Factual and Procedural Background
The Appellant began working for the Respondent as a labourer in June 1990. The Appellant worked whenever work was available, signing on for benefits during periods without work, including a three-week Christmas break and two layoffs in 1991. The Appellant was paid by cheque weekly at a rate of £50 per day with a 24% tax deduction and chose to be treated as self-employed for tax purposes. Between May and August 1995, the Appellant was off sick without pay from the Respondent and claimed state incapacity benefit. The Respondent ceased providing work after March 1997 and subsequently ceased trading. The Appellant claimed a redundancy payment.
The Employment Tribunal at Stratford, chaired by Mrs. Prevezer, held on 8 January 1998 that the Appellant was not an employee and therefore not entitled to redundancy pay. The Tribunal also found that, if the Appellant had been an employee, his continuity of employment was broken by his absence due to sickness, preventing completion of two years' service by the termination date.
Conflicting decisions had been made by other Employment Tribunals involving the same Respondent and different workers, with some finding employment relationships existed. The appeal was allowed to proceed to a full hearing by a Tribunal division presided over by Judge Levy QC, who found the appeal arguable on grounds of perversity given the differing tribunal findings.
The Appellant was granted leave to file amended grounds of appeal, raising issues about the adequacy of the Employment Tribunal's reasoning regarding the existence of mutual obligations, control, personal performance of work, and risk of profit and loss.
Legal Issues Presented
- Whether the Appellant was an employee of the Respondent within the meaning of Section 130 of the Employment Rights Act 1996.
- Whether the Employment Tribunal provided adequate reasoning in reaching its conclusion that the Appellant was not an employee.
- Whether the Appellant’s continuity of employment was broken by his period of sickness absence between May and August 1995.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| O'Kelly v Trusthouse Forte (1983) ICR 728 |
On appeal, the question of employment is one of fact and degree for the Employment Tribunal, barring self-misdirection or perversity. |
The court applied this principle to affirm that interference with the Employment Tribunal’s findings is limited unless there is an error of law or perversity. |
| Meek v City of Birmingham District Council (1987) IRLR 250 |
Employment Tribunals have a duty to explain their reasoning when reaching conclusions. |
The court found the Employment Tribunal’s reasoning defective for failing to explain how it reached the conclusion that the Appellant was not an employee. |
| Kent County Council v Gilham (1985) ICR 233 |
Different Employment Tribunals can reach different conclusions on similar facts without necessarily making an error of law. |
The court acknowledged conflicting tribunal decisions but emphasized this does not automatically imply error. |
Court's Reasoning and Analysis
The court emphasised that the determination of employment status is a factual and evaluative question for the Employment Tribunal, subject to review only for legal error or perversity. The court noted conflicting tribunal decisions involving the same Respondent and different workers, but clarified that such conflicts do not inherently indicate legal error.
Critically, the court found the original Employment Tribunal’s reasoning deficient because it failed to articulate the basis for its conclusion that the Appellant was not an employee. The Tribunal did not address key factors such as mutual obligations, control, personal performance of work, and risk of profit and loss, which are central to employment status assessments.
Regarding continuity of employment, the court observed that the Tribunal’s finding of a break in service due to sickness absence required reconsideration, particularly in light of statutory provisions protecting continuity during sickness periods of less than 26 weeks. The court expressed no final view but remitted this issue for fresh consideration.
Consequently, the court allowed the appeal and remitted the case for rehearing by a fresh Employment Tribunal, directing that both the employment status and continuity issues be reconsidered with proper reasoning.
Holding and Implications
The court’s final decision was to ALLOW THE APPEAL and remit the matter to a fresh Employment Tribunal for rehearing on whether the Appellant was an employee and on the question of continuity of employment.
The direct effect is that the original Employment Tribunal’s decision is set aside and the case will be reconsidered with proper reasoning. No new legal precedent was established; rather, the decision reinforces the necessity for Employment Tribunals to provide clear reasoning and to properly apply statutory provisions concerning employment status and continuity.