THE INDUSTRIAL TRIBUNALS 

CASE REF:	2956/04

CLAIMANT:			Liam Desmond Higgins

RESPONDENT:		Waveney Engineering Limited

DECISION

The decision of the tribunal is that the claim is dismissed.
Appearances:
The claimant appeared in person.
The respondent was represented by Mr Sheridan of Peninsula Business Services Limited.

1.	The claimant, Mr Liam Desmond Higgins, claims a redundancy payment from the respondent, Waveney Engineering Limited, which is referred to hereafter as “Waveney”.

2.	The claimant’s contention is that he was a Waveney employee from September 1992 until August 2004.  Waveney’s witness, Mr John Joseph McNally, who has held the position of Managing Director of Waveney for 25 years, said in his direct evidence that the claimant worked for Waveney as an employee from 1992 until 1998, but that on and from 6 February 1998 the relationship changed from that of employee to that of self-employed contractor.  This relationship, it is contended, continued until August 2004 when no further work was available for the claimant to do.  The Waveney/Michelin contract, which will be referred to later, ended at that time.

3.	There is, therefore, no dispute that the claimant was employed under a contract of employment with Waveney from September 1992 until 5 February 1998.  The matter in dispute, and which the tribunal must decide on the evidence presented, is whether the contract of employment continued beyond 5 February 1998 until August 2004, or whether on 6 February 1998 the contractual arrangements between the parties changed from one of employment to one for services and that those arrangements continued until August 2004.  Put briefly the question is, did the claimant’s status change, on 6 February 1998, from that of employee to that of a self-employed contractor and did that new status continue until August 2004?

4.	Article 170 of the Employment Rights (Northern Ireland) Order 1996 (“the Order of 1996”), insofar as relevant to these proceedings, provides that an employer shall pay a redundancy payment to any employee of his, if the employee is dismissed by reason of redundancy.  The term “employee” is important because it is only an “employee” who can benefit from the right conferred under the Article.  The term “employee” is defined in Article 3 (1) of the Order of 1996.  Insofar as relevant, that provision defines an “employee” as an individual who worked under a contract of employment.  Article 3(2) of the Order of 1996 says, again insofar as relevant, that a contract of employment means a contract of service, whether express or implied, and, if it is express, whether oral or in writing.  This means that a person engaged under a contract for services (a self-employed contractor) can not qualify for a redundancy payment.

5.	The tribunal was not provided with any written contract made between the parties; nor was it provided with a copy of a written contract between Waveney and the Michelin Tyre Company.  A bundle of agreed documents were handed in and these are attached to this decision and are marked with an “A” (Bundle A).  Evidence was given by the claimant and for Waveney by Mr John Joseph McNally.

6.	The claimant commenced employment with Waveney in September 1992 as a mechanical fitter.  Initially he worked at Waveney’s premises at Crankill Road, Ballymena.  Between 1992 and 1998 he spent a considerable amount of time, as an employee of Waveney’s, assisting Michelin’s staff in carrying out mould size changes at the Michelin plant at Ballymena.  The claimant worked a shift pattern there.  He was paid by Waveney and received overtime payments for hours worked beyond the basic and also received enhanced payments for working during the Michelin shutdowns in the July months.

7.	In late 1997 Waveney was asked by Michelin’s purchasing division at Stoke-on-Trent to submit a tender for their mould size change work.  The claimant assisted Waveney (and spent a considerable amount of time doing so) in deciding the number of hours likely to be involved, the methods for carrying out the work, the procedures necessary, the additional work that would be required and the costs involved.  Waveney was awarded the contract with a starting date of 6 February 1998.  On and after this date Michelin staff did not carry out mould size change work.

8.	It was agreed between the parties that the claimant would run Waveney’s new operation at Michelin and it was also agreed between them that the claimant would operate as a self-employed contractor.  The running of the operation included the supervision of staff.

9.	Waveney’s contention is that the claimant became self-employed when the new contract with Michelin commenced on 6 February 1998 because he wished, as a self-employed person, to avail himself of the tax and national insurance benefits associated with that status.  No doubt some benefits would also have accrued to Waveney.

10.	After 6 February 1998 the claimant’s earnings increased considerably.  The maximum the claimant earned from Waveney prior to that date was in the region of £800 gross per month, which is £185 gross per week.  In the 3 months after 6 February he earned, from Waveney, on Mr McNally’s evidence, between £300 and £400 gross per week, which the tribunal calculates as between £1,300 and £1,733 gross per month.  The increase in earnings came about, according to Mr McNally, because the claimant could finish a job in a shorter period than the hours allocated and begin a fresh one.  Mr McNally said that self-employed contractors are inclined to “work smarter” than employees who are paid an hourly rate.  The tribunal accepts Mr McNally’s evidence concerning the increase in earnings.  The claimant said that he “would not have a clue” what he earned in 1998 and that he was not in a position to contradict Mr McNally.  In Bundle A there are a number of CIS 25 vouchers relating to the claimant and which are referred to immediately below.  These show gross monthly earnings within the month to 5 April 2004 of £2,485 (page 24), within the month to 5 May 2004 of £2,517 (page 27), within the month to 5 June 2004 of £3,582 (page 26), within the month to July 2004 of £3,777, and within the month to August 2004 of £2,117 (page 23).  Allowing for inflation, these show significant increases in earnings over the earnings of £800 gross paid prior to 6 February 1998.  In the tribunal’s view at least part of this increase could be accounted for by an increase in responsibilities as the claimant was, from February 1998, in charge of Waveney’s tyre mould change operation at Michelin and had responsibility for staff.

11.	In the agreed Bundle A, at pages numbered 23-27, are a number of tax payment vouchers (CIS 25s) under the Construction Industry Scheme (“the Scheme”) and relating to the claimant.  They show, inter alia, the amount of payment liable to tax deduction and the amount deducted to be paid over to the Inland Revenue.  This indicates to the tribunal that the claimant holds an Inland Revenue registration card as a subcontractor.  Mr McNally gave evidence to the tribunal that each month a CIS form was completed in triplicate by Waveney in respect of the claimant.  One went to the claimant, one to the Inland Revenue and a third one was kept on file by Waveney.  At one stage during his cross-examination, by Mr Sheridan, the claimant referred to the CIS forms as “funny forms” and said that they referred to the construction industry “and me in an engineering environment”. It is not for the tribunal to decide whether the deductions were properly made or whether the claimant should or should not be registered under the Scheme.  However, the tribunal finds that the deductions were made under the Scheme.  The claimant (through his then solicitor) in reply to the respondent’s Notice for Further and Better Particulars states that he “was paid exclusively by Waveney Engineering on the basis of gross pay less a deduction of 18%” and in the Notice accepted that the claimant was responsible for his own National Insurance (See page 7 of Bundle “A”).  18% is the amount deducted under the Scheme.

12.	The tribunal finds, in the light of what occurred afterwards as set out in the two preceding paragraphs, that the parties, when they entered the arrangements commencing on 6 February 1998, believed that their relationship was changing from that of employer/employee to that of employer/independent contractor and that they intended that this would be the result of the arrangement.

13.	It was accepted that before the Waveney/Michelin contract commenced, and in anticipation of its commencement, the claimant, whilst an employee of Waveney’s, was sent on a course by Waveney, and financed by Waveney, to train as a forklift driver and obtain the appropriate licence.  The skill and the licence were required in order to lift the moulds, which were of a substantial weight.  According to Mr McNally, it was a requirement of Waveney’s contract with Michelin that one of those working on mould size change be properly trained in the operation of forklifts and be licensed.  The tribunal accepts this.

14.	It was not in dispute that the equipment used by the claimant in his role in Michelin was supplied by Waveney.  The equipment included a forklift truck, tools, and protective clothing and office facilities.  Mr McNally said in evidence that Waveney was required, under the terms of the contract with Michelin, to provide these to people who worked there on their behalf.  The tribunal accepts this, but nevertheless notes that they were supplied by Waveney and that the claimant used them to carry out his work.

15.	The tribunal finds that during the six years between February 1998 and August 2004 the claimant attended various meetings with Michelin personnel in connection with his role there.  He attended a meeting every morning with them to decide what work was to be carried out on that day and the order in which it was to be carried out.  He also attended other meetings, usually on a weekly basis.  He produced two documents that were shown to the other side.  The documents are headed “DPCM ACTION REPORT”, one is a report of a meeting (number 12) held on 2 October 1998 and the other is a report of a meeting (number 13) held on 16 October.  The tribunal finds that the persons recorded as in attendance were all Michelin personnel, with the exception of the claimant and also finds that the documents were Michelin documents and were not forwarded to Waveney.  The point that the claimant made was that he was representing Waveney at these meetings and this pointed to him being an employee and not a subcontractor.  It was in the interests of Waveney that their contract with Michelin be carried out to Michelin’s satisfaction.  Matters were left largely in the claimant’s hands.  It was also in his interests, whether as an employee or as a sub-contractor, that Michelin’s needs were catered for.

16.	The claimant produced a letter from Waveney, dated 1 March 1999, addressed to him at his home address.  The letter stated that as and from 1 March 1999 the claimant’s new rate of pay for normal time would be £7.83 per hour.  It also set out “other pay elements”, namely, A shift 0.78 per hour, B shift 1.43 per hour, C shift 1.95 per hour and Carbon black £6.00 per day.  The claimant considered that this letter tended to show that he was a Waveney employee.  Mr McNally explained that this type of letter went out to everyone in the organisation including subcontractors (and the company only ever had two subcontractors).  He said that had the claimant been an hourly paid employee the letter would have included overtime rates and the rate for statutory holidays and that the “other pay elements” referred to in the letter were only applicable during the July shutdown at Michelin and when the claimant did work other than mould size change.  The tribunal accepts Mr McNally’s uncontradicted evidence with regard to the letter.

17.	In his reply to the respondent’s Notice for Further and Better Particulars the claimant states that he worked “under the control of Jimmy Morrison, the site manager for the respondent and John McNally, the owner of the business, exclusively” and that he “also took instructions from Mr Galbraith who was employed by Michelin where” he, the claimant, “worked exclusively during the twelve year period” (see page 7 of Bundle “A”).  The tribunal does not accept that the claimant was under the control of Mr McNally, in the sense that he gave instructions to him at the Michelin plant.

Mr Morrison was Waveney’s project engineer at Michelin, where Waveney had ten to twelve employees engaged in work other than size mould change.  The claimant said on cross-examination by Mr Sheridan that he saw Mr Morrison on most days.  Mr Morrison would enquire how the job was going and whether any tools were required.  If tools were required Mr Morrison would provide them.  The claimant also said, at this stage of the proceedings, that he had, as part of his duties, to complete time-sheets, to complete mould size change sheets that were supplied by Waveney, and ensure that any additional work was signed for by Michelin personnel.  He also calculated wages and hours on time-sheets in respect of Waveney employees on mould sit change work and handed these to Mr Morrison.  The tribunal accepts that the claimant carried out the duties outlined on behalf of Waveney.  Mr McNally in his evidence stated that Waveney did not give the claimant “instructions of any description” and that the claimant took all his instructions from Mr Galbraith (who was an employee of Michelin’s).  The tribunal is satisfied that the claimant was highly skilled in his work and would seldom need instructions on its requirements, but would follow Mr Galbraith’s directions to prepare what was necessary to cater for Michelin’s needs.  The tribunal is also satisfied that Mr Morrison, holding the position that he did, is more than likely to have taken more than a passing interest in the claimant’s work and would have been empowered to give instructions to the claimant where necessary.

18.	If there was no mould size change work there was no obligation on Waveney’s part to provide work to the claimant.  If no work was available the claimant did not receive any pay.

19.	As regards financial risk, it appears to the tribunal that there was very little on the claimant’s part.  

20.	The claimant was not entitled to holidays etc from Waveney.

21.	No evidence was given on whether the claimant had to perform the agreed work personally.  However, it appears to the tribunal that the mould size change work was of a fairly specialized nature and it is unlikely that the claimant would have been able to substitute another to carry it out.  But having said that, the tribunal is conscious of the fact that an independent contractor may undertake personally to perform the work he or she is contracted to do.  

22.	Both parties referred to the issue of control and the tribunal has touched upon this issue earlier in relation to Mr Morrison.  Waveney’s evidence was that it was Michelin who gave the claimant his orders.  It seems to the tribunal that there was an obligation on the claimant to follow the reasonable instructions and requests of Michelin.  It also seems to the tribunal that under the contractual arrangements between the claimant and Waveney that control was asserted largely through Michelin.  As far as the workplace was concerned, namely, the Michelin plant, little control was exercised directly by Waveney.

23.	On occasions Mr McNally telephoned the claimant at home in connection with business.

24.	Towards the end of August 2004 the claimant went to the Michelin site and removed Waveney’s tools and office equipment and took them back to Waveney’s premises.  He took the next two working days off and when he returned he was told to take the rest of the week off.  The claimant did not tell the tribunal who gave him the instructions to bring the tools and office equipment back to Waveney’s, nor who told him to take the rest of the week off.

25.	The tribunal heard submissions and arguments made by the parties and was also referred to the case of Bunce –v- Potsworth, trading as Skyblue (2005) EWCA Civ. 490, a decision of the Court of Appeal (England and Wales).

26.	There is no single test that the tribunal can apply that will determine whether a person is an employee or self-employed; nor is there a checklist that the tribunal can run through and reach a decision.  The task of the tribunal is to consider all the factors put before it as a whole: it considers those that appear to support one proposition or another and then steps back and considers the picture that emerges.  Having done so on the facts found and also taking account of mutuality of obligation, the obligation to provide work personally, and control and having made an assessment of the picture painted, the tribunal concludes that as and from 6 February 1998 the claimant operated as an independent contractor and did so until August 2004.  He is not, therefore, eligible for a redundancy payment.

Chairman:

Date and place of hearing:		20 May  2005, Belfast.

Date decision recorded in register and issued to parties: