Workers, Elephants, Bikes, and the Semi-Detached Barrister

Mr R. Somerville v. (1) Medical Practitioners Tribunal Service (2) Nursing and Midwifery Council Case Number: 2413617/2018.

Overview

An employment tribunal has ruled that Robin Somerville, a Barrister who sits as a tribunal chair for the Nursing and Midwifery Council (NMC), is a ‘worker’ rather than an independent contractor and therefore entitled to holiday pay.

The judgment could prove significant for regulatory bodies such as the NMC and open the door to claims from others who act as panel members.  In line with the body of case law, whether a panel member is a worker in any particular case will depend on the contractual arrangements in place and the reality of what happens in practice.

An appeal to the Employment Appeal Tribunal may follow.

What’s interesting is that regulatory panel members with long service could be awarded substantial sums if the decision is followed on appeal. The European Court of Justice held in Conley King v The Sash Window Workshop Ltd (2017), that workers who are led to believe they are not entitled to paid holiday are entitled, on termination, to a payment in lieu of any untaken statutory holiday going back for the entirety of the contract.

Background

Mr. Somerville (‘the Claimant’) claimed unpaid statutory holiday pay against both Respondents, and age discrimination against the First Respondent (‘the MPTS’) only. The Respondents are professional regulatory bodies: the MPTS for doctors, the NMC for nurses and midwives. The Claimant had been a Tribunal Member with the former until April 2018 and remained a Panel Chair with the latter at the time of the hearing.

That the Claimant was called to the Bar in July 2012 is, in truth, simply an interesting aside. The employment judge was to describe the Claimant’s career as a ‘portfolio career’, his CV demonstrating that since 2012, when he was first appointed by NMC, he had been, among other things: an ombudsman at the Financial Ombudsman Services; an accredited mediator and mediation advocate; an arbitrator in a variety of different types of dispute; an independent disciplinary member/chair of employee disciplinary and grievance hearings; and an independent investigator into serious disciplinary matters.

Appointment by the NMC

In 2011, the NMC advertised for 100 panel chairs, to serve for at least 30 days a year. The Claimant was appointed in 2012 for four years and renewed for a further four in 2016. Throughout the appointment process, it was made very clear by the NMC that he was being retained as an independent contractor.

Writing to the Claimant to confirm his appointment, the NMC stated:

“You are not an employee or an office holder of the NMC. Your appointment as a practice committee member makes you eligible to provide services, as an independent contractor, to the NMC, as a panellist or a panel chair.”

This reflected the very Order establishing the NMC – the Nursing and Midwifery Order 2001, – which reads (at sch. 1, Part 1, para 15(3)):

“The Council may not employ any member of the Council or its committees, or sub-committees”.

On 9 May 2012 the NMC wrote to the Claimant confirming his appointment and saying:

“You are not an employee or an office holder of the NMC. Your appointment as a Practice Committee member makes you eligible to provide services, as an independent contractor, to the NMC, as a panellist or a Panel Chair.”

The terms of the appointment were set out in the Panel Member Services Agreement (‘PMSA’) of 16 April 2012. Clause 8 of the 2012 PMSA provided:

“The Panel Member shall provide the Services to the NMC as an independent Panel Member and nothing in the Agreement shall create a relationship of employer and employee between the NMC and the Panel Member”.

Clause 9 provided:

“Nothing in this Agreement shall render the Panel Member an employee, partner or agent of the NMC […]”

Further, the Claimant’s letter of reappointment, dated 5 May 2016, included the following:

“I am required to remind you that as a Panel Member you are not an employee or an office holder of the NMC. You are appointed as a Practice Committee member who is eligible to provide services, as an independent contractor, to the NMC …”

Issues

The Claimant contended that, regardless of the contract between him and both Respondents (which characterised him as an independent contractor) he was either an employee within the meaning of s.230(1) Employment Rights Act 1996 (‘ERA’), or alternatively a ‘limb b’ worker within the meaning of s.230(3)(b) ERA.

The Claimant alleged that upon being an employee or worker, the Respondents had failed to pay him in respect of his statutory annual leave entitlement, contrary to Regulations 13, 13A and 16(1) of the Working Time Regulations 1998 (‘WTR’), and had thereby made unauthorised deductions from his wages, contrary to s.13(1) ERA.

Outcome

The MPTS raised limitation issues in relation to both of the claims against it and denied that the Claimant was an employee or a worker. The NMC too denied that the Claimant was an employee or a worker. The NMC was content for any limitation issues in respect of the claim against it to be held over for the final hearing, should the claims proceed.

The claim against the MPTS, of age discrimination under the Equality Act 2010 and unauthorised deduction from wages under the Employment Right Act 1996, was dismissed – the Tribunal lacking jurisdiction to hear the claims (in essence, their being presented out of time).

However, in relation to the NMC, the conclusion of Employment Judge Massarella was:

1. The Claimant was not an employee of the NMC for the purposes of s.230(1) ERA, and Reg 2(1)(a) of the WTR.

2. The Claimant was, however, a worker of the NMC for the purposes of s.230(3)(b) ERA, and Reg 2(1)(b) of the WTR.

This was despite Mr. Somerville being told he was being appointed as an independent contractor.

Worker status

The Judge found that there was an overarching contract between the Claimant and the NMC, as well as individual contracts when work was assigned, under which the Claimant agreed to provide his services personally (although the Judge concluded that neither were contracts of employment).

The conclusion of the judge was that Mr. Somerville qualified as a worker. In coming to this conclusion, the judge stated that the following three conditions were met in the affirmative:

1. there must be a contract between the Claimant and NMC;

2. the contract must be one in which he undertakes to perform work personally for NMC;

3. and the NMC must not be a client or customer of a profession or business carried on by the Claimant.

The rationale behind this was partly captured as follows:

“I have already concluded that the Claimant entered into a contract with the NMC, whereby he undertook personally to perform work/services for it. Standing back and looking at the overall picture, when I have regard to the method of recruitment, the factors I have identified above which, cumulatively, suggest a significant degree integration into the operation, together with the element of subordination in the conduct/performance procedure and the absence of any negotiation in respect of pay, I am satisfied that the NMC’s status was not by virtue of that contract that of the Claimant’s client or customer. I have concluded that he was sufficiently integrated into the NMC’s operations, such that he was, to borrow the language of Elias J in James v Redcats, ‘semi-detached’ rather than ‘detached’, as an independent contract would be.”

That deals with the worker and the semi-detached Barrister, now for those elephants…

Taking a Step back

Whenever considering a client’s dilemma one is always reminded of the Indian fable involving six blind men who each, independently of one another, come into contact with an elephant on their respective travels. Each feels one part of the elephant (ears, trunk, leg etc.) and from their limited perspective creates their own subjective view on what the elephant looks like…

…Taking instructions from a client does sometimes feel that we have transposed ourselves into the fable ventured. Each client identifies their respective positions based upon their uniquely subjective experiences of the situation as opposed to the actuality of the matter.

Worker status is an area where this can be acutely experienced. With the ‘gig economy’ now firmly embedded in the fabric of commerce helping to identify the employment status of a client or addressing the ‘elephant in the room’ (see what we did there?! you’re welcome), is becoming increasingly more important. Unlike our allegorical sojourners our task (and that of employers) is becoming more complicated because, amongst other things, individuals can be two things at the same time, and legal definitions and meanings can be protean depending upon the legislation from which they are derived, or the context in which they are used. Indeed, mutably of terms was something that EJ Massarella recognised in his judgement (see para. 220).

The consideration made by EJ Massarella is focused on the bifurcation created by s.230(3) of the Employment Rights Act 1996 (“ERA 1996”) as to workers and whether the NMC was a client or customer of a profession or business carried on by Mr Sommerville. The status of the worker is an important distinction to make. Whilst all employees are workers, not all workers are employees and the rights and entitlements that extend to one do not necessarily extend to the other.

The highest status of worker is clearly that of an employee (or “Limb A” worker) and with this lofty title comes a number of statutory and common law entitlements. For instance, the right not to be unfairly dismissed, the right to redundancy payment and entitlements to maternity and paternity pay as well as some other statutory rights are the exclusive domain of employees. The implied term of mutual trust and confidence is also something that is only granted to those who are considered to be employees.

Following this are workers, representing the half-way house between employees and self-employed contractors (“Limb B” workers). Limb B workers are excluded by some legislation but encapsulated by an extension of the definition ‘worker’ by others. Sections 83(2) of the Equality Act 2010 for instance extends protection to those in ‘…employment under a contract of employment, a contract of apprenticeship or a contract personally to do work…’. The automatic transfer of employees pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 1981 will only apply to employees.

Gillham v Ministry of Justice (2019)

The effects of ascertaining worker status can be profound as it may open up or limit the rights and entitlements of the ‘worker’. In the case of Gillham v Ministry of Justice [2019] UKSC 44 the court was invited to consider whether judges are workers for the purposes of protection under the Employment Rights Act 1996 for whistleblowing. Judges are workers for the purposes of EU law and domestic laws derived from it (see the case of O’Brien v Ministry of Justice [2017] ICR 1101) but the whistleblowing legislation is not derived from UK law so the question arose as to whether the judge was a worker. The courts, from ET through to SC, were unanimous that judges were not ‘workers’ for the purposes of whistleblowing claims and on the basis that an essential feature (the existence of a contract) was not present. Judges worked by way of ‘appointment’, not under contract. Protection was in fact granted to the judge in question but under human rights legislation and not ERA 1996.

The Supreme Court confirmed in O’Brien that part-time Recorders were ‘workers’ for the purposes of the Part Time Working Directive and Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000. The importance of determining worker status is exemplified in this case as it impacts not only upon the entitlement to bring such a claim but also on the calculation of pensions for employers and limitation periods associated with such.

Another Loss for Big Business in the Gig Economy – The Bike Bit

If you need any further convincing of the importance that should be attached to worker status in the nascent gig economy just ask the directors of City Sprint. The Independent Workers’ Union of Great Britain (“IWGB”) claimed not a first, not a second, but a third legal scalp from them this week [link to news report here]. City Sprint is a cycling courier service that operates at various locations around the country.

In 2017 the IWGB introduced a claim on behalf of one of its members seeking holiday pay. The outcome of this case changed the status of that individual worker entitling them to holiday pay and the minimum wage. In 2019, the IWGB won a further case gaining TUPE protection for the workers. Most recently [link to judgment here] a tribunal decided that attempts by City Sprint to incorporate a right of substitution, thereby diminishing the necessity for personal performance, had not been achieved.

The ‘dominant feature’ of that contract remained personal performance and in consequence the claimants were entitled to compensation for a failure to observe Regulation 30 of the Working Time Regulations 1998. A remedies hearing has been listed for later in the year. Similar positions have been adopted in the cases of Addison Lee Ltd v Lange & Ors UKEAT/0037/18/BA and Uber BV v Aslam & Ors UKEAT/0056/17.

As can be the case with worker status claims, just when you think you can be certain as to that status the wheels can come off (forgive the pun). In contrast to the success of the claims above, which largely involved cyclists, the recent case of Varnish v British Cycling Federation and another UKEAT/0022/20/LA) demonstrated that a holistic and objective view of each situation needs to be made on each occasion. In relation to whether Ms Varnish was a Limb B worker the EAT was clear that if the dominant purpose of a contract was not personal service for the other party then this may be a factor that directed away from a conclusion that the relationship was one of employment or work related. Judge Choudhury concluded that Ms Varnish was neither an employee nor a worker.

The point of the above, whether viewed from the perspective of employer or worker is that getting it wrong can be costly. City Sprint will have undoubtedly racked up significant legal costs in the tribunal proceedings and now face a remedy hearing to determine the sums to be awarded to their successful workers. Whilst a firm of that size may be able to tolerate the imposition of a financial award many others would not. It’s estimated that the award may be in the region of £20,000. A separate holiday claim is being brought by three workers who TUPE’d from City Sprint to the Royal Mail owned ‘eCourier’ in the sum of £43, 668.86. Taking into account the decision in Conley King v The Sash Window Workshop Ltd (where the ECJ held that workers who had been led to believe that they were not entitled to paid holiday are entitled, upon termination, to a payment in lieu of any statutory pay that remains untaken going back for the entirety of the contract) the financial implications for a number of businesses could be catastrophic.

Ending Where We Started, a Trunk or a Tail?

In relation to Mr Somerville’s case, the potential ramifications should be clear and obvious. Panel members and chairpersons fulfil a fundamental and necessary role in many regulatory bodies such as the General Optical Council and at police misconduct hearings. One can think of many more to which this decision may apply.

The decision that members and chairpersons may now be considered to be workers and entitled to a gamut of entitlements not contemplated either at the time of their appointment or within the scope of any budgetary requirements will undoubtedly send a shiver down the spine of budget holders around the country. Fundamentally though, the decision provides a salutary reminder that complacency in the area of worker status can be financially ‘challenging’ at best. Objectivity and a holistic assessment of the factual nexus is paramount in each and every case when determining worker status.

Good luck and be gentle with those elephants.

Case here

 

Darren Stewart

Alun Williams