Blakely v On-Site Recruitment Solutions Ltd & Heritage Solutions City Ltd (Debarred) UKEAT/0134/17/DA
A recent decision of the Employment Appeal Tribunal has generated a number of headlines, being hailed as a “ground breaking victory against bogus self-employment” by the union Unite, who’s member had brought the appeal.
The case concerned a pipe-fitter, Mr Blakely who had responded to an advert from an employment agency, On-Site Recruitment Limited (‘On-Site’), for work at Broadmoor Hospital via a construction company called Fascel. The intention of On-Site was that Mr Blakely would be engaged to do the work by an umbrella company, Heritage Solutions City Ltd (‘Heritage’). However, Mr Blakely refused to sign the contract he was sent by Heritage (which we assume from the judgment was a PAYE contract for services) and complained to his union about alleged deductions from his wages for employer’s NI and a company margin. The working arrangement did not last long and Mr Blakely subsequently brought a claim to an Employment Tribunal, against both On-Site and Heritage, with regard to the alleged unlawful deductions and for non-payment of holiday pay. To succeed in his claim, Mr Blakely needed to show that he was a ‘worker’ of either company.
The ET decided that there was no contract of any kind between Mr Blakely and On-Site and his claim against them therefore failed. The existence of some form of contract is a prerequisite to establishing worker status. The ET further concluded that although Mr Blakely did have a contract with Heritage, there was no obligation under the terms of that contract for Mr Blakely personally to do any work for Heritage. The claim against Heritage therefore also failed at the ET as Mr Blakely had failed to achieve worker status, a lack of a requirement for personal service being fatal to such a claim.
At the EAT Mr Blakeley sought to challenge the findings of the ET on several grounds. Firstly, he challenged the finding by the ET that he had no contract with On-Site because of the finding by the ET that there was a lack of any intention on the part of On-Site to create legal relations with him. Such an intent is a fundamental legal requirement of any contract, but it is extremely unusual to find such an argument deployed in the decision of an ET.
Perhaps unsurprisingly therefore, this part of the ET’s judgment was overturned by the EAT who decided that there was a contract “of some sort” between Mr Blakely and On-Site. However, the EAT did not decide what the terms of that contract were. Mr Blakely has not therefore, as has been reported, ‘won’ his case against On-Site nor can he simply show up at the ET and collect his compensation. To succeed, he will still need to convince an ET that he was a ‘worker’ of On-Site in order to win his claim against them.
However, the case did not stop there, with the EAT going on to consider the issues of personal service and whether Mr Blakely was operating a business. With regard to On-Site, the EAT decided that having established that there was ‘some sort’ of contract between them and Mr Blakely, that it would now be up to a fresh ET to decide whether that contract meant there was an agreement to provide services personally and if so, whether Mr Blakely was operating a business undertaking of some sort of which On-Site was a customer. The issue of whether or not Mr Blakely was a ‘worker’ of On-Site will therefore be reconsidered by a new ET. Again, despite the assertions in the press, nothing has been ‘won’ by Mr Blakely yet.
With regard to Heritage, the EAT rightly overturned the reasoning of the ET, which had focussed too narrowly on whether Mr Blakely was obliged to provide his services personally only with regard to Heritage, a clear error of law. However, the EAT did not then go on to decide the issue of personal service with regard to Heritage, therefore leaving it open. The EAT also suggested that the ET might have considered whether Heritage was acting as an agent of On-Site in the arrangements that On-Site had with the end-client.
Importantly therefore, the EAT did not, having already decided that there was ‘some sort’ of contract between On-Site and Mr Blakely, overturn the finding of the ET that there could nonetheless, also have been a contract between Heritage and Mr Blakely. The EAT in fact decided that Mr Blakely “could be found to be a worker of On-Site or Heritage or conceivably of both”. It is this aspect of the judgement that Unite have seized upon in particular, claiming that it “blows a hole in the way that employment agencies hide behind payroll and umbrella companies and pretend that they are not responsible for the employment of the workers they recruit”. If this part of the judgement is allowed to stand and is applied by other ETs, then it may well have significance to the operation of employment agencies and umbrella companies. This however, is a long way from the done deal that Unite have suggested that it is.
However, we are of the opinion that it cannot be right that there can be more than one contract for the same work. There are limited circumstances where there can be more than one employer for the same work in law, for example under the whistleblowing legislation, health and safety and discrimination law. However, it is precisely because these are the exceptions to the rule that the EAT’s finding that both On-Site and Heritage could ‘conceivably’ be found to have simultaneously engaged Mr Blakely as a worker cannot be correct for ordinary statutory employment law purposes such as were relevant to his claim. We can only hope therefore, that the case is further appealed and clarification provided by the Court of Appeal.
Finally, a point that always has to be made with regard to any Employment Tribunal claim is that the facts of each case are as crucial in determining the outcome as the application of the relevant law. In this case there were communications between On-Site and Mr Blakely which were suggestive of an agreement between them, prior to Heritage entering the picture. Mr Blakely also refused to sign Heritage’s contract but was allowed to continue working, effectively under protest. In addition, important contractual documents which could have assisted in explaining the nature of the contractual chain were, for some reason, not made available to the ET. Perhaps most importantly though in this case, the umbrella company, Heritage, did not make any response to the claim to the ET and were debarred from taking part in the EAT proceedings after ignoring an ‘unless order’.
On-Site were therefore left to defend the arrangements on their own, without the benefit of the umbrella company making clear to the Tribunal, as would usually be the case, that they fully accepted that they were the party that engaged Mr Blakely and that they were therefore the correct Respondent to the claim and the only party against whom liability could therefore be found. Heritage’s failure to defend their client was crucial in exposing On-Site to this claim and the potential consequences that may follow.