Discrimination and employment status: A new or a false dawn?

This article, written in September 2011, first appeared in ELA Briefing Magazine and is reproduced here with permission.

When trying to answer the question, is this claimant an employee under section 230 of the Employment Rights Act 1996 (“ERA”)?, we at least know what tests should be applied, even if applying them can be difficult in practice.  What has been harder is deciding whether someone who is not an employee under the ERA is in “employment under… a contract personally to do work” under the Equality Act 2010 (EqA) or its predecessors.  Chris Camp considers employment status in discrimination law, in light, in particular, of the recent Supreme Court decision in Jivraj v Hashwani [2011] UKSC 40.
Where we were

In this article, those in “employment” under the EqA are called “workers”.  Before the Supreme Court’s decision in Jivraj, we appeared virtually to have got to the point where all that was needed in order to be a worker was: a legally enforceable contract; a contractual obligation personally to do work.  The judicial tendency to strip the legal test for worker status down to these bare essentials probably reached its peak in Jivraj itself in the Court of Appeal. The Court decided that an independent commercial arbitrator was a worker and that individual solicitors or plumbers, engaged by customers on a one-off contracts, would likely be workers too.
Dominant purpose

Pre-Jivraj, there was, in theory, a further test to be applied: was the dominant purpose of the contract the execution of personal work or labour?  So: in Mirror Group Newspapers Ltd v Gunning [1986] 1 WLR 546, the Court of Appeal decided the claimant wasn’t a worker even though she was obliged personally to execute work for the respondent pursuant to a newspaper distribution agreement because the dominant purpose of the agreement was the regular and efficient distribution of newspapers.

Recent decisions have, however, tended either to ignore the dominant purpose test or to pay lip-service to it.

Mutuality of obligation

Another once-seemingly important factor to be taken into account in deciding whether or not someone is a worker that has been routinely glossed-over in recent decisions is “mutuality of obligation”.  In this context, mutuality of obligation means: was there “a mutual obligation between the parties to offer and accept work”: Mingeley v Pennock [2004] ICR 727 (CA).

That the [alleged] worker must be under an obligation to do/accept at least some work is simply another way of saying that they must be under a contractual obligation “personally to do work”. What is more controversial is whether the [alleged] employer must be under an obligation to offer/provide any work.  In Muschett v HM Prison Service [2010] IRLR 451 (CA), this aspect of mutuality of obligation was said not to be a “condition of” worker status.

Where we are

Jivraj v Hashwani is quite revolutionary.  It introduces, from European law (Allonby v Accrington and Rossendale College (Case C-256/01) [2004] ICR 1328 (ECJ)), a completely new test, which might be called the “Allonby test”: is the individual concerned “a person who, for a certain period of time, performs services for and under the direction of another person in return for which he receives remuneration”, in which case they are a worker, or are they genuinely self-employed – “independent providers of services who are not in a relationship of subordination with the person who receives the services” – in which case they are not.

Even in the absence (at the time of writing) of any post-Jivraj reported cases on the issue, we can be reasonably confident about at least two things:

• The dominant purpose test can in future be ignored with impunity.  Its sole remaining role is as an optional tool to assist a Tribunal “in arriving at the correct conclusion on the facts of a particular case” (Jivraj, paragraph 39) when applying the Allonby test;
• A legally enforceable contract and a contractual obligation personally to do work remain essential.

To explain the second point: because of the particular facts of the case before it, the focus of the Supreme Court in Jivraj (see in particular paragraph 36) was on the importance of the first two words of the phrase “employment under … a contract personally to do work”.   This emphatically did not mean the other six words were irrelevant.  It was stated that (ditto), “it is not sufficient [my emphasis] to ask simply whether the contract was a contract personally to do work”, i.e. that this needs to be asked, but is not the only question.

It is moreover inconceivable the Supreme Court would, without in terms saying so, be telling Tribunals and Courts to construe that phrase in such a way as to render meaningless the words “contract” and “personally”.
Problem areas – volunteers

Pre-Jivraj, volunteers could be workers, so long as they were under contractual obligations personally to do work.  In  X v Mid Sussex CAB [2010] ICR 423 (EAT) & [2011] ICR 460 (CA), the claimant argued she should be deemed a worker, relying on European law, even though she wasn’t under any such obligation.  In dismissing her claim, it was pointed out, particularly by Burton J in the EAT at paragraph 37, that volunteers were better off under English law than European law, under which, in accordance with Allonby, one can’t be a worker without remuneration.

In relation to volunteers, the obvious question, post-Jivraj, is: can they ever be workers, given that a worker is now defined as someone who (amongst other things) “receives remuneration”?  Although it’s clearly arguable the answer is no, I think that, on balance, they can be.  This is because as a general rule, European law specifies the minimum and not the maximum level of rights; there is normally nothing stopping a Member State giving those within its jurisdiction greater rights than the European minimum.

Mutuality of obligation #2

A second problem area is “mutuality of obligation”, as discussed above.  This was not something in issue in Jivraj and we still need a definitive ruling from the Court of Appeal on it.  For the time being at least, it isn’t safe for a respondent defending a discrimination claim to rely simply on the fact that it was under no obligation to offer or provide any work to the claimant.
Casual workers

A final problem area to be discussed in this article is: what of those who are not genuinely self-employed and who are not, at the time of the allegedly discriminatory act, performing services for and under the direction of others in return for remuneration?

In particular, what about those: who work periodically for a single company on a series of assignments; who have no "umbrella" contract requiring them, at the end of one assignment, to take on another one; who therefore have no ongoing contractual obligation “personally to do work”; and who, when between assignments, are effectively sacked – told they are not going to be offered any more assignments – for allegedly discriminatory reasons?  This is not as unusual a situation as it may sound.  There are, for example, many organisations that have a "bank" of "casual" staff.

The short answer seems to me to be that for such individuals nothing has changed.  It ought to be obvious, but is worth emphasising that the claimant still (in an unexceptional case) has to be in employment at the time of the allegedly discriminatory act in order to make a claim for discrimination in employment.

When such individuals are working on assignments, they are workers and have employment rights as such: Cornwall County Council v Prater [2006] ICR 731 (CA).  When between assignments, in the absence of an ongoing obligation personally to carry out any work, they are not workers and do not have employment rights – Carmichael v National Power plc [1999] ICR 1226 (HL).  This is unless the case is one like Prater where the continuous employment provisions of the ERA are in play, which they won’t be in a pure discrimination case. 

So if the alleged discrimination occurs between assignments, it will only be justiciable if the potential claimant can legitimately bring his or her claim not as a worker but as something else, e.g. as a job applicant.

Conclusion

The Supreme Court’s decision in Jivraj v Hashwani is good news for anyone who ever contracts with someone else for them to provide a service personally; good news for pretty much everyone, in other words.  It also provides us with a clearer and hopefully more workable test for determining employment status than we previously had. Jivraj is, though, no panacea and we shall still sometimes have to go back to unsatisfactory pre-existing case law, particularly when considering unconventional working relationships.

Cases referred to:

Allonby v Accrington and Rossendale College (Case C-256/01) [2004] ICR 1328 (ECJ)
Carmichael v National Power plc [1999] ICR 1226 (HL)
Cornwall County Council v Prater [2006] ICR 731 (CA)
Jivraj v Hashwani [2010] ICR 1435 (CA); [2011] UKSC 40
Mingeley v Pennock [2004] ICR 727 (CA)
Mirror Group Newspapers Ltd v Gunning [1986] 1 WLR 546 (CA)
Muschett v HM Prison Service [2010] IRLR 451 (CA)
X v Mid Sussex CAB [2010] ICR 423 (EAT); [2011] ICR 460 (CA)