Our employment law “case of the week” this week is the recent Court of Appeal decision in Stringfellows Restaurants Ltd v Quashie [2012] EWCA Civ 1735, concerning employment status and unfair dismissal.

The facts in Stringfellows Restaurants Ltd v Quashie

Stringfellows Restaurants Ltd (“Stringfellows” or “the Respondent”) employed Ms Quashie (“the Claimant”) intermittently over a period of 18 months. During this period (according to contractual documents) Ms Quashie provided “table-side dancing” services to clients of the Respondent (better known as “lap-dancing”). However, on 9 December 2008 the Respondent informed the Claimant that her services were no longer required as there were allegations that she had become involved with drugs on work premises. Ms Quashie subsequently pursued an unfair dismissal claim in the Employment Tribunal. A preliminary issue at the Employment Tribunal was whether the Claimant was an employee (and could therefore make a claim for unfair dismissal) and, secondly, whether she had sufficient continuity of service to entitle her to claim unfair dismissal. The Employment Tribunal ruled that she was not an employee and Ms Quashie appealed. At the Employment Appeal Tribunal stage HHJ McMullen found that Ms Quashie was in fact an employee as the Respondent had control over her actions at work. The Respondent appealed this finding to the Court of Appeal.

The law relating to employment status

Under s.230(1) of the Employment Rights Act 1996 “employee” means an individual who has entered into or works under a contract of employment”. A contract of employment is then defined in s.230(2) of the 1996 Act as ” a contract of service or apprenticeship whether express or implied and (if it is express) whether oral or in writing”. If there is a written contract of employment then this is normally the end of the matter. However, if there is a lack of a contract, the contract is ambiguous or the contract is alleged to be a “sham” then a test must be used to determine whether there is in existence a contract of employment. There are a number of tests in existence but the one currently (normally) used is that of the “mixed test” of McKenna J in Ready Mixed Concrete (South East Limited) v Minister of Pensions and National Insurance. The test for the essential elements of a contract of employment under this test are as follows:

  1. Is there sufficient control exercised by one party over the other to make that party the “master”? (the “control” test)
  2. Is there a mutuality of obligation between the parties that one party will provide remuneration for the skill and work of the other? (the “mutuality of obligation” test)
  3. Is the “employee” obligated to provide a personal service?

The Court of Appeal’s judgment in Stringfellows Restaurants Ltd v Quashie

The Court of Appeal upheld the Respondent’s appeal against the decision of the Employment Appeal Tribunal, holding that HHJ McMullen had overly concentrated on the control test to the detriment of the mutuality of obligation test. The Court of Appeal determined that the important findings were that the Claimant negotiated her own fees with clients, took the risk that on any particular night she could be out of pocket and received back from her employer only monies received from clients after deductions. This therefore indicated that although there was a contract in place that this contract was not a contract of employment. Accordingly, the Employment Tribunal did not have jurisdiction to entertain the Claimant’s unfair dismissal claim.

Chris Hadrill, employment law solicitor at Redmans, commented on the case: “It’s not often that decisions of HHJ McMullen are overturned on appeal but this is a rare instance. This case demonstrates the swings and roundabouts which sometimes go with the issue of employment status, and the potential legal and factual complexity of such matters”. If you’ve got a case in which employment status is a crucial issue then it may be wise to obtain specialist advice from an employment law solicitor.

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The Direct 2 Lawyers Employment Team post daily on interesting employment law cases, Employment Tribunal judgments and Employment Appeal Tribunal judgments. All of the Employment Team posts are written by qualified specialist employment lawyers

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