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United Kingdom Employment Appeal Tribunal


You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Burton v Raphealite Jewellery Ltd (In Liquidation) [1995] UKEAT 98_93_1805 (18 May 1995)
URL: http://www.bailii.org/uk/cases/UKEAT/1995/98_93_1805.html
Cite as: [1995] UKEAT 98_93_1805

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    BAILII case number: [1995] UKEAT 98_93_1805

    Appeal No. EAT/98/93

    EMPOLYMENT APPEAL TRIBUNAL

    58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

    At the Tribunal

    On 18 May 1995

    Before

    THE HONOURABLE MR JUSTICE MUMMERY (P)

    MR J A SCOULLER

    MR N WILLIS


    MRS S M BURTON          APPELLANT

    RAPHEALITE JEWELLERY LTD (IN LIQUIDATION)          RESPONDENTS


    Transcript of Proceedings

    JUDGMENT

    Revised


     

    APPEARANCES

    For the Appellant MR P STAGG

    FREE REPRESENTATION UNIT

    49-51 Bedford Row

    London

    WC1R 4LR

    For the Respondents NO APPEARANCE BY OR ON BEHALF OF           RESPONDENTS


     

    MR JUSTICE MUMMERY (PRESIDENT): This is an appeal against the decision of the Industrial Tribunal held at London (North) as long ago as 26 November 1992. The case has been brought by Mrs Susanne Burton against Mrs Tina Shevrington, claiming unpaid wages for services rendered by her as a daily nanny. The claim was brought under The Wages Act 1986. The details of the claim are set out in the originating application, presented on 17 July 1992. It is unnecessary to examine the details of the calculations. It appears, from the Full Reasons for the Decision, notified to the parties on 10 December 1992, that the case was decided on a preliminary point, which has given rise to this appeal.

    In order to understand the preliminary point, it is necessary to refer to the Notice of Appearance, submitted by Mrs Shevrington in the form of a letter. The point taken by Mrs Shevrington was that Mrs Burton was a nanny, sent by the Complete Nanny Service, but she was self-employed and paid a sum of £180 a week. Out of that she was supposed to deduct her own National Insurance and Tax. "Mrs Burton's services were for my company, and this is confirmed by the cheques she has accepted. They were all company cheques entered in our books and gone into our accounts. Unfortunately our main company within this time, went into liquidation; hence the cheques bouncing. Rather than enter Mrs Burton as a creditor of the company, as we needed her services on a continual basis, we will try to pay her from the new company."

    The main point in defence of the claim under The Wages Act was therefore, that Mrs Burton was a self-employed nanny, responsible for her own National Insurance and Tax and the services were rendered to Mrs Burton's company, not to Mrs Burton personally. When the matter came before the Industrial Tribunal, they reached the unanimous decision that Mrs Burton's employer was not Mrs Shevrington, but the company called Raphealite Jewellery Ltd. It is in liquidation. The consequence of that decision was that the Tribunal decided that they could not hear the case against Mrs Shevrington, as she was not the correct Respondent.

    Mrs Burton appealed against that decision by a Notice of Appeal served on 20 January 1993. The appeal was first dealt with on a Preliminary Hearing by this Tribunal on 30 June 1994, when the Tribunal directed that the appeal be allowed to proceed to a full hearing. When the matter was listed for 10.30 this morning, nobody appeared to represent Mrs Burton nor did Mrs Burton attend personally. Enquiries were made by the Office. It was discovered that the Free Representation Unit, which had been responsible for representing Mrs Burton, were unable to trace the particular person who had acted in the Industrial Tribunal. Fortunately for us, and for Mrs Burton, the Free Representation Unit have briefed Mr Stagg at short notice to argue the case this afternoon. If we may say so, he has done exceptionally well on very short notice. His submissions have been of great help in deciding that this appeal should be allowed.

    In order to do justice to the submissions made by Mr Stagg, it is necessary to refer to the reasons for the decision. The Tribunal decided the case without any appearance by Mrs Shevrington. Mrs Burton gave evidence to the Tribunal, in which she said that she understood that Mrs Shevrington was her Employer. The Tribunal noted that Mrs Shevrington had made certain contentions in her statement, to the effect that Mrs Burton was responsible for her own National Insurance and Tax. They said in paragraph 3:

    "Before we could consider whether there had been deductions contrary to section 1 of Wages Act 1986, we have to be satisfied that Mrs Shevrington was Mrs Burton's employer and that the contract was not tainted with illegality..."

    They did not come to a conclusion on the latter point because, on the first point, they decided that Mrs Burton was employed by the company. The Tribunal stated the conclusions in paragraph 4:

    "We find that Mrs Burton was employed by Raphealite Jewellery Ltd, therefore that company should have been the Respondent to the application. The company is now in liquidation and it will be for Mrs Burton to consider whether she applies under section 122 of the Employment Protection (Consolidation) Act 1978 to the Secretary of State for the payments due to her. We are quite satisfied the company is insolvent. We saw the necessary documents. Therefore her remedy is to apply to the Secretary of State for Employment as an ex-employee of a company that has now gone into liquidation. We have made no findings as to whether the contract was tainted with illegality because it is not necessary to do so as we cannot hear the case against Mrs Shevrington..."

    Mr Stagg has argued three grounds as to why that decision is flawed by an error of law. The most important ground, in our view, is that the Tribunal did not apply the correct legal test for determining who was Mrs Burton's employer. The decision implicitly decides that Mrs Burton was not self-employed. Although that was the main issue on the pleadings, the Tribunal seems to regard the real issue at the hearing as whether Mrs Shevrington or the company was the employer. In deciding that the company was the employer, the Tribunal, without hearing any evidence from Mrs Shevrington to contradict Mrs Burton's understanding of the position, (her understanding was that Mrs Shevrington was her Employer), decided that the company was the Employer. It was the company on whose account the cheques were drawn and made payable to Mrs Burton. We agree with Mr Stagg that that is not the correct legal test for determining whether Mrs Burton was an employee of Mrs Shevrington or the company.

    In order to decide who is the employer out of two possible candidates, it is necessary to look at all the facts and circumstances, e.g. who is ultimately responsible for the control of the person employed? To whom are the services rendered? What are the nature of the services? Mr Stagg emphasised the personal nature of these services, as well as matters such as the amount of remuneration, who is responsible for it and who supplies any necessary equipment and so on. Instead of looking at all the circumstances of the case, the Tribunal, contrary to the uncontradicted evidence of Mrs Burton, decided that the Employer was the company; simply on the basis that cheques were drawn on that company's account. That is not looking at all the circumstances. That is deciding the case, by looking at one circumstance, which cannot itself be decisive. We agree with the submission in (b) of the Notice of Appeal that it is possible to explain the payment made by the company as a payment by an agent. The company could have been acting as the agent of Mrs Shevrington. The fact of payment could not therefore, by itself, determine who was the employer. For that reason alone, we would allow the appeal and remit it to the Industrial Tribunal. We also agree with the two other points made by Mr Stagg. There was a breach of the rules of natural justice. The rules of natural justice require, in general terms, a fair hearing. That includes certain specific duties, such as the duty on the part of the Tribunal to alert the parties to the possibility that they might decide the case on a point not taken or argued by the parties.

    As appears in the case of Laurie v Holloway [1994] ICR page 32, a Tribunal which is minded to take a point not taken by the parties, should alert the parties to the possibility that they would decide the case on that point. If the parties are not sufficiently alerted to the prospect of a Tribunal considering a point, not raised by them, but likely to be decisive of the case, and no warning has been given before the final speeches, then there may be a breach of the rules of natural justice, which necessitates remitting the case to be heard by a differently constituted Tribunal. The passage on page 37H to page 38E of that case are particularly in point.

    In this case, the parties went to the Tribunal with an IT1 and a Notice of Appearance, which raised the issue whether Mrs Burton was self-employed or employed. The Tribunal, without expressly dealing with that issue, decided a different point; whether Mrs Burton's employer was Mrs Shevrington or the company, Raphealite Jewellery Ltd. It also appears that, during the course of the hearing, the Chairman may have given the impression by an interruption that there really was no doubt that the company could not have been the employer. Mrs Burton's advisers were led to believe that there was really no question of a ruling to the effect that the company was the employer and that Mrs Shevrington was not the proper Respondent. The effect of dealing with the matter in that way, was to deprive Mrs Burton, effectively, of the opportunity of putting the whole of her case. An indication was given that the case would be decided one way, when, in the result, it was decided in the contrary way.

    Finally, Mr Stagg put the point that this was a perverse decision. It appears to have been reached without any evidence brought from Mrs Shevrington. She did not attend. All she did was to put in an unsworn statement in a letter. Mrs Burton gave evidence, which the Tribunal appear not to have accepted, though it was not contradicted by sworn evidence. If it was contradicted, the only contradiction was in respect of the cheques drawn on the company's account. We have already expressed the view that that itself cannot be a decisive matter. We are of the view that no Tribunal, properly looking at the law and the whole situation, could have come to this conclusion that the company was the employer. For all those reasons, this appeal must be allowed.

    We remit it for re-hearing by a different Tribunal. The re-hearing is to be of all issues raised in the case. For clarification we state that those issues include: whether Mrs Burton was self-employed or employed; if she was employed, whether she was an employee of Mrs Shevrington or of Raphealite Jewellery Ltd; if she was an employee of Mrs Shevrington, whether that relationship was affected by any illegality, in relation to the agreement about payment of National Insurance Contributions and Tax; if there was no illegality, whether there has been a contravention of The Wages Act by the withholding of sums due to Mrs Burton for services rendered. If money is due, there will have to be a calculation of the amount. It is a matter of regret to all involved in this case, that it has taken so long to be heard and that we are sending it back to stage one. Mrs Burton's employment finished in June 1992. The Tribunal gave its decision to the parties on 10 December 1992. It did not come to a Preliminary Hearing before this Tribunal until June 1993. It has taken over another year for a full hearing. Having regard to the comparative simplicity of the dispute and the small amount involved, it is no credit to the system that it has taken so long and still not reached a conclusion. We hope that it is possible to speed up the remitted hearing before the Industrial Tribunal. The appeal is allowed with those directions.


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URL: http://www.bailii.org/uk/cases/UKEAT/1995/98_93_1805.html