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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Premier Groundworks Ltd v Jozsa [2009] UKEAT 0494_08_1703 (17 March 2009) URL: http://www.bailii.org/uk/cases/UKEAT/2009/0494_08_1703.html Cite as: [2009] UKEAT 494_8_1703, [2009] UKEAT 0494_08_1703

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APPEARANCES

 

For the Appellant	MR MATHEW GULLICK (of Counsel) Instructed by Curwens Crossfield House, Gladbeck Way Enfield Middlesex EN2 7HT
For the Respondent	MR ALAN BISHOP (of Counsel) Instructed by Turner Coulson 29 Billing Road Northampton NN1 5DQ


 


SUMMARY

WORKING TIME REGULATIONS: Worker / Holiday Pay

Mr Victor Jozsa ("the claimant") entered into a written agreement dated 1 January 2006 with Premier Groundworks Ltd ("the respondent") to provide groundwork services. By Clause 13 of the agreement it was provided that:-

"[the claimant] shall have the right to delegate performance of [ground works] services under this agreement to other persons whether or not his employees provided that [the respondent] is notified in advance and provided that any such person is at least capable experienced and qualified as [the claimant] himself."

The Employment Tribunal found that the agreement was not a sham and held that the claimant was a "worker" within the meaning of Regulation 2(1) of the Working Time Regulations 1998 ("WTR") and was entitled to holiday pay. The issue on the appeal was whether the claimant was a "worker" with in the meaning of the WTR.

The Employment Appeal Tribunal allowed the appeal. It held that:-

(1) where as in this case a party has an unfettered right not to personally perform the contractual obligations under contract but can delegate them for any reason to someone else, he cannot be a "worker" as defined in the WTR even though the person actually performing the contractual obligations has to meet certain conditions (Express and Echo Publications Ltd v Tanton [1999] IRLR 367 applies);

(2) The position would be different if the right not to perform the contractual obligations depended on some other event such as whether that party was unable to perform his or her obligations (MacFarlane and Another v Glasgow City Council [2001] IRLR 7 and James v Redcats (Brands) Ltd [2007] IRLR 296).

(3) An additional reason why the claimant was not a "worker" as defined in the WTR was that the respondent was not an entity "whose status is not by virtue of that contract that of a ..customer of a …business undertaking carried on by the individual [namely the claimant]". The reasons for that were that the claimant was obliged to send invoices to the respondents, the claimant was referred to throughout the agreement as the "supplier" and the preamble stated that the claimant "carries on business as a groundworker... and in the course of business provides services to other building concerns".

THE HONOURABLE MR JUSTICE SILBER

I Introduction

1. The issue raised on this appeal is whether Mr Victor Jozsa ("the claimant") was a "worker" within the meaning of regulation 2 (1) of the Working Time Regulations 1998 ("the WTR") in respect of his relationship with the party with whom he contracted, namely Premier Groundworks Ltd ("the respondent") under the terms of a written agreement dated 1 January 2006. This entails considering first whether the claimant "undertook to do or perform personally any work or services for another party to the contract" and second whether that other party to the contract (namely the respondent) is a person or entity "whose status is not by virtue of that contract that of a client or customer of any profession or business undertaking carried on by that individual".
2. The Employment Tribunal held that the answer on both issues was in the affirmative but the case for the respondent is that the answers on both issues should be in the negative. As already appears, we describe the parties by the roles they had in the Employment Tribunal.

II The Facts

3. The claimant was a groundworker who had contracted with the respondent to carry out groundwork. The Employment Tribunal decided that the work he carried out was not carried out under a contract of employment and for that reason he was not an "employee" entitled to bring a claim for unfair dismissal against the respondent. Nevertheless, the Employment Tribunal held that the claimant was a "worker" within Regulation 2(1) of the WTR and he was entitled to be paid holiday pay which he did not receive. Thus, they awarded him £2,500 in a decision sent to the parties on 18 August 2008.
4. The Employment Tribunal found a number of facts relevant to the issues raised on this appeal and they are that under the contract between the claimant and the respondent:-

(a) the claimant accounted to the Inland Revenue on a self-employed basis;

(b) the claimant was not paid for any days that he did not work or for holidays or during periods of inclement weather;

(c) he worked on a number of sites and he had been told that he was not required on a couple of occasions during the currency of the contract between the parties;

(d) the claimant would be assigned his daily tasks by the foreman. On one occasion he had been admonished for leaving early but there was no evidence before the Employment Tribunal to show whether this was before or after he had completed the assignment for that day;

(e) the times at which breaks would be taken by the claimant was fixed by the foreman and an enhanced rate was paid for Saturday work;

(f) the claimant was obliged to provide his own hand tools but the respondent provided safety gear and the heavy specialist items of plant (such as a generator, a dumper truck and a jack hammer) which were available for all personnel on the site;

(g) he had to notify the respondents of dates when he intended to be away on holiday. Those dates were never refused and there was no evidence to support the contention that he needed permission;

(h) the claimant never sought to substitute the services of another for his own. There was never any defective workmanship and so the claimant was not called on to make good work at his own expense; and

(i) when the claimant sought a qualification that would have allowed him to drive dumper trucks, he paid the cost of the course.

5. The reasoning of the Employment Tribunal on the issue of whether the claimant was a "worker" was that:-

"11. However we are required to consider the question of holiday pay. It is admitted that no such payment was made to the claimant and we note that he would have been entitled to paid holiday if he satisfied the definition of a worker in Regulation 2(1). It is clear that he did work under a contract, did undertake to perform personally work for the respondent and their status was not that of a client to a business or profession. We have concluded therefore that this aspect of his claim succeeds. His evidence was that he worked a daily rate of £125 gross. Given that he accounts to the Revenue the gross figure is applicable and thus our award is 20 x £125 - £2,500".

6. In order to understand the grounds of appeal, it is necessary to refer to Regulation 2(1) of the WTR which sets out the definition of a "worker" for the purposes of identifying the persons to whom the right to holiday pay applies under the WTR. This includes those employed under a contract of employment, which is not relevant for the purposes of this appeal, and also an individual who works under a contract which is not a contract of employment but:-

"(b) 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".

III The Submissions.

7. Mr Mathew Gullick, counsel for the respondent, contends that the claimant was not a "worker" within the meaning of regulation 2 (1) of the WTR for one or both of two reasons. The first reason is that the claimant did not come within the terms of regulation 2 (1) of the WTR because first he was not a person "who undertook to do or perform personally any work or services for another party to the contract" and second the party with whom the claimant contracted (namely the respondent) was not an entity "whose status is not by virtue of that contract that of a ..customer of any...business undertaking carried on by that individual [namely the claimant]".
8. The case for the claimant is that he fell well within the terms of paragraph 2 (1) of the WTR both under the terms of the agreement and also because of the way it was carried out the claimant. There is no challenge to the finding of the Employment Tribunal that "...there are no grounds upon which we could conclude the written agreement did not reflect the relationship between the parties" [10]. In those circumstances, it becomes necessary to ascertain first whether the terms of the agreement meant that the claimant was not a "worker" and, if so, then to consider whether anything happened in practice which showed that that was not the case.

IV Was the claimant a person "who undertook to do or perform personally any work or services for another party to the contract"?

9. At the forefront of the respondent's case is the contention that the written agreement between themselves and the claimant contained in clause 13 a provision which meant that the claimant did not undertake to personally perform any work or services for the respondent. Clause 13 states (with the term "the Supplier" meaning the claimant and the term "the Firm" meaning the respondent) that:-

"The Supplier shall have the right to delegate the performance of Services under this Agreement to other persons whether or not his employees provided that the Firm is notified in advance and provided that any such person is at least capable experienced and qualified as the Supplier himself".

10. The term "Supplier" means according to the preamble to the agreement "a ground worker who contracts work from and/or performs services for the Firm". The case for the respondent is that these provisions show that the claimant would fall outside Regulation 2(1) of the WTR because he was not undertaking to perform his work or his services personally.
11. In response, Mr Alan Bishop, counsel for the claimant, points out that the contract is in effect an over-arching agreement which seeks to provide the terms under which a number of individual contracts could or would be made between the parties. It is correct that Clause 7 states that each assignment would be treated as a separate contract and the terms would apply to each and every contract between the claimant and the respondent. Nevertheless, that provision does not derogate from the claimant's right to delegate because it merely means that individual assignments have to be agreed but the critical fact is that the claimant can delegate his functions under clause 13.
12. Another point made by Mr Bishop is that Clause 13 is a limited and conditional one because there are two important pre-conditions before it can be invoked. They are the requirements first of advance notification presumably to allow the respondent to decide whether or not the substitute is sufficiently qualified and experienced and second that the person delegated is as "capable, experienced and qualified as the [claimant] himself".
13. In our view, those conditions do not prevent Clause 13 being regarded as a right to delegate the performance of the agreement and to nullify any suggestion that the claimant is a "worker". In reaching this conclusion we are bound by and we follow the decision and the reasoning of the Court of Appeal in Express and Echo Publications Ltd v Tanton [1999] IRLR 367. In that case, there was a contract between the parties which provided that:-

"3.3 In the event that the contractor is unable or unwilling to perform the services personally he shall arrange at his own expense entirely for another suitable person to perform the services".

14. There was another provision in paragraph 13 of the schedule to the agreement, which provided that "in the event that the contractor provides a relief driver, the contractor must satisfy the company that such a relief driver is trained and is suitable to undertake the services".
15. Peter Gibson LJ said in his judgment, with which Auld and Hirst LJJ agreed, that:-

"31 .In these circumstances it is, in my judgment, established on the authorities that where, as here, a person who works for another is not required to perform his services personally, then as a matter of law the relationship between the worker and the person of whom he works is not that of employee and employer. [The claimant] has submitted to us that though the personal service to the [contracting party] was a highly material consideration, it was not conclusive. I am afraid that that proposition cannot stand in the light of the authorities."

16. It is noteworthy that there is a crucial similarity between that case and the present one because in both cases the person claiming to be an employee or a worker could for any reason delegate his functions subject to the other party being satisfied about the qualifications of that other person. Indeed in both cases there was no need for the person said to be an employee or a worker ever to do the work even if he was able to do it.
17. There are other cases in which the courts have held that a person can be an "employee" or a "worker" even though he or she could arrange for a replacement. In MacFarlane and Another v Glasgow City Council [2001] IRLR 7 the applicants were gymnastic instructors, who were working at sports centres operated by Glasgow City Council under conditions that if they were unable to take a class, they would arrange for a replacement from a register of coaches maintained by the council. The replacements were paid directly by the council and not by the applicants.
18. In giving the judgment of this Appeal Tribunal, Lindsay P explained that a provision allowing for a limited ability to delegate does not inescapably lead to the conclusion that the contract was one of services and not a contract of service. He pointed out that Tanton (supra) does not oblige a tribunal to conclude that under a contract for services the individual has always in any event however exceptional personally to provide his or her services. The Tribunal considered that the critical factor in Tanton was that the individual of his own will and at his own expense could perform this contract by sending someone else along .That was a factor which distinguished the Tanton case from the case before Lindsay P because as he explained "it is important to note that Mr. Tanton was entitled not to perform any services personally" [10].
19. In the present case, the claimant, like the claimant in the Tanton case, could of his own will and at his own expense perform his contract by sending someone else along. So the present case is distinguishable from the facts in MacFarlane because in that case unlike the present case, first the claimants in that case "could not simply choose not to attend or not to work in person" [11] and second the substitutes would be paid directly by the entity for whom the work was performed and not by the person for whom the substitute was standing in.
20. Another decision on this issue is James v Redcats (Brands) Ltd [2007] IRLR 296 in which the contract between the parties provided that the obligation on the appellant was (with our emphasis added) that "you need to ensure that a suitable alternative courier is available to carry out the terms of this agreement when you are unable. ..You will need to discuss and agree the identity of your replacement with your courier link contract". The Employment Appeal Tribunal had to determine if the claimant was a "worker" under the WTR and it concluded that the Employment Tribunal had wrongly concluded there was no obligation on the claimant personally to provide services because she was able to find a substitute courier when she was "unable" to work. That, in the view of this Appeal Tribunal was crucially narrower than the phrase "unable or unwilling" which was the term used in the Tanton case because in words of Elias P:-

"34. …If I need not perform the work when I am unwilling, then there never is any obligation of any kind to perform it. It is entirely my will and therefore my choice. But if I can only be relieved of the duty when I am unable, then I must do the work personally if I am able".

21. Applying that reasoning to the present appeal, this was a case where the claimant was entitled to decide whether or not he wanted to delegate as in the words of clause 13 of the agreement "he shall have the right to delegate". Mr Gullick also drew our attention to the decision of this Appeal Tribunal in Redrow Homes (Yorkshire) Ltd v Buckborough [2009] IRLR 34 in which Judge Burke QC giving the judgment of this Appeal Tribunal made various obiter comments. In any event, we are bound by the Tanton judgment as a decision of the Court of Appeal and in reaching that conclusion we have not overlooked the decision of this Appeal Tribunal in Byrne Brothers (Formwork) Ltd v Baird and others [2002] IRLR 96 in which it was held on the facts that the power which the applicants had under the contract to appoint a substitute was "qualified and exceptional" [15] with the result that it did not preclude those involved from falling within the term "worker" in the WTR. It was therefore distinguishable from the present case and the Tanton case.
22. The present case is if anything stronger from the respondent's point of view than the Tanton case because the right to delegate the work did not depend on the contracting party being "unable or unwilling" but gave an unfettered right to delegate for any reason although in both cases the substitute had to satisfy certain requirements
23. Further, Mr Bishop drew our attention to various other terms of the agreement submitting that these, when read with clause 13 and construed contra proferentem, would have made any delegation under clause 13 more complex and onerous. However, we are satisfied that there was no ambiguity which could bring the contra proferentem rule into play. This rule did not assist his case as this case has such similarities with the Tanton case that the claimant was not "a worker" under the strict terms of the agreement.
24. Mr Bishop also submitted that irrespective of the terms of the agreement, it is necessary to look to see how it was performed although as we have explained the Employment Tribunal found that this was not a sham agreement. The Employment Tribunal also noted that the claimant never sought to substitute the services of another for his own. We have no reason to doubt that clause 13 was a valid provision in the agreement.
25. In conclusion, we consider that where a party has an unfettered right for any reason not to personally perform the contractual obligations under a contract but can delegate them to someone else, he cannot be a "worker" within the meaning of the WTR even though the person actually performing the contractual obligations has to meet certain conditions. The position would be different if the right not to perform the contractual obligation depended on some other event such as where that party was "unable" to perform his or her obligations (see MacFarlane and James (supra)).
26. It was agreed by counsel that if we reached that conclusion, we would have to allow the appeal and set aside the order of the Employment Tribunal that the claimant was entitled to receive holiday pay.

V Was the respondent an entity "whose status is not by virtue of that contract that of a ..customer of any ..business undertaking carried on by that individual [namely the claimant]"?

27. In the light of our earlier conclusions, this issue is academic but as we heard submissions on it, we will deal briefly with the alternative submissions of the respondent which were that the respondent was by reason of the agreement a customer of the claimant.
28. Mr. Gullick relies on the provisions in the agreement that (a) the claimant "carries on business as a groundworker… and in the course of business provides services to other building concerns"(preamble C); (b) the claimant was obliged to send invoices to the respondent (Clause 2); and (c) the claimant was referred to throughout the agreement as the "supplier".
29. Although Mr. Bishop sought to persuade us that the Employment Tribunal were correct on this issue, we found Mr. Gullick's submissions to be correct and this would be an additional ground for allowing the appeal.

VI Conclusion

30. Notwithstanding Mr Bishop's submissions, we must therefore allow the respondent's appeal as the claimant was not a worker for the purposes of the WTR. We set aside the order of the Employment Tribunal that the claimant was entitled to receive holiday pay.