Appeal No. UKEAT/0480/09/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 6 April 2010

Before
HIS HONOUR JUDGE McMULLEN QC
MRS R CHAPMAN
MR A HARRIS

MR K AHSAN	APPELLANT

WESTMEAD BUSINESS GROUP LTD – IN LIQUIDATION	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	Written submissions 	
For the Respondent	No appearance or representation by or on behalf of the Respondent	

SUMMARY
JURISDICTIONAL POINTS
Worker, Employee or Neither

The Employment Tribunal had rejected the Claimant’s claims on the basis that he was not an employee. On examination of the documents there was an employment relationship and the parties conducted themselves in accordance with it until after it ended. Employment Tribunal Judgment reversed.

HIS HONOUR JUDGE McMULLEN QC

1.	This is an appeal by Mr Ahsan, the Claimant in proceedings against Westmead Business Group Limited, the Respondent, which were heard before an Employment Tribunal chaired by Employment Judge Silverman at London South on 30 June 2009.  The Claimant was in person.  The Respondent was represented by counsel.  The Claimant made a number of claims associated with his engagement by the Respondent from 2 April 2007 to about 7 February 2008.

2.	On 15 July 2009, the company was wound up upon a creditor’s petition brought by HMRC, and a liquidator was appointed on 6 October 2009, Mr Dennis.  He has written to the EAT saying that he does not oppose the Claimant’s appeal.

3.	This appeal was sifted to a full hearing by HHJ Peter Clark, who was of the opinion that there were reasonable prospects of success in the light of Autoclenz Limited v Belcher & Ors [2010] IRLR 70 CA.

The facts
4.	It is difficult to state the facts with the care that we would normally employ for the reasons in the Judgment are sparse.  The relevant passages are these:
1.	“The Claimant was offered employment by the Respondent under the terms of the Respondent’s letter dated 17 July 2007. (p35)

2.	The Claimant would have preferred to be self employed and attempted to negotiate terms as a self employed contractor.

3.	The negotiations had not been finalised at the time when the Claimant started to work for the Respondent on 2 April 2007.

4.	On hearing evidence presented to us by the Claimant and Ms Plowman, an HR sub-contractor working for the Respondent, we conclude that the Claimant was able to regulate his own hours of work by attending the Respondent’s offices on average two days a week and to control his own work schedule.

5.	He was paid monthly by cheque and the Respondent withheld an amount roughly equivalent to the tax and national insurance payments to which the Claimant was liable but he was not put on the company’s PAYE system.  The money was never paid to the relevant authorities.

6.	Ms Plowman was engaged on as a sub-contractor and her terms of engagement were very similar to these outlined by the Claimant.

7.	Towards the end of 2007 it appears that the Respondent became dissatisfied with the Claimant's performance and by email dated 5 February 2008 sought to terminate the arrangement with him.  The Claimant did not seek nor has he obtained a P45 or P60 from the Respondent.

8.	On 25 February 2008 the Claimant and Respondent agreed by email (pp 90-94) a form of wording which confirmed the Claimant’s status as a self-employed person.

9.	The Claimant is an educated man, he had expressed a desire for the commencement of the period of work with the Respondent to be self-employed.  The Tribunal finds that the Claimant fully understood the difference between employment and self-employment and would not have agreed to the emails on pp 90-94 without understanding the consequences of their content which from a taxation point of view, were to his advantage.

10.	Although these emails are dated after the arrangement between the Claimant and Respondent was terminated they reflect the status quo of the relationship between the Claimant and Respondent and have the effect of negating any employment relationship between them.

11.	For the above reasons the Tribunal finds that the Claimant was not an employee and therefore his claim fails and is dismissed.”

5.	The Tribunal appears to have conducted a perfunctory analysis of the factors pointing to and against an employment relationship in paragraph 4 above relating to time at work.  The Tribunal does not analyse the relationship as it was formed in 2007 but focuses upon what was said by the parties by email after it had terminated.  The Claimant was not an employee, and some of his claims failed.

6.	He appealed. The appeal contains a number of procedural contentions which relate to the timing of the hearing and the organisation of the bundles by the lawyers representing the Respondent.  But the reality of this case is that the claim is one of employment.

Discussion
7.	With no opposition by the Respondent, we consider the situation to be clear.  The Employment Tribunal wrongly focused upon on the email traffic at the end of the relationship.  Since that is the sole basis of the Tribunal’s finding against an employment relationship it is easy for us to see an error.  True it is that the Employment Tribunal does deal with aspects commonly associated with the investigation carried on when employment status is put in issue (see paragraph 4 above) but this does not point one way or another in favour of employment.  That the Claimant worked on two days a week and could organise his schedule does not solve the problem of employment status.  On the contrary, these are matters found in the written materials.  

8.	The end of the relationship is signalled on 7 February 2008 following a meeting.  In an email, three months’ notice is given to the Claimant, “as stated in your contract”.  There is a further reference to the notice period, to statutory sick pay and commission up to February 2008.  These, we hold, are drawn directly from a letter dated 17 February 2007.  We assume that the letter referred to by the Employment Tribunal in paragraph 1 of its Reasons is wrongly dated.  There is no other contract in evidence.  The words “the contract” plainly refer to this letter since they relate to commission and other matters.

9.	The Claimant raises on appeal a dispute about whether he was given the staff handbook dated 2002 or 2007; he says the former.  But nothing turns on that since this is plainly available to employees.  All of the provisions are consistent with it being given to a person who is an employee. 

10.	Not referred to in the Employment Tribunal judgment but which we assume was before it is a letter dated 3 October 2007 written by Mr Dhamelia, the managing director and the leading light for the Respondent, who conducted the relationship and negotiations in the following terms:

“To whom it may concern.  I confirm that Mr Ahsan is employed by us on a full time basis since 1st April 2007 as Head of Corporate Strategy and Performance.  His current salary is £55,000 per annum.” 

11.	Thus at that stage the only documentation is of an employment relationship. What then happened is that the relationship became difficult.  Different reasons are given but, as at the date the relationship ended (see the email of 7 February 2008), the Respondent is plainly asserting the existence of the original contract.  This was followed by an exchange in which the Claimant continues to assert payments in accordance with that contract.

12.	But then, in a sequence of three emails, the Claimant accepts that his employment was on a self-employed basis between 1 April 2007 and 7 May 2007.  In the second and third versions of the email, the Claimant accepts responsibility for tax and national insurance payable to the Inland Revenue.  This is an important aspect of the case.  Documents available on appeal and we assume below include a P11 calculator for tax and national insurance where there is reference to the “employee’s name”.  It is clear from this document that the Respondent  worked out roughly what would be the charge for tax and national insurance and deducted that from the Claimant’s paycheques. But the Respondent made no payment over to HMRC throughout the time of the Claimant’s relationship.  Thus it appears that the Respondent entered into a contract of employment, was obliged to make deductions for tax and national insurance, purportedly did so, but did not hand them over.

13.	In our judgment, the Employment Tribunal wrongly paid attention to the subsequent email.  It is true that, since Autoclenz [2009] EWCA Civ 1046and Launahurst Ltd v Larner [2010] EWCA Civ 324 matters such as sham should be examined most carefully.  In our judgment, the Employment Tribunal failed to take account of relevant documents and failed to give effect to what is plainly a contract of employment, conducted as such by the parties throughout their relationship until it ended.

Disposal
14.	Since the company is in liquidation and there is no opposition to this appeal nor to the relief the Claimant seeks, it seems to us that we have the material available to us to enable us to decide the employment issue in this case.  The sole material relied on by the Tribunal is documentary.  We hold that there was an employment relationship.  Mr Dhamelia did not attend at the Employment Tribunal to give evidence to gainsay what the Claimant said about it.

15.	The introduction of a comparison between any contract of the HR subcontractor and the Claimant seems to us to be a red herring.  That subcontract is not before us, and it seems unlikely that she had a contract in the same form as the letter of 17 February 2007 appointing her to a position like the Claimant’s.  In our judgment, that comparison is inapt and is an irrelevant consideration.

16.	Thus, on the documentary material, it is open to us to make a judgment and in accordance with the principles of Sinclair Roche & Temperley v Heard [2004] IRLR 763 not refer it, so avoiding “ping-pong” (Buckland [2010] EWCA 121 per Jacob LJ).  It is expeditious to do so and, we will decide that the Claimant was an employee. We reject the contention upheld below that the post-termination correspondence “negates” that relationship. Since the Claimant was an employee he did not undo that status by the later exchanges, whatever the reason for them.

17.	The matter will now be referred back to the Employment Tribunal for it to consider the Claimant’s claims on the footing that he is an employee.  Such decisions as the Tribunal made that are based upon the Claimant’s not being an employee are set aside.