Employee status comes into question again

In a recent appeal case of Stringfellow Restaurants Ltd V Quashie, the topic of employee status was again discussed at length.

The Claimant worked on an intermittent basis as a lap dancer at the Defendants night club.  She was informed after 18 months of service that her services would no longer be required, as there was suspicion that she had been involved with drugs on the premises.  The Claimant brought an unfair dismissal claim against the Defendant.

The matter had been passed through the Employment Tribunal who deemed that the Claimant was not an employee of the company as per Section 230 of the Employment Rights Act 1996 and therefore was not entitled to bring a claim of unfair dismissal against the Defendant.  This was overturned by the Appeal Tribunal who deemed that the Claimant was in fact an employee.  The Defendant sought to appeal this decision, and the Tribunal decided as follows;

They first examined the definition of Employee under Section 230 (1):

“Employee means an individual who has entered into or works under…a contract of employment”

Contract of Employment is defined as (Section 230(2)):

“A contract of service or apprenticeship whether express or implied and…whether oral or in writing”.

Therefore if the Claimant held a valid contract of service they they would be classed as an employee and able to bring their unfair dismissal claim.  The Tribunal then applied the standard test (founded in the Ready Mixed Concrete Case) to assess if there was a Contract of Service;

1.    Wages or other remuneration are given by the wage payer in exchange for the provision of service.

2.    Performance of this service is subject to the control of the wage payer, they dictate to a significant degree how and when the service is provided.

3.    The contract that exists holds terms that are consistent with a standard contract of employment.

The key element here being control, if the employer/wage payer, dictates how, when, where etc, the worker does their job they will be classed as an employee.  In this case, the Claimant was subject to a shift rota, where they hold mandatory working shifts alongside flexible ones.  If the Claimant did not attend for one of the mandatory shifts they faced suspension from the following week’s rota.  An element of control and mutuality of obligation therefore clearly existed here. Holidays also had to be pre authorised and signed off by the employer, the Claimant could not simply inform the employer that they were taking a period of annual leave.

However, the Claimant was not restricted from working in other establishments in the contract, but it was generally felt that it would be unacceptable.  The Claimant also had to provide there own uniform of their own choice and at their own expense. The Claimant was however given details of the Respondent’s recommended supplier they should wish to use them.  Again an element of control here.

The Respondent however charged the Claimant to attend work by way of a ‘house’ and ‘tip out’ fee, as well as taking a cut of their earnings as commission. The Claimant was further subject to fine payment if they failed to undertake a task as per the Respondents instructions/procedures. Therefore in effect the Respondent never paid the Claimant any wages; they merely exchanged the vouchers they received during their shift into cash, less the fees the Claimant paid to the Respondent.

The court here found that this point was the crux of the argument, as the Claimant paid the Respondent to work and they merely took commission from her.  She paid for the opportunity to earn money, the Respondent did not pay her for doing it. The Claimant took an ‘economic risk’ by choosing to be paid by the Respondents customers and not the Respondent directly and as such the Tribunal found there to be no mutuality of obligation to formulate an employee employer relationship. The Claimant was therefore not entitled to bring a claim of unfair dismissal against the Respondent.

Further points that swayed the Tribunals decision here was that the Claimant knew when she began working that the intention was for her to be a self employed worker, responsible for her own tax, NI, holiday pay, sick pay etc.  Further the contract clearly stated that this was the working arrangement, which was signed and accepted by the Claimant.

Published: 04 Jan 2013

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