Social Care Councils Code of Practice to you.” 

8.	There then followed details of the standards that the First Respondents required of Care Workers in many different aspects of their work ranging from respecting the independence of Service Users to  recording the administration of medicines promptly and correctly.  As regards grievances, the First Respondents’ handbook provided:

“Trinity Public Sector – Disciplinary and Grievances Procedure
……………………………
Grievance procedure
Where a worker as (sic) a grievance arising from their duties, then this must be raised with his/her immediate superior.

If it is not possible to resolve the problem then the matter may be referred to the CEO of Trinity Public Sector, who will assess the situation and give a decision , where possible , within 5 working days. The decision will be final.” 

9.	As to payment of earnings to the Care Workers, the system was, on the Tribunal’s findings and as is borne out by the terms of the contract with the First Respondents, that the Claimant was paid by the First Respondents on production of time sheets. Those time sheets would usually have been signed by the Second Respondents. The First Respondents recovered the payments to the Claimant, the PAYE payments and commission, from the Second Respondents but even if they had not done so they were nonetheless obliged to pay the Claimant for hours worked.  

10.	There was no written contract between the Claimant and the Second Respondents.

11.	The Claimant was supervised in his work by the Second Respondents’ Mr Murray. Three supervision meetings took place on 21 September, 17 October and 9 November 2005.  He was subjected to the same appraisal scheme as the Second Respondents’ ‘in–house’ employees. 

12.	Problems developed, which are explained in the Tribunal’s judgment, regarding the Claimant’s work performance, relating in particular to allegations of poor time keeping, sickness, sleeping on shift and dress code.  These were all discussed at the meeting on 9 November when Mr Murray made various notes in terms which, the Tribunal accepted, gave the Claimant valid grounds for feeling aggrieved.  He followed that up by sending the Second Respondents a grievance letter dated 25 November 2005.  He copied his letter to the First Respondents’ Mr Singh, one of their managers.  The Second Respondents’ Ms Devonish was asked by Ms Crouch to investigate the Claimant’s grievances.

13.	On 28 November 2005, the Claimant had a meeting with Mr Murray in the course of which he became angry and accused him of being ‘a liar, a racist’ and ‘not fit to be a manager’.  Mr Murray spoke to Mr Singh by telephone on 29 November and told him that he did not want the Claimant to attend work for the remainder of his shifts at Kensington Gardens.  Mr Singh conveyed that information to the Claimant. 

14.	A question arose as to whether or not the Claimant had been paid for shifts beyond the last date he worked at the Second Respondents’ project. At paragraphs 90 - 92, the Tribunal state:

“90.	We find that there was some initial discussion on 29 November 2005 between Mr Singh and Mr Murray about paying the Claimant one week’s pay for shifts that he had been removed from in exchange for the Claimant not returning. We find that Mr Murray intimated that he would be unhappy about the Claimant returning.

91.	Mr Murray informed his managers (Ms Devonish and Ms Crouch) about his discussion with Mr Singh.

92.	On 6 December 2005, Mr Murray wrote a further email to his managers. He informed them that he had just had a phone call from Mr Singh and that Mr Singh had spoken with the Claimant who had agreed to having one week’s pay and that he would take no further action. The Claimant’s bank statement showed, however, that he was paid for more than one week after that date, receiving pay both on 9 and 16 December 2006.” 

15.	The Tribunal make no finding in fact as to whether the Second Respondents ever agreed to paying anything for the Claimant’s services beyond the shifts during which he was present at their premises or indeed whether they made any such payments.  In short, the finding is to the effect that the Claimant received some pay beyond the last date that he actually provided services for the Second Respondents but not that that pay was funded to any extent by the Second Respondents.  The Tribunal makes no finding about who funded it.

16.	The Tribunal found in fact that the Claimant had not, as at 6 December 2005, in fact agreed with Mr Singh that he would accept one week’s pay for not going back to the Second Respondents’ project.  They add, by way of comment, at paragraph 94.2:
“Mr Singh may have been confident that he could have placed the Claimant into alternative work.”  

17.	On 7 December, Ms Devonish told Mr Singh in no uncertain terms that she did not want the Claimant back working for them.  None of the Second Respondents’ managers wanted the Claimant to return to work on the project and, on the Tribunal’s findings, that was partly because of comments that he made in his grievance letter. 

18.	The Claimant did not, in these circumstances, return to work at the Second Respondents’ project. 

The Tribunal’s Judgment 
19.	The Tribunal correctly identified that they required to determine whether or not the claimant was one of the second respondents’ employees.  They concluded that he was. Their reasons for doing so are set out at paragraphs 124 to 125 and were, essentially:

a.	the role of the First Respondents was limited to recruiting the Claimant and paying his wages;
b.	the day to day management of the Claimant lay with the Second Respondents who had a very close control over his work;
c.	the First Respondents exercised no control over how the Claimant carried out his work ;
d.	the Claimant was paid on a PAYE basis rather than on a self employed basis;
e.	the Claimant was described as an employee in the Second Respondents’ appraisal form. At paragraph 125, they state :” If he was described as an employee it is hardly surprising that he should regard himself as one”   ; and
f.	the Second Respondents investigated the Claimant’s grievance;

and in these circumstances the way in which the contract was performed was “consistent with an implied contract between the Claimant and the Second Respondents and would be inconsistent with their being no such contract.” (para 125).  They referred to the cases of  James v London Borough of Greenwich [2007] IRLR 168 (EAT)  and James v Redcat (Browns) Ltd [2007] IRLR 296 and, as they put it: “cases such as Dacas and Cable and Wireless v Muscat referred to in those cases”. 

20.	Following a subsequent hearing on remedy, the Tribunal awarded the Claimant compensation of £4,588.36 in respect of his victimisation claims and £314.50 pursuant to s.38 of the Employment Act 2002 for failing to provide the Claimant with a written statement of employment particulars, in terms of a judgment which was registered on 24 September 2007. £314.50 represented two weeks gross pay for the Claimant. He had not made a claim under s.38 and the Tribunal acknowledged that it had heard no submissions thereanent. It determined, however, that:

“51.	Having in mind …the Tribunal’s overriding objective contained in Regulation 3 of the Employment Tribunals Rules of Procedure 2004, particularly of saving expense, it appears unnecessary to invite the parties to address the Tribunal on this issue, or to provide written submissions of (sic) the point … If either party is unhappy about this course of action they can apply for a review of this aspect of our judgment.”  

21.	The figure for compensation for victimisation included a 15 per cent uplift under and in terms of s. 31 of the Employment Act 2002 in respect that the Second Respondents had not followed the statutory procedures, and the view was taken that since it was not uncommon for organisations to structure their arrangements in this way so as to seek to avoid taking on employees, the circumstances in which they had failed to do so were not exceptional.  It followed, accordingly, that there should be some uplift.  No point is taken on behalf of the Second Respondents regarding this approach and we do not, accordingly, require to consider whether or not the Tribunal erred in taking the view that they did.  Our silence on the matter should not, however, be taken as tacit approval, we can see that there could be arguments both ways and the matter would have to be properly debated. 

The Relevant Law 
22.	The legal principles that apply when considering worker, agency, end - user arrangements have been discussed at some length and clarified over the last few years. That discussion was focussed in particular by Elias P  in the case of James v Greenwich LBC [2007] ICR 577 where he drew conclusions that were later referred to and approved by the Court of Appeal ([2008] ICR 545) . We note that the hearing before the Tribunal in this case predated the latter but it did have the former available to it. 

23.	The observations contained in paragraphs 53 to 61 of the EAT’s judgment in James were specifically approved by the Court of Appeal.  We find assistance in, in particular, the discussion contained in paragraphs 57 – 58.  It lends support to the approach that was urged on us in this appeal.  That is that one should ask firstly whether or not the express contractual arrangements put in place at the outset adequately explain the actual relationship of the three parties involved at that stage.  Then, secondly, if they do, ask whether or not any subsequent words or conduct of the parties have changed matters.  Then, thirdly, if they have (or if the answer at the first stage was in the negative), ask whether or not in the light of those changes, it is necessary to imply a contract of employment, taking account at that stage of the irreducible minimum mutuality of obligation that is required for there to be such a contract.  At those paragraphs 57 -8, Elias P explains:

“57.	The key feature is not just the fact that the end-user is not paying the wages, but that he cannot insist on the agency providing the particular worker at all.  Provided the arrangements are genuine and the actual relationship is consistent with them, it is not then necessary to explain the provision of the worker’s services or the fact of payment to the worker by some contract between the end – user and the worker, even if such a contract would also not be inconsistent with the relationship.  The express contracts themselves both explain and are consistent with the nature of the relationship and no further implied contract is justified.

58.	When the arrangements are genuine and when implemented accurately represent the actual relationship between the parties – as is likely to be the case where there was no pre-existing relationship between worker and end-user – then we suspect that it will be a rare case where there will be evidence entitling the tribunal to imply a contract between the worker and the end – user.  If any such contract is to be inferred, there must subsequent to the relationship commencing be some words or conduct which entitle the tribunal to conclude that the agency arrangements no longer dictate or adequately reflect how the work is actually being performed, and that the reality of the relationship is only consistent with the implication of the contract.  It will be necessary to show that the worker is working not pursuant to the agency arrangements but because of mutual obligations binding worker and end-user which are incompatible with those arrangements.”  

24.	The relevant principles were  summarised further by Elias P, in the case of National Grid Electricity Transmission PLC unrepd UKEAT/0432/07DM (a judgment which postdates James in the EAT but predates  the Court of Appeal’s judgment in James), at paragraph 21, is a clear and cogent summary which  we gratefully adopt :

“1. Where employees are provided pursuant to an agency contract, a tribunal must not simply focus on the express contractual arrangements but must also have regard to how the work is actually carried out: see Dacas v Brooke Street Bureau (UK) Limited [2004] IRLR 358 per Mummery LJ para. 53.  This may provide material from which it is possible to imply a contract between the worker and the end user, notwithstanding the absence of any express contract between them.

2. However, it is not legitimate to imply a contract merely because it is considered desirable to do so, or because it would be so implied in the absence of the express contracts.  As Mummery LJ observed in Dacas (paras 49 – 51) parties are entitled to arrange their relationships so as to exclude the creation of any contracts of employment, and tribunals must resist the temptation of finding a contract of employment merely because the worker is not in reality self employed or in business on his or her own account.  The fundamental question is whether it is necessary to imply the contract to give business reality to what is actually happening.  Such a necessity arises only if there is conduct which is inconsistent with there not being such a contract: see the observations of Bingham LJ in the Aramis case [1989] 1 Lloyd’s Reports 213, 224, an approach approved by the court both in Dacas and in the later decision of the Court of Appeal which followed Dacas, Cable and Wireless PLC v Muscat [2006] IRLR 354.

3. It will be legitimate to imply a contract where the formal written contracts are a sham, in the sense that they are deliberately intended to mislead third parties or the Court as to the true nature of the relationship. …

4. However, even absent a sham , it will be appropriate to imply a contract if in fact the express contracts no longer adequately reflect what is actually happening, and it is necessary to imply a contract to provide a proper explanation: see the observations of Elias P in James v London Borough of Greenwich [2007] IRLR 168 para.58.” 

25.	Accordingly, only if the express contractual arrangements do not adequately explain the legal relationship of the three parties does the question of whether there might be a contract of employment with the end – user arise and when considering that issue it is essential to ask whether it is necessary to imply such a contract (see also: James v Greenwich LBC [2008] ICR at para 23 per Mummery LJ).  It is also plainly important to avoid falling into the trap of implying a contract of employment because the conduct of the parties is consistent with there being such a contract.  As Mummery LJ observed in James at para 24:

“As Bingham LJ went on to point out in the same case it was insufficient to imply a contract that the conduct of the parties was more consistent with an intention to contract than with an intention not to contract. It would be fatal to the implication of a contract that the parties would or might have acted exactly as they did in the absence of a contract.” 

26.	We would, finally, refer to Mummery LJ’s postscript in James where he stresses that the test for implication is one of necessity and that it is not within the power of the courts or tribunals to change the law, the latter comment being made under reference to his awareness of the ongoing controversy regarding the absence of job protection for agency workers.  We would respectfully agree with his observation regarding courts and tribunals at para 56:

“They are not architects of economic and social policy. … they must operate within the legal architecture created by others.”

The Appeal 
27.	For the Second Respondents, Ms Reindorf submitted that the Tribunal had erred in law in concluding that the Claimant was employed by the Second Respondents.  She referred to the facts found and to the law as explained in the authorities to which we have referred.  She also referred to the case of  Heatherwood and Wexham Park Hospitals NHS Trust v Kulubowila and others UKEAT/0633/06 for the submission that it is important to guard against judging that a worker is an employee just because he:

“29. … looked like an employee … , acted like an employee and was treated like an employee…”

and to the case of Wood Group Engineering (North Seas) Ltd v Robertson UKEATS/0633/06, for the passage at paragraph 15 where it is observed that a contract of employment will only be implied where it is necessary to do so:

“ …and such implication will not be appropriate unless the arrangements under which the person is working are only explicable by there being such a contract.  If they are explicable by reference to the existing written contracts then there will be no room for any such implication unless of course it can properly be concluded that those contracts were but a sham.” 

28.	We were greatly assisted by Ms Reindorf’s clear skeleton argument, the content of which we do not propose to rehearse in this judgment.  She also made persuasive oral submissions in support of it.  Suffice it to say that her essential submission was that it was evident from the judgment that the Tribunal had not applied the correct test.  They referred to the law only very briefly.  They did not articulate the need to ask whether the circumstances were only consistent with there being a contract of employment between the Claimant and the Second Respondents.  Their reference to it being inconsistent with there being no such contract was not enough to elide the clear impression that they had not applied the test properly.  That impression was fortified by their having failed to take account of the respects in which the First Respondents had control of the Claimant over and above recruiting him and paying his wages, their failure to consider the terms and effect of the provisions of the handbook, their failure to take account of the fact that Mr Murray spoke to Mr Singh rather than the Claimant when he wanted to bring an end to the arrangement, the fact that Mr Singh was involved in the negotiations to bring an end to the arrangement, the fact that the Claimant’s intimation of his grievance to the Second Respondents accorded with his obligations in terms of the First Respondents’ handbook and the fact  that the Claimant copied his grievance to the First Respondents.  Had they been applying the correct test, they would have taken account of these matters since, quite apart from anything else, they indicated that the arrangements put in place at the outset in terms of the contract between the Claimant and the First Respondents, properly and adequately explained the situation. 

29.	Ms Reindorf invited us to uphold the appeal and substitute for the Tribunal’s judgment a finding that the Claimant was not the Second Respondents’ employee, which failing to uphold the appeal and remit the issue to a freshly constituted Tribunal. 

30.	In the event that we did not accede to that submission, Ms Reindorf had a separate submission regarding the s.38 award.  The Tribunal should not, she submitted, have made any such award without giving the parties an opportunity to make submissions.  Had the Second Respondents had such an opportunity, they would have drawn attention to the provisions of s.1(2) of the Employment Rights Act 1996 which affords an employer a period of two months to issue the necessary statement.  The Tribunal had made no finding as to the start date for the Claimant’s employment and the facts founded on by them as showing that the Claimant was an employee were related to the last two weeks or so of the time that he worked with the Second Respondents.  It was not, accordingly, obvious that the two month period had elapsed and without such a finding, it was not open to them to find that there had been a failure to comply with the statutory obligation. 

31.	No appeal was taken against the Tribunal’s findings that the claimant was victimised on grounds of race and on grounds of sexual orientation.  Nor was any appeal taken against the Tribunal having awarded compensation in respect of loss of earnings, injury to feelings and interest in respect of that victimisation.  The appeal was confined to an attack on the Tribunal’s uplift of 15 per cent under s.31 of the Employment Act 2002 and the award under s.38 of the same Act.  We were not entirely clear as to why this approach was adopted; unless the second respondents were the claimant’s employers, they could not be said to have committed any unlawful victimisation as is plain from reading s.2 and 4(2) of the 1976 Act together and reading regs 4 and 6(2) of the 2003 Regulations together . If their acts were not unlawful then liability to make payment of compensation under s.56 of the 1976 Act  and reg. 30  of the 2003 Regulations would not arise, liability to do so only arising where there has been unlawful discrimination .  We would, accordingly, have expected the appeal to extend to the finding of victimisation and the entirety of the compensation awarded. Be that as it may, we have to recognise the restricted scope of this appeal. 

32.	The Claimant sought, at the outset of the hearing, to lodge a bundle of emails.  He indicated that they would show that he was subject to the Second Respondents’ control whilst working with them.  They were documents that had not been before the Tribunal and we did not, accordingly, allow them to be introduced.  Separately, he objected to the contract between him and the First Respondents being included in the bundle.  The issue was whether he was employed by the Second Respondents and that contract was, accordingly, irrelevant.  That contract was, however, before the Tribunal and was referred to and relied on by them.  Further, we did not accept the Claimant’s submission that it was irrelevant. On the contrary, it was highly relevant given the importance of considering whether, at the outset, the relationship of the parties to agency, worker, end – user arrangements are adequately explained by the written contract entered into by the worker at the outset. 

33.	Otherwise, the Claimant relied principally on the terms of a document headed “Performance & Development Form”.  It was a document promulgated by the Second Respondents as part of their normal appraisal procedure, dated 14 November 2005 and signed by the Claimant.  It is the appraisal form referred to by the Tribunal at paragraph 125.  Much of it is in standard terms.  There are several boxes on the first page, the first of which begins “Name of Employee”.  The Claimant’s name is entered against that box.  On, it seemed, the basis of that entry, the Claimant submitted that any earlier arrangement was thereby negated.  Any contract predating that document was irrelevant.  All the case law relied on by Ms Reindorf was, thus, irrelevant.  The document was a clear determination that he was an employee of the Second Respondents.  His approach was that the document constituted a type of certification that he was confirmed, as of that date, to be an employee of the Second Respondents.  He was not an employee of the First Respondents. 

34.	On the line of the ‘Performance and Development Form’ which follows the line relied on by the Claimant, there is a box for “Job Title” and the entry against that is: “Specialist Support Worker (Part Time 18.5 hrs – Agency)”.  The Claimant made no submissions in respect of that part of the form. 

35.	The Claimant also submitted, separately, that he was not employee of the First Respondents.  That was a departure from his position before the Tribunal where he had sought to argue that he was employed by both respondents.  He submitted that he had to be employed by someone.  He submitted that the role of the First Respondents was confined to producing funds but legal control of the release of funds to him lay with the Second Respondents.  He posed the rhetorical questions: why would the Second Respondents investigate my complaint if they were not my employers? And why did they not communicate the outcome of their investigation to the First Respondents?  Otherwise, he relied on the reasoning of the Tribunal.

Discussion and Decision 
36.	We are satisfied that the Tribunal did err in concluding that there was a contract of employment between the Claimant and the Second Respondents.  Having carefully considered the whole terms of their judgment, not only are we satisfied that they cannot have applied the correct test but we are left with the distinct impression that they have determined the issue on the basis that the arrangements were simply consistent with the relationship being one of employment.  Notwithstanding the bald statement that the way in which the contract was being performed was inconsistent with the absence of a contract of employment, their reasoning reads as showing that their approach was that since the Claimant looked like an employee and acted like an employee, he was an employee, thus falling into the trap identified by HHJ Peter Clark in the Heatherwood and Wexham Park Hospitals case.  That is the wrong test. 

37.	It seems that the point at which the Tribunal’s approach first fell into error was at the outset.  It did not consider the express contractual arrangements.  The Tribunal arrived at its conclusion without first going through the important exercise of examining whether, on the evidence, the relationship was adequately explained by the contractual arrangements that were put in place at the outset.  The failure may well be explained by the fact that this issue was the last in a series of complex issues that the Tribunal had had to determine in this case and they jumped too quickly to a conclusion but that explanation does not of course alter the fact that they have adopted an erroneous approach. 

38.	The Tribunal did not, unfortunately, look fully at the contract between the Claimant and the First Respondents.  Had they done so, not only would they have applied the first stage of the correct test but would, we are satisfied, have been bound to conclude that there was no question of the parties’ relationships not being adequately explained by the initial contractual arrangements that had been put in place. 

39.	There is much more to those arrangements than the role of the First Respondents being “limited” to recruiting the Claimant and paying his wages, as is stated by the Tribunal at paragraph 124.  As is shown by the terms of the contract to which we have referred, the First Respondents retained quite substantial and significant control over the Claimant’s standards of conduct in terms of the handbook (clause 7.1. 1(a)),  they  required the Claimant to intimate any grievance he had to the client in the first instance, the First Respondents were obliged to pay the Claimant for hours worked irrespective of whether or not they had received payment from the Second Respondents for those hours, the Claimant required to inform the First Respondents of sickness or other reason for absence so that the First Respondents could then advise the Second Respondents of his unavailability and although the Claimant was subjected to day to day control by the Second Respondents that was in the context of him having contracted with the First Respondents to co-operate with the client’s reasonable instructions and accept the direction, supervision and control of any responsible person in their organisation (clause 7.1.(a)).  

40.	The Tribunal then required to ask whether or not the facts and circumstances of the way in which the parties’ relationships worked were adequately explained by the contract.  It did not, however, do so.  Had it done so, it could only have observed that they were.  We have in mind not only the general conduct of the working relationships as explained in the findings in fact but, in particular that the Claimant’s intimation of his grievance to the Second Respondents is explained by the requirements of the First Respondents’ handbook, that he also intimated it to the First Respondents, that when matters came to a head, rather than intimating their desire for the Claimant to work no further shifts to him, the Second Respondents contacted Mr Singh of the First Respondents, and that Mr Singh was involved in the negotiations about the termination of the arrangement for using the Claimant’s services.  These are all readily explicable by reference to the contract between the Claimant and the First Respondents. 

41.	As regards the Performance and Development form, we note firstly that the Tribunal refer only to the part of the form where the Claimant’s name appears against the term “Employee”.  They did not consider the form as a whole and for reasons which we explain below we are not at all persuaded that its terms do actually conflict with the contractual arrangements providing an adequate explanation of the working relationships.

42.	Further, we have given consideration to but reject the Claimant’s case that it shows that there was a change as at 14 November 2005 and that it, in effect, certified that he was employed by the Second Respondents .  On the contrary, it is clearly able to be explained under reference to the express contractual arrangements entered into.  The Claimant was obliged in terms of his contract with the First Respondents to co-operate with the client’s reasonable direction, supervision and control (clause 7.1.(a)) and the form is but an example of circumstances in which such direction, supervision and control was taking place.  Far from being evidence of change, it provides evidence of compliance with the contract between the Claimant and the First Respondents.  As regards the use of the term “employee”, the purpose of the document was not to record any agreement about the Claimant’s status and the term should not be taken out of context.  When read together with the following entry it is plain that the Claimant is recognised as being an agency worker.  

Disposal
43.	We will accordingly, pronounce an order upholding the appeal, find that the Claimant was not an employee of the Second Respondents and set aside the judgment of the Tribunal against the Second Respondents of 24 September 2007 insofar as it awarded the Claimant the sum of £598.48 under s.31 of the Employment Act 2002 and £157.25 under s.38 of that Act.

Award under s.38 of the 2002 Act 
44.	Since we are upholding the appeal, it is not necessary for us to deal specifically with the s.38 award in respect of the failure to provide particulars of employment.  We should, however, state that we do not consider that it was appropriate for the Tribunal to deal with the issue in the way that they did.  The terms of the overriding objective and the possibility of seeking a review do not afford justification for considering and determining an issue which was not raised by either party and in respect of which neither had had the chance to present submissions.  As a matter of principle, that is not an approach which ought to be followed.  Looking at the particular circumstances of this case, the folly of that approach is underlined by the fact that the Tribunal appear to have overlooked that s.1(2) of the 1996 Act gives an employer two months to comply with the obligation to provide particulars and they could not, accordingly, be satisfied that there had been a failure without first identifying when the contract of employment that they found to have existed, commenced.  They had, however, made no findings in fact which enabled them to pinpoint the start date and a question arose whether, in those circumstances, they could find the Second Respondents to have been in breach of the statutory requirement at all.  That is a matter to which Ms Reindorf would, we are advised, have drawn their attention had the Second Respondents had a chance to make submissions.