Quashie v Stringfellows Restaurants Ltd UKEAT/0289/11
This is the latest in a recent series of cases considering the employment status of individuals who work under unconventional arrangements. In this particular claim, Ms Quashie worked as a dance for Stringfellows club. When she started work in June 2007, she was not given a contract nor a copy of the House Rules, but was issued with a similarly framed introductory document about the establishment.
Dancers within the club work on a rota basis, and are responsible for providing their own outfits, though the "House Mother" of Stringfellows took care of minor dress repairs, ironing, make up and hair. The Claimant was directly responsible for paying the House Mother, the DJ, hairdresser and other club facilities through an up-front fee she paid each evening. During the evening the Claimant would be paid in vouchers purchased by customers. Cashiers would make deductions, including commission fees, a nightly house fee and any fines (for being late or missing a shift, dance or meeting) before putting her earnings in a dancer's envelope.
The Claimant was dismissed on 12 December 2008, and subsequently raised a claim for unfair dismissal. Stringfellows defended the claim, arguing that the Claimant was not an employee - therefore had no right to claim for unfair dismissal - and that even if she was an employee, her contract of employment was unenforceable because it had been performed illegally due to false representations to HMRC.
The Employment Tribunal held that the Claimant was not an employee on the basis that there was no "mutuality of obligation" between the two parties – Stringfellows was not obliged to pay the Claimant anything and no permission was required for the Claimant to go on holiday. In relation to the enforceability aspect of the contract, it was held that, while it was not necessary for the tribunal to go on to find whether the contract had been performed illegally, there was insufficient evidence to determine whether the Claimant had misrepresented her tax position.
The Claimant appealed against the decision that she was not an employee and Stringfellows cross-appealed the findings on illegality.
The Employment Appeal Tribunal ("EAT") allowed both the appeal and the cross-appeal. The EAT held that there was, in fact, a mutuality of obligations on each night the Claimant worked. She had to attend in accordance with the rota and, in return, Stringfellows had to give her the opportunity to dance to earn money. In doing so, Stringfellows controlled her activities. Stringfellows was, in fact, under an obligation to pay the Claimant, and the imposition of fines or deductions by agreement suggested the existence of an ongoing relationship. Further, as a form of discipline built into the contractual relationship, it was consistent with an employment contract.
The EAT also held that there was a single contract covering the whole of the period of 80 weeks. The only suggestion to the contrary was the fact that the Claimant could work elsewhere on her nights off. However, the EAT considered that this was insufficient to undermine the balance of the findings and held there was an over-arching contract of employment between the parties.
Although considered only briefly, the EAT held that if the Claimant had falsely represented her position to HMRC the contract would be unlawful. This would be for a tribunal to determine. The EAT has remitted the question of whether the dancer's contract had been void for illegality and, if not, whether she had been unfairly dismissed to the employment tribunal.
This claim follows the recent Supreme Court decision in Autoclenz Ltd v Belcher, and is consistent with the appellate courts making their judgment on facts presented before the tribunal in relation to the reality of the working relationship, rather than any contractual agreement between the parties. It appears that courts are becoming increasingly willing to find that individuals are employees, rather than self employed or workers (a European derived concept, which sits as a somewhat awkward halfway stage between the self employed and employees).
The court regarded the determining of mutuality of obligation between parties as particularly important. Though it is only one factor towards pointing to an employment relationship, it is an increasingly important one.
If employers want to reduce the risk of establishing an employment relationship, it is important that clear contractual provisions are put in place which set out the limits of parties' obligations towards one another. Although such contracts will not prevent an employment tribunal looking beyond the documentation and assessing the factual matrix in order to determine employment status, it does provide a first line of defence to any claim that the individual is an employee.