Appeal No.	EAT/0232/03/ILB

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                                 At the Tribunal
	                                 On 4 July 2003
Judgment delivered on 15 August 2003

Before
HIS HONOUR JUDGE D M LEVY QC
MS G MILLS
MR J C SHRIGLEY

NORTH ESSEX HEALTH AUTHORITY
(now known as ESSEX STRATEGIC HEALTH AUTHORITY)	APPELLANT

DR C DAVID-JOHN	RESPONDENT

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

For the Appellant	MR N UNDERHILL QC
(of Counsel)
Instructed by:
Messrs Radcliffes Le Brasseur
Solicitors
5 Great College Street
Westminster
London SW1P 3SJ
	
For the Respondent	MR K SONAIKE
(of Counsel)
Instructed by:
Messrs Tayo Arowojulu
Solicitors
Helen House
214-218 High Road
Tottenham
London N15 4NP	

HIS HONOUR JUDGE D M LEVY QC

1	In this appeal Mr Underhill QC and Mr Johnson appear for the Appellant and Mr Sonaike appears for the Respondent.  Mr Johnson and Mr Sonaike appeared for their respective clients at the Employment Tribunal.  When the appeal was called on, Mr Underhill QC drew attention to the strong possibility that he had sat with one of the members sitting on this appeal.  In the light of Lawal -v- Northern Spirit Ltd [2003] UKHL 31.  It might be thought inappropriate for that member to sit on the hearing of this appeal.  In the circumstances Mr Sonaike agreed to discuss with his client as to whether there was any objection to that member sitting.  

2	After a short adjournment Mr Sonaike confirmed that his client had no objections.  In his Originating Application the Respondent claimed that he had been unfairly dismissed by the Respondent against whom he also made a complaint of unlawful discrimination.  In its IT3 the Appellant averred that an Employment Tribunal had no jurisdiction to hear the complaint of unfair dismissal because the Respondent had never employed the Appellant.  It denied that the Employment Tribunal had jurisdiction to hear the Respondent’s unlawful complaint, because there was no employment relationship between them.  That led to a directions hearing by a Chairman sitting alone at Watford and directions were given for a preliminary hearing at which these issues could be determined.  The issues were thus defined:
“From the 1 July 1996 (the date upon which the [Respondent] became the Sole Practitioner) to 17 April 2001 (when he ceased to provide medical services in the area of the [Appellant] or at any time within that period was the [Respondent]:-
(a) An employee as defined in section 230(1) of the Employment Rights Act 1996           [“the ERA”].
(b) In “employment” as defined in section 78 of the Race Relations Act 1976 [“the RRA”]?
(c) A “contract worker” within the meaning of Section 7 of the RRA?”

3	An Employment Tribunal sat at Watford on three days in November 2002 and held a discussion day in December 2002 to consider the submissions heard.  Their Decision was promulgated on 4 February 2003.  It answered the preliminary questions in favour of the Respondent, hence a Notice of Appeal followed, received on 12 March 2003.  On 27 March 2003, on the sift system, Judge Ansell directed that the appeal should come on for a hearing with a recommendation for expedition.  

4	In paragraph 3 of his Note of Discussion of a preliminary hearing held on 20 September 2001 the ET Chairman referred to an authority to which he had been referred by the Appellant and that the Tribunal had referred the parties to, City and East London Family Health Services Authority -v- Duncan (EAT/721/96) (IDS Report - copy on file) and expressed the view that it was really quite remarkable that “none of these issues appear to have been authoritatively decided anywhere in the country.”

5	The Extended Reasons suggest that none of the very relevant authorities to which we were referred were considered by the ET.  The Extended Reasons contain, at paragraph 5, a number of questions which the Tribunal thought needed answering and the issue to be determined and the answers given by Mr Greenwood, the witness called by the Tribunal.  Paragraphs 7 and 8 set out the date the Respondent was in a working relationship with the Appellant, namely from December 1993 until 17 April 2001 and that he was practising on premises providing a service to 3,100 patients approximately.  Paragraph 9 refers to written skeleton submissions used by Counsel.  Paragraph 10 sets out the definition of an employee, as found in section 230 of the ERA.  Paragraph 11 sets out and refers to the National Health Service (General Medical Services) Regulations 1992 (“the 1992 Regulations”) and states:

“It has been suggested that the statutory instrument that governs the relationship between GPs and Local Health Authorities cannot be a contract because it is a statute.  The Tribunal can find no authority for this proposition.”

With the assistance of Counsel we have been able to consider several such authorities during the hearing of this appeal.  Paragraph 12 of the Extended Reasons reads:
“The Tribunal then went on to dissect the terms of service for doctors to see what arrangements were in place (if any) for a contract of employment to exist.”

The remainder of the Decision contains extracts from those Regulations and the conclusions of the Tribunal to be drawn therefrom which led to the discussion.  In paragraph 16 the Tribunal reminded itself of the various tests that have been developed over the years to distinguish a contract of service from a contract for services, and it set out the four most important elements, namely:
“(a) the control test;
(b) the integration or organisational test;
(c) the economic reality test; and
(d) the multiple test”

Their conclusion was that there was a sufficient element in the Regulations controlling the relationship between the GP and the local Health Authority to constitute a contract of employment.  The final sentence reads:
“24  …. Whilst that may not have been the intention of Parliament, the Tribunal reminds itself it is not the label the parties put on the relationship, it is the reality of the relationship between the parties.”

During the hearing of this appeal we have not only been able to consider with the help of Counsel the statutory framework in which the question has to be considered, but also the various authorities to which no reference was made by the Employment Tribunal.  

6	In opening the appeal, Mr Underhill very helpfully took us through the statutory framework for the provision of General Practitioner services in the National Health Service, taking us to the changes from time to time in the statutory developments.  This enabled us the better to understand the issues in the appeal.  He pointed out, insofar as the Respondent claimed that the Authority’s conduct in relation to the dispute constituted a fundamental breach of contract and that his resignation was accordingly a constructive dismissal, his claim for unfair dismissal arose under part xi (10) of the ERA.  He drew our attention to section 230(1) and (2) in support of a submission that it was essential to the Respondent’s claim that he should have been employed as an “employee” as therein defined, i.e. under a contract of service.  

7	Mr Underhill also took us to sections 4(2) and 78(1) of the RRA on which the Respondent relied to say that the conduct of which he complained constituted racial discrimination against him as an employee.  By section 78(1) of the RRA, “employee” has a wider meaning than that under the ERA.  It covers not only a contract of service but also employment under a contract “personally to execute any work or labour”  Mr Underhill pointed out that both these questions were answered adversely to the Appellant below.  

8	Mr Underhill submitted that the principal issues which fell for decision on the preliminary point before the EAT and before us were these:(A) was there a contract between the parties, and (B) was there a contract “personally to execute any work or labour” between the Respondent and the Appellant? We will consider these points in the context of the Regulations and the authorities to which we have been referred.  

9	The first of the authorities in time, to which we were referred was Wadi -v Cornwall and Isles of Scilly Family Practitioner Committee [1985] ICR 492.  There the Appellant, a medical practitioner, had made a complaint of unlawful discrimination by the Respondent of him under the RRA.  This was heard by a panel of the EAT, headed by Peter Gibson J, which dismissed the appeal.  The EAT held that the nature of the relationship between a doctor and the Medical Practice Committee and the Family Practitioner Committee was not contractual, but that a doctor worked pursuant to arrangements made under a statutory scheme conferring rights and obligations (emphasis noted).  Accordingly, the Applicant was not employed under a contract of employment.  At page 495 of the judgment, the EAT started by considering “the highly complex statutory scheme affecting General Practitioners in the National Health Service”.  We note in passing that the panel had the benefit, amongst others, of Mr Underhill giving “skilled guidance through the statutory labyrinth”.  Having gone through the submissions of both parties, at page 498 between letters C and D, the panel summarised the position thus:
“In summary, our view is that under the statutory arrangements the doctor on the one side and each of the family practitioner committee and the medical committee on the other have rights and obligations conferred by statute rather than by contract.  It is not necessary and we think it wrong to seek to import a contract into a scheme of things which is governed by the very detailed statutory arrangements made by neither the family practitioner committee nor the medical committee.”

Mr Underhill having drawn our attention to changes in the “statutory scheme” since the decision in Wadi submitted that that was a correct a statement of law now as it was then.  

10	The next authority in time, which considered the position between a doctor and a party in the same position as the Appellant, was Roy -v- Kensington, Chelsea and Westminster Family Practitioner Committee.  That came before Judge White, sitting as a Judge of the High Court in the Queens Bench Division on a preliminary application where the issue was:

“If the [Committee] form the opinion that a practitioner is not devoting a sufficient amount of time to qualify for the full allowance, this can be challenged by way of action for breach of contract as the plaintiff seeks to do, or whether the court should insist that the challenge be by way of judicial review.”
The learned Judge said that this posed two questions which he phrased thus:

“(1) does the practitioner have a contractual relationship with the Committee? and
(2) what is the duty the Committee is discharging when it makes a decision under this direction upon the eligibility of a practitioner for the full allowance?”

The Defendant Committee had reduced by twenty per cent an allowance paid to the Plaintiff because of his absence, during which he had employed a locum, who had acted as his practice manager.  In the course of his judgment, the learned Judge said this:
“There are indeed contractual echoes in the relationship.  The practitioner is bound by terms of service and, in applying to be placed on a list, gives an undertaking to provide general medical services.  The echoes are nevertheless, in my judgment, deceptive.  The rights and duties of those within the scheme stem from and are entirely dependent on statute and regulation.  They are not dependent on a contractual relationship.  The rights and duties are no less real or effective for the individual practitioner.  Private law rights flow from the statutory provisions and are enforceable, as such, in the courts but no contractual relationships come into existence.  The decision I make upon the application is nevertheless not dependent on this finding, for, whether or not the plaintiff’s right to full payments under the scheme were contractually based, I accept that the duty which the Committee discharges, when establishing for the purposes of a practitioner’s eligibility, whether or not he is devoting a substantial amount of time to general practice under the National Health Service, is a public law duty; the function is a public law function.”

11	His decision, striking out the application on the grounds set out, went to the Court of Appeal.  Their decision is reported in [1990] 1 MLR 328.  All three Judges in the Court of Appeal came to the conclusion that the learned Judge was wrong to find that the relationship between Dr Roy and the Committee was contractual, and concluded that there was no reason why Dr Roy should not be allowed to sue on the contract by ordinary action.  Nourse LJ agreed with Balcombe LJ that the Committee’s acceptance of Dr Roy’s application to be included on their list of doctors created a contract between them and that accordingly his proper remedy was by ordinary action and not by judicial review.  From that decision, the Committee appealed to the House of Lords.  The report of that appeal is found at [1992] 1 AC 624.  The House of Lords dismissed the appeal on the grounds that a litigant possessed of a private law right could enforce that right by ordinary action, notwithstanding that the proceedings would involve a challenge to a public law act or decision and that the plaintiff’s relationship with the Committee, whether contractual or statutory, (emphasis added) conferred on him a private law right to remuneration in accordance with his statutory terms of service.  The House of Lords, therefore, agreed with the Court of Appeal that the claimant was entitled to proceed against the Committee, contrary to the original decision of the Judge.  However, in the two speeches with which three other Law Lords agreed, there were interesting observations on the “contractual” position between the parties.  In his speech, Lord Bridge said, at page 630 D:
“I do not think the issue in the appeal turns on whether the doctor provides services pursuant to a contract with the family practitioner committee.  I doubt if he does and am content to assume that there is no contract.”

12	At page 649 D to G, Lord Lowry said this:
“I have already referred to the judgment of the Court of Appeal [1990] 1 Med L R 328, which concluded that there was a contract for services between Dr Roy and the committee and that it was therefore in order for Dr Roy to sue the committee for a declaration of his rights and an order for payment.  (Your Lordships have not the benefit of the Court of Appeal’s view on what the position would have been assuming that no contract existed.)  I cannot altogether accept the reasoning which led the members of the Court of Appeal to conclude that there was a contract, because, although there may well have been a contract for services, I am not satisfied that there was.  Reg. v East Berkshire Health Authority, Ex parte Walsh [1985] Q.B. 152 does not in my view provide a reliable argument in favour of saying that there was a contract in the present case and Wadi -v- Cornwall and Isle of Scilly Family Practitioner Committee [1985] ICR 492 indicates the contrary.  At the same time, I would be foolish to disregard the fact that all the members of a distinguished Court of Appeal held that a contract for services existed between Dr Roy and the committee.  It shows, to say the least, that there are “contractual echoes in the relationship,” as Judge White [1989] 1 Med L R 10, 12, put it and makes it almost inevitable that the relationship, as was said of that which arose in Wadi’s case, gave rise to “rights and obligations” and that Dr Roy’s rights were private law rights.  I would here observe that the mere fact that the Act and the Regulations constitute a statutory scheme which lays down the doctor’s “terms of service” (an expression which has contractual overtones) and creates the relationship between him and the committee, is not fatal to the idea of a contract, but that relationship did not need to be contractual.  Moreover, the discretion which the scheme confers on the committee is not typically characteristic of a contractual relationship, and the same can be said of the appellate and supervisory role given to the Secretary of State.”
Wadi, not cited to the Court of Appeal, was considered in the House of Lords.

13	The final authority on the point of whether there was a contract of service between doctor and Health Committee to which we were referred was Ealing Hammersmith and Hounslow FHSA -v-Shukla [1993] ICR 710.  There Dr Shukla made a complaint that the Health Authority had unlawfully discriminated against him on the ground of sex in the manner of his failure to succeed to a vacancy in a general practice.  A preliminary issue was raised in the Industrial Tribunal as to whether the relationship between a general practitioner and a Health Services Authority was capable of being a subject of a complaint under section 6(1)(a) of the Sex Discrimination Act 1975 (the “SDA”) and that accordingly they had jurisdiction to hear Dr Shukla’s complaint.  In coming to its decision, the Tribunal relied on the Court of Appeal’s ruling in Roy. Giving the judgment of the EAT, Wood J stated:
“Argument before us centred, in particular, on the issue whether the decision in Roy’s case in the Court of Appeal …. was, in effect, overruled by the House of Lords  … or whether it stands and the ratio is binding on us.  We have decided that the ratio in the Court of Appeal in Roy, that a contract existed, no longer stands.”

14	He gave three reasons for that and went on to say at H:
“We ourselves would respectfully add some comments.  First, since the relationship of general practitioners with the family health services authority is based on statutory provisions, there is no need to seek to explain it in contractual terms.  The sources of the obligations are statutory.  Secondly, the relationship does not sound in the contractual concepts of offer and acceptance; we doubt whether consideration can be spelt out.  Thirdly, the appointing body was the medical practices committee not the family health services authority.  Fourthly, the obligations arising do not arise out of a bargaining process between the parties.  Fifthly, such discretion as is available to the family health services authority is subject to appeal to the Secretary of State, who is in fact the arbiter.  Sixthly, the situation is distinguishable from those instances where a contract arises and statutory terms are to be implied into it.  Hospital doctors, nurses and ancillary staff are employees under contracts of service.  
We accept and are content to follow the reasoning of Peter Gibson J. and the members of the appeal tribunal in Wadi v Cornwall and Isles of Scilly Family Practitioner Committee [1985] ICR 492, 498, where he says:
“In summary, our view is that under the statutory arrangements the doctor on the one side and each of the family practitioner committee and the medical committee on the other have rights and obligations conferred by statute rather than by contract.  It is not necessary and we think it wrong to seek to import a contract into a scheme of things which is governed by the very detailed statutory arrangements made by neither the family practitioner committee nor the medical committee.”
Miss Booth makes the general point that, if no contractual basis exists, general practitioners as a group, as self-employed, are deprived of the benefit of making allegations of discrimination to industrial tribunals under the Acts of 1975 and 1976.  The remedy on facts similar to those in the present case is by way of appeal to the Secretary of State during which allegations of discrimination can be made.  Such procedure undoubtedly has some limitations: see Reg v Department of Health Ex parte Gandhi [1991] ICR 805.  The legislation, however, seems to be quite clear: see section 63(2) of the Act of 1975 and section 54(2) of the Act of 1976.
Mr Jeans has also drawn our attention to the history of the interpretation sections in those Acts.  At the time they were being drafted, the main Act in employment law was the Trade Union and Labour Relations Act 1974.  In section 30 - the interpretation section - definitions are to be found of “employee”, “employer” and “worker”.  By the wording of section 30(2), general practitioners (those providing general medical services) were expressly included in the definition of “worker” as were dentists and some others.  This indicates that in the absence of such express inclusion the legislature considered they would be outside the definition of “worker”, parts of which definition are to be found in the definition of “employment” in section 82(1) of the Act of 1975.  He further submits that his argument is reinforced by the wording of sections 279, 295 and 296 of the Trade Union and Labour Relations (Consolidation) Act 1992.  We accept that his submissions have force.”

15	Mr Underhill has submitted that the decision of the EAT in Shukla was plainly binding on the Employment Tribunal.  He points out that such an understanding appears to have been shared by the legislature in that an insertion was made by the Public Interest Disclosure Act 1998 into the ERA in section 43K(1)(c) which proceeds on the assumption that GPs will not fall within the definition of “worker” in section 230(3) or therefore of “employee” in section 230(1).  He submitted that it was necessarily to be inferred that this is because they have no such contractual relationship with the authorities for which they work.  He referred to the speech of Lord Taylor in Al-Mehdawi -v- Secretary of State for the Home Department [1990] 1 AC 876 at pp 881-3.  

16	Mr Sonaike, by contrast, invited us to follow the views of the Court of Appeal in Roy, given that they did embark on a detailed consideration of the issues, whereas the House of Lords did not.  He pointed out that in the Al-Mehdawi case, the reasoning of the Court of Appeal was of “powerful persuasive influence”.  He submitted that the express view of the Court of Appeal should be preferred to that of the EAT in both the Wadi and the Shukla case.  He submitted that the reference to section 43K(1)(c) was immaterial and he pointed to factors which did suggest that that was a contract of employment.  

17	We have carefully considered all of Mr Sonaike’s submissions both in his Skeleton Argument and oral submissions.  However we have found the reasoning of Wood J in Shukla to be persuasive on why the decision in Roy in the Court of Appeal should not be followed.  We cannot accept his submission that the Employment Tribunal was following the guidance found in the authorities, to which we have referred, in the light of the fact that no reference whatsoever is made to them. Indeed in paragraph 11 of the Extended Reasons, the Tribunal rejected what they said was a submission that:
“the [1992 Regulations] cannot be a contract because it is a statute”
on the grounds that it could find no authority for that proposition.  In our judgment, that wholly mischaracterises the basis of the reasoning in Wadi and Shukla.  It therefore fails properly to consider submissions which we understand were made by the authority based on them.  

18	We further accept Mr Underhill’s submission that even if the Tribunal had not been bound by Wadi and Shukla, it was necessary for it to consider the questions addressed in those authorities of whether, in all the circumstances, the relationship was in fact contractual or purely statutory.  It did not do so.  In paragraph 15 of the Extended Reasons, attention is drawn at great length to various paragraphs of the terms of service, which the Tribunal confuses with the Regulations themselves, and emphasis is placed on the word “shall”.  We agree with Mr Underhill’s submission that the Tribunal has missed the point.  Of course it is true that the terms of service impose a number of obligations on a General Practitioner in relation to patients whom he accepts on to his list, or who are assigned to it.  However, that does not advance the argument whether those obligations are contractual rather than statutory in character.  For the reasons that we have given, we are satisfied that they are in fact statutory rather than contractual.  

19	In the light of our decision on Issue (A), it is not strictly necessary for us to deal with the other two issues which are raised in the Notice of Appeal.  However, as to whether there was a contract of service between the Appellant and the Respondent, we think it is inconceivable that it is one of service, i.e. of employer and employee as it is ordinarily understood.  We agree with Mr Underhill’s submission that it is hard to think of a clearer example of a self employed “independent contractor” than a GP.  Although the issue did not arise for determination in any of the authorities to which we have referred, it is notable that in none of them was it suggested that a GP was an employee in the ordinary sense and each proceeded on the basis that if there was a contract, there was a contract for services.  
20	As to issue (C), which only arises if, contrary to our judgment, there is a contract between a GP and a Health Authority, in our judgment, such a contract is not one “personally to execute any work or labour” which in the Mirror Group Newspapers PLC -v - Gunning [1986] ICR 145 the Court of Appeal stated was a contract:
“the dominant purpose of which was the execution of personal work or labour”
Although the Regulations which we were taken through in detail, contemplate that a GP will provide at least some services of a General Practitioner personally, that is not decisive: the terms of service make it clear that a General Practitioner on a medical list is not required personally to treat patients on his list.  Regulation 19(1) appears to say this but Regulation 19(2) provides that treatment may be given by a deputy, an assistant or a partner and since 1986, by an out-of-hours deputising service.  Although there are some restrictions on the appointment of deputies and assistants, it is not necessary for a General Practitioner to obtain the Health Authority’s consent to such appointments, save to the prolonged employment of a particular assistant or assistants.  In our judgment, the essence of the contract is the doctor on the list should take full responsibility for his patients, but not that he should personally meet them is in line with the dicta of Oliver J in Mirror Group Newspapers plc -v- Gunning [1986] ICR 145 at 151C - D.  Mr Sonaike relied on the minimal “availability” of requirements imposed by the terms of service in Regulations 29 - 33.  Those requirements relate to the services for which he was responsible and are not relevant to the question whether those services should be provided personally.  

21	In our judgment the decision of the Employment Tribunal was wrong in law.  We will allow this appeal and hold that the Employment Tribunal does not have jurisdiction to uphold either of the claims which the Respondent brought, namely that he was constructively dismissed, or that he had a claim against the Appellant under the Race Relations Act.
22	Before we retired to consider our decision, each party sought permission to appeal in the event that they lost.  In the light of our findings that the point of law was clear and determined by authority which, if not binding on this Tribunal, is one to which we feel bound to pay respect, and which in any event we feel to have been rightly decided, we will not give permission to appeal.  We consider that, on the authorities presented in this judgment, the appeal has small prospects of success.  Consequently, the Respondent’s application for permission to appeal is refused.