Appeal No. UKEATS/0036/11/BI
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF
At
the Tribunal
On
26 January 2012
Before
THE HONOURABLE LADY SMITH
(SITTING ALONE)
MRS
LINDA CORMIE APPELLANT
ROBERT
RODGER T/A DALNEIGH POST OFFICE & STORES RESPONDENT
JUDGMENT
SUMMARY
UNFAIR DISMISSAL – Exclusions including worker/jurisdiction
Contract of employment. Whether Claimant was an employee where,
after eight years as an employee working in a post office and general store,
she took over (in addition to her previous duties) the duties of
sub-postmaster, entering into a contract with the Post Office to do so. On
appeal, held that Employment Tribunal had erred in failing to find that she had
remained an employee of the Respondent; they had failed to look at the whole
relevant circumstances.
THE
HONOURABLE LADY SMITH
Introduction
1.
This appeal concerned the status of a Claimant who worked in a sub
post-office and general store. Was she an employee or not? The Employment
Tribunal sitting at Inverness, Employment Judge Ms E J Bell
presiding, found that she was not an employee (or a worker) as at
13 January 2010, the relevant date. The judgment was registered on 4 May 2011.
2.
I will, for the sake of clarity, continue referring to parties as
Claimant and Respondent.
3.
The Claimant was represented by Mr F H Lefevre before the
Tribunal and by Ms Stobart, advocate, before me. The Respondent was
represented by Ms V Telfer, of the Citizens Advice Bureau, before the
Tribunal and represented himself before me.
Background
4.
The following relevant facts are disclosed by the Tribunal’s findings in
fact and certain other matters which were spoken to in evidence and were not
disputed but to which the Tribunal has not made reference.
5.
The Claimant entered the employment of the Respondent in
March 2001. He leased shop premises at Dalneigh from Highland Council.
They were known as the “Dalneigh Post Office and Stores”. They comprised a
general store and a sub post-office. At that time, the Respondent was the
sub-postmaster.
6.
Between March 2001 and 5 November 2009, the Claimant’s
work involved her arriving at 6.30am each morning to take in the newspapers and
open up the store. Between 6.30am and 9am, she worked in the general store and
after 9am, she focussed her efforts on the post office side of things, working
as post office clerk although still giving some assistance, at times, in the
general store.
7.
On 5 November 2009, the auditors for Post Office Limited
attended at the premises. They suspended the Respondent from his role as
sub-postmaster. The Respondent asked the Claimant “if she would be willing run
(sic) the post office on his behalf until he had his hearing with Post Office
Limited.”
8.
The Claimant agreed to take over the role of sub-postmistress “in order
to assist Mr Rodger to maintain the business until he secured a sale of it
(preparations for which had already been underway for some time) to a willing
buyer.”
9.
The Claimant then entered into a contract with Post Office Limited. That
contract was concluded on 7 November 2009. It provided that she was
appointed as temporary sub-postmaster at the Dalneigh Post Office and would be
paid the remuneration which had formerly been paid to the Respondent. Her
appointment was backdated to 5 November 2009. The contract recorded
the Claimant having made a declaration that she understood Royal Mail Group’s
and Post Office Limited’s obligations regarding the safety of postal packets,
confidential information, the Official Secrets Act and the Data Protection
Act. It provided that the Claimant was an agent of Post Office Limited, not
their employee, set out a list of products and services which Post Office
Limited might, at their discretion, make available for the Claimant to sell,
set out the basis of her remuneration, provided that it was for the Claimant to
provide the sub-post office premises and any suitable assistants, and for her
to be responsible for the safe custody of all Post Office Limited property in
the premises and it set out restrictions regarding private business activities
in the premises.
10.
After 5 November, the Respondent did not pay any remuneration to
the Claimant. She did, however, receive income from Post Office Limited.
11.
After 5 November, the Claimant continued to arrive at Dalneigh Post
Office & Stores at 6.30am, open up the premises and work in the general
store until 9am (except on Mondays when she did so until 8.30am). At 9am each weekday, she opened up the sub–post office and ran it during the working day.
From time to time she would, throughout the day, serve customers in the general
store in addition to carrying out her post office duties.
12.
As at 5 November, the Claimant understood that the arrangement
whereby she was to be the sub–postmistress would be a temporary one.
13.
By letter dated 29 December 2009, the Respondent was advised
by Post Office Limited that they had decided “summarily to terminate your
contract for services as sub-postmaster at Dalneigh Post Office Branch from the
date of your suspension…”.
14.
The Claimant attended for work on 13 January 2010 to open up
as usual, at 6.30am. The Respondent attended later that morning and told her
that she was no longer employed. Some time thereafter, in the middle of
January 2010, the Respondent assigned his tenant’s interest in the lease
of the premises to a third party.
Relevant Law
15.
The Claimant’s complaint is that she has been unfairly dismissed, in
terms of section 98(4) of the Employment Rights Act 1996.
The right not to be unfairly dismissed is vested in employees
and section 230(1) of the 1996 Act provides:
“In this Act “employee” means an individual who has entered into
or works under (or, where the employment has ceased, worked under) a contract
of employment.”
16.
It was not disputed that the Claimant entered into and worked under a
contract of employment with the Respondent between March 2001 and
5 November 2009. The issue for the Tribunal was whether, at that
point, she ceased to do so. The parties’ relationship between 5 November
and 13 January 2010 required, accordingly, to be examined to see
whether the contract of employment continued or whether, during that period,
the Claimant was working on some other basis. They required to consider
whether there existed an “irreducible minimum”
of mutuality of obligation and control. If mutuality of obligation is present,
that is demonstrative of a contract and the significance of control is that it
is relevant to determining whether or not the contract is one of service or
not. The Tribunal required, in that regard, to take account of the whole facts
and circumstances involved in their relationship after
5 November 2009.
17.
As was observed by Mummery LJ in Dacas v Brook Street Bureau,
a decision regarding the vexed question of the employment status of an agency
worker, it is important to look at the whole circumstances involved in the
parties’ arrangements:
“17. The critical point is that, although the construction of
the contractual documents is important, it is not necessarily determinative of
the contract of service questions, as contractual documents do not always cover
all the contractual territory or exhaust all the contractual possibilities. In
determining the true nature of the relationship (if any) between each of the
respective parties, it is necessary to consider the total situation occupied by
the parties. The totality of the triangular arrangements may lead to the
necessary inference of a contract between such parties, when they have not
actually entered into an express contract, either written or oral, with one
another. Although there was no express contract between the applicant and the
end-user in this case, that absence does not preclude the implication of a
contract between them. That depends on the evidence, which includes, but may
not be confined to, the contractual documents.”
18.
Control was raised as an issue before the Tribunal and the Employment
Judge, accordingly, referred to and relied on Ready Mixed Concrete (South
East) Limited v Minister of Pensions and National Insurance.
There, McKenna J stated that a contract of service existed if three
conditions were fulfilled, namely:
“(i) The servant agrees that in consideration of a wage or other
remuneration he will provide his own work and skill in the performance of some
service for his master; (ii) He agrees, expressly or impliedly, that in the
performance of that service he will be subject to the other’s control in a
sufficient degree to make that other master. (iii) The other provisions of the
contract are consistent with its being a contract of service…..as to (ii).
Control includes the power of deciding the thing to be done, the way in which
it shall be done, the means to be employed in doing it, the time when, and the
place where it shall be done. All these aspects of control must be considered
in deciding whether the right exists in sufficient degree to make on
party the master and the other his servant. The right need not be
unrestricted.” (Emphasis added).
19.
The control exercised by the putative employer need not, accordingly, be
absolute. The fact that it is, for instance, limited in terms of parties’
express or implied contract, by law or by trade union regulations, is not
inconsistent with there being a relationship of employer and employee. Nor
does the fact that the claimant also carries out other work not controlled by
him necessarily mean that there cannot be a contract of employment.
The Tribunal’s Judgment and Reasons
20.
At paragraph 7.1, the Employment Judge states:
“The key factor in this case is that Ms Cormie was not paid
by Mr Rodger in respect of the hours which she worked for him namely
between 6.30am and 8.30/9am Monday to Friday……the absence of any wage or
remuneration in respect of the work carried out by the claimant for
Mr Rodger and the absence of any control exercised by Mr Rodger in
relation to the claimant during that period means that the “irreducible
minimum” which requires to exist in order for there to be a contract of
services, was absent in the period between 5 November and 13 January.”
21.
The Employment Judge also referred, at paragraph 7.2, to it being
accepted that the Respondent did not exercise control over the Claimant when
she was fulfilling the role of sub-postmaster and that she was not paid by the Respondent
for that role. She added, at paragraph 7.4, that the Claimant was not a
worker because there was no evidence that the parties entered into any
agreement about her setting up the store each morning; the Claimant had just
carried on as before but without the Respondent paying her.
The Appeal
Submissions for the Claimant
22.
Ms Stobart submitted that Tribunal had fallen into error. They had
failed to record certain relevant evidence which was not disputed:
(a) that the Claimant’s last working day was on 10 January 2010
and on 12 January 2010 he had called her and advised that “he
was going to close the store”;
(b) the Claimant had attended for work on 13 January to open up as
usual at 6.30; the Respondent had attended later that morning and told her that
she was no longer employed;
(c) the Claimant had received no communication from Post Office Limited
terminating her contract with them; and
(d) throughout the course of the Claimant’s employment and from
5 November 2009 to 13 January 2010, the Respondent leased
the store and post office premises from Highland Council and the lease was
transferred to a third party after 13 January, the Respondent ceasing to
trade from the premises at that time.
23.
Secondly, the Tribunal’s decision was perverse.
24.
Ms Stobart referred to the history of events including the above
four matters which should, she submitted, have been recorded by the Tribunal
and taken into account as they were important. The Employment Judge
should have considered whether, from 5 November, there was an implied
agreement between the parties that an employer/employee arrangement would
operate whereby the Respondent would allow the Claimant to use the premises to
carry out her post office duties, with him continuing to undertake all the
tenant’s obligations under the lease. The Claimant was to be allowed to take
the fruits of the lease insofar as they comprised the payments from Post Office
Limited – that was an arrangement which he had asked her to enter into, it
being to his benefit that the sub post office continued to operate during his
suspension and pending his sale of the business. She submitted that there must
have been mutuality. The Claimant had worked for the Respondent
since 2001. She turned up for work each morning at 6.30 and continued to
do so after 5 November. The work she carried out in the general store
after that date was not for no consideration or remuneration. Her remuneration
was in the form of the post office remuneration being diverted to her and being
allowed to use the premises to earn that money without having to pay for the
use of them. He facilitated her ability to earn money. He continued to
exercise control in that her use of the premises for the post office work was
subject to his will and the position regarding the general store work did not
change. If the Tribunal had considered all those factors that pointed to
employment and weighed them against those which pointed away from employment –
namely that the remuneration was routed through Post Office Limited – they
could only have concluded that she was an employee. The contract with Post
Office Limited was not determinative. The Tribunal had erred in looking only
at the issue of remuneration and control narrowly.
Respondent’s submissions
25.
Mr Rodger referred to the Claimant having signed the contract with
Post Office Limited. He did not pay her after that. He had no control over
her post office work after that. He accepted that she carried on with the work
in the general store but she did not, he said, have to do that. He did not
tell her to do it. He did not control when she took her breaks. He accepted
that he retained responsibility for all the costs relating to the premises. He
also accepted that the evidential matters referred to by Ms Stobart were
not disputed.
Discussion and Decision
26.
Prior to 5 November 2009, the Respondent was the
sub-postmaster at Dalneigh subject to the same obligations to Post Office
Limited as were contained in the contract that the Claimant signed on
7 November 2009. Prior to that date, the Claimant was undoubtedly working
for the Respondent in a contract of employment with duties that involved both
post office work and general store work. The issue for the Tribunal was to
consider whether the change that occurred on that date was such as to disturb
the pre-existing employer/employee relationship. What happened at that time?
The Respondent did not dismiss the Claimant. He did not instruct her to cease
the general store work that she had always carried out for him. Rather he was
in the difficult position of being unable personally to continue, in the
meantime, to undertake sub- postmaster duties but wanting the whole business to
continue in operation whilst he tried to sell it. Accordingly, he asked the Claimant,
his employee, to assist him by running the post office on his behalf until he
had his hearing, following upon the auditor’s inspection. It is implicit in the
Tribunal’s findings that he must also have proposed to Post Office Limited that
they appoint the Claimant as temporary sub-postmaster. The Claimant agreed to
the Respondent’s request.
27.
The Claimant, accordingly, took over, on a temporary basis, the direct
responsibilities to Post Office Limited that are owed by any
sub-postmaster/mistress but she did not become an employee of Post Office
Limited. It was also part of the arrangement between the Claimant and the Respondent
that what he proposed would involve her being entitled to whatever remuneration
could be earned from carrying out post office work in place of the salary that
he had previously paid to her. That is not to say, however, that the Respondent
afforded the Claimant no benefit under the new arrangement. He may not have
been bound to pay her a salary but, in introducing her to Post Office Limited,
he facilitated the payment to her of a regular income and, importantly, he
allowed her to use the premises rent free (no sublease was entered into) and
free of any tenant’s responsibilities/liabilities in respect of them. There is
no suggestion of the Claimant having to provide her own tools (e.g. a till,
scales or other equipment); it can be inferred that she was to be allowed to
continue using the Respondent’s post office equipment. The Respondent plainly
exercised an element of control in respect that he was to and did provide her
with these benefits, without which she could not have carried out her
sub-postmaster duties and, further, in respect that her ability to use the
premises was at his will and behest and it could have been prevented by him at
any time. If, for instance, he had decided that it suited his business
purposes to close the premises at 4pm each afternoon, the Claimant would have
had to stop working then. The fact that that would have put her in breach of
her contract with Post Office Limited (which provided for the sub-post office
to be open until 5pm each weekday) would have been neither here nor there. He
could have controlled her working in that respect and she would have had no
alternative but to accept it.
28.
Further, the Claimant carried on working in the Respondent’s general store,
as before, taking in the newspapers that he had decided should be sold, opening
up the premises at the usual time for his business and working exclusively for
his business in the first 2–2½ hours each morning. There is no suggestion
that she had any choice or control over what was to be sold in the general
store or that the Respondent could not, at any time, have given her specific
directions about her work in that part of his business. It is no answer to
say, as Mr Rodger did, that he did not specifically ask her to carry on
opening up the store each morning or to work there. It is plain on the facts
found that matters carried on as before so far as the general store was
concerned. That is, she worked in the general store as his employee before 5 November 2009 and nothing changed so far as the method of working was
concerned after that. The Tribunal relied on the fact that the Claimant
received no monetary payments from the Respondent in respect of her continued
work for the general store. That is, of course, correct but if the Employment
Judge had looked at the whole picture, she would have recognised that the Claimant
was in fact receiving consideration from the Respondent in the ways referred to
above. Put shortly, she worked in the general store, she provided the
temporary sub-postmaster services that the Respondent’s business required and,
in return, she had the benefit of the re-routing to her of the Post Office
Limited earnings and the use of the Respondent’s premises and equipment.
29.
These arrangements plainly suited the Respondent very well indeed since
the Dalneigh Post Office and General Store was able to keep running in its
entirety whilst he was attempting to sell the business.
30.
The arrangement could, accordingly, in “Ready Mixed Concrete”
terms, only be analysed as follows: first, the Claimant agreed to provide her
work and skill for the benefit of the Respondent and received remuneration
consisting of monetary payments and other benefits, the latter coming directly
from the Respondent and the former resulting from him having introduced her to
Post Office Limited as a suitable temporary replacement; secondly, the Respondent
had a measure of control over the Claimant – although he could not directly
control the post office work she carried out under her contract with Post
Office Limited, there were other ways in which he exercised control, as
discussed above; thirdly, this arrangement which, to a significant degree
perpetuated matters as between the Claimant and the Respondent in the same way
that they had operated before 5 November 2009, was consistent with it
being a contract of employment. The addition to the Claimant’s bundle of
duties of those which she, after 5 November 2009, owed to Post Office
Limited, did not, in my view, detract from that.
31.
I am accordingly, persuaded that this appeal is well founded. Had the Tribunal
looked at all the relevant facts and circumstances, it could not have concluded
that the Claimant ceased being an employee of the Respondent.
Disposal
32.
I will, accordingly, pronounce an order upholding the appeal and
substituting for the Judgment of the Employment Tribunal a finding that the
Claimant remained in the employment of the Respondent after
5 November 2009 in a contract of employment which was terminated by him
on 13 January 2010.
