3PLR – GLOBAL PLANT LTD. V. SECRETARY OF STATE FOR HEALTH AND SOCIAL SECURITY
POLICY, PRACTICE & PUBLISHING LAW REPORTS, 3PLR
GLOBAL PLANT LTD.
V.
SECRETARY OF STATE FOR HEALTH AND SOCIAL SECURITY
QUEEN’S BENCH DIVISION
[1971] 3 W.L.R. 269
1971 JUNE 9
3PLR/1971/29 (QB)
BEFORE:-
LORD WIDGERY C.J.
MAIN ISSUES
EMPLOYMENT AND LABOUR LAW:- Employer-employee relations – Liability of employer to pay contributions under an insurance statute for the benefit of employee – Construction of
EMPLOYMENT AND LABOUR LAW:- Distinction between Contract for services and contract of services – Relevant considerations – Duty of court thereto – Implications for employer’s duties to the employee – Statutory basis
INSURANCE AND REINSURANCE LAW:– Liability of employers to pay contributions under an insurance statute – Implication for nature of employment – Whether one for contract of service or for contract for services
GOVERNMENT AND ADMINISTRATIVE LAW:- Administrative decisions – Minister’s statutorily power to determine nature of employment of person pursuant to a statute – Whether a question of law or one of fact – When court will interfere therewith
HISTORY AND SUMMARY OF CASES
A company employed drivers for earth moving machines, and some factors of employment were consistent with a contract of service, other factors being consistent with a contract for services. The Secretary of State for Social Services decided that the company were liable as employers to pay contributions in respect of the drivers under S.1 National Insurance Act 1965.
On appeal by the company contending that on the facts found in the case stated the drivers were not in employment under a “contract of service” within section 1 (2) (a) of the Act of 1965: –
Held, dismissing the appeal, that since an appeal to the court lay only on a point of law, the court had to examine the Minister’s decision to see whether it contained a false proposition of law ex facie whether it was supported by no evidence, and whether the facts found were such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal (post, p. 282C); and that, accordingly since the Minister’s decision did not contain a false proposition of law ex facie and there was evidence on which his conclusion could be supported and the suggestion could not be made that no person acting judicially and properly instructed as to the law could have come to the decision he had reached, the company had failed to establish an error of law and the appeal failed.
Dicta of Lord Radcliffe in Edwards v. Bairstow [1956] A.C. 14, 36, H.L.(E.) applied.
Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173 and Construction Industry Training Board v. Labour Force Ltd. [1970] 3 All E.R. 220, D.C. applied.
Morren v. Swinton and Pendlebury Borough Council [1965] 1 W.L.R. 576, D.C. considered.
Per curiam. The court on appeal does not have again to balance the arguments pro and con the decision reached, giving the separate factors the weight which the court thinks they should or should not have in determining whether employment is under a contract of service or a contract for services, the balancing operation is a matter for the Minister (post, p. 282C).
The following cases are referred to in the judgment:
Cassidy v. Ministry of Health [1951] 2 K.B. 343; [1951] 1 All E.R. 574, C.A.
Construction Industry Training Board v. Labour Force Ltd. [1970] 3 All E.R. 220, D.C.
Edwards v. Bairstow [1956] A.C. 14; [1955] 3 W.L.R. 410; [1955] 3 All E.R. 48, H.L.(E.).
Market Investigations Ltd v. Minister of Social Security [1969] 2 Q.B. 173; [1969] 2 W.L.R. 1; [1968] 3 All E.R. 732.
Morren v. Swinton and Pendlebury Borough Council [1965] 1 W.L.R. 576; [1965] 2 All E.R. 349, D.C.
Phipps v. Minister of National Insurance (unreported), November 30, 1951.
Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance [1968] 2 Q.B. 497; [1968] 2 W.L.R. 775; [1968] 1 All E.R. 433.
Simmons v. Heath Laundry Co. [1910] 1 K.B. 543, C.A.
Terrar v. Minister of Pensions and National Insurance (unreported), July 30, 1960.
The following additional cases were cited in argument:
Argent v. Minister of Social Security [1968] 1 W.L.R. 1749; [1968] 3 All E.R. 208.
Hughes (C. W. & A. L.) Ltd., In re [1966] 1 W.L.R. 1369; [1956] 2 All E.R. 702.
MAIN JUDGMENT
CASE STATED by the Secretary of State for Social Services.
On September 26, 1968, Global Plant Ltd., then J. Greaves & Co. (Plant Hire) Ltd. (“the company”), applied for a decision of the Minister of Social Security under section 64 (1) of the National Insurance Act 1965 and section 35 (1) of the National Insurance (Industrial Injuries) Act 1965 of the question whether they were liable as employers to pay contributions in respect of Peter Morrissey for the period from May 20, 1968, to September 26, 1968, and in respect of Kenneth Summers for the period from March 11, 1968, to September 1968.
On February 21, 1969, the Secretary of State for Social Services appointed Mr. H. M. Jones, barrister-at-law and member of the solicitor’s office of the Department of Health and Social Security, to hold an inquiry into questions arising on the application and to report thereon. On March 20, 1969, Mr. Jones held an inquiry at Birmingham. The company were represented by solicitors. Evidence on oath was given by the company’s secretary and by Mr. Summers. Mr. Morrissey was invited by letter to attend the inquiry and accepted but later chose not to do so.
On consideration of the evidence given at the inquiry the Secretary of State found the following facts. The company were incorporated on June 23, 1964; the registered office was at 12 Lombard Street, West Bromwich, Staffordshire. The company were engaged in the hire of industrial plant as a subsidiary of a larger concern known as the Greaves Organisation Ltd. The company kept earth moving machines at a plant yard in Winsom Green Road, Birmingham, and the business had expanded from £7,500 in 1963 to £700,000 in 1969. For the purposes of this matter the company had the following types of machines: a J.C.B. Digger, used for cutting earth trenches and then depositing the removed earth to lorries nearby; International Drott on tracks with front bucket, used mainly for moving side inclines and cutting roads through fields. The company owned the machines which cost £3,000 each in 1963 and £4,200 in 1969 and at all times were responsible for fuelling, services, repairs and insurance. The company made all contracts for hire of the machines to such people as main contractors on building sites and private hirers. Mr. Kenneth Summers and Mr. Peter Morrissey worked for the company on earth moving contracts, using the company’s machines over the following periods: Mr. Summers from March 11, 1968, to September 26, 1968; Mr. Morrissey from May 20, 1968, to September 26, 1968 (“the material periods”).
Mr. Summers held an ordinary road driving licence and had been engaged in earth moving contracts in association with the company (and Greaves Services prior to the company’s incorporation) since 1963. Mr. Summers gave evidence that Mr. Morrissey worked exactly the same as he did up to March 1968. In the period from a date in 1963 up to March 10, 1968, Mr. Summers worked under the following arrangements with the company (or Greaves Services prior to its incorporation): he was engaged by Mr. Arnold, the company’s plant manager, as a plant operator to drive any earth moving machine; at the start of his employment he handed his national insurance card and P.45 tax form to the company for stamping and deduction of tax under P.A.Y.E.; payment was agreed at 7s. 7d. an hour; Mr. Arnold said that Mr. Summers was to drive machines which were hired out by the company to contractors; Mr. Summers agreed that he would work the hours required by the hiring contractor (“the hirer”); Mr. Summers was given a letter of appointment containing details regarding notice and rate of pay; he drove mainly a J.C.B. Digger which he picked up at the plant yard. The International Drott machine was delivered to the hirer’s site. The company told Mr. Summers where a job was to be done either in answer to a telephone inquiry or when he reached the plant yard, and he had to pick up the machine at a time which would enable him to get to the site at the time required by the hirer; Mr. Summers was paid weekly in a pay packet containing a slip showing details of deductions for national insurance (at the employed person’s rate) and P.A.Y.E. tax; he was paid a travelling allowance of £4 to £4 10s. per week; the plant manager informed Mr. Summers of the machine required and the address of the hirer; Mr. Summers always reported to the site foreman or site agent on the site and the latter told him what to do, when to do it and where to do the work on the site; consequently the hours varied according to the wishes of the hirer; Mr. Summers understood that he was required to do the work on the particular hire contract which the company had arranged; he had no freedom to take the machine elsewhere without permission of the company’s plant manager; Mr. Summers received paid holidays, two weeks in the year, plus Easter, Christmas and bank holidays; when he wished to take time off he always gave notice to the plant manager; Mr. Summers kept time sheets in triplicate, one copy to the hirer, one to the plant manager, and one he kept himself; the company required him to send their copy to their office to arrive by Monday; copies of two of those time sheets were exhibited to the case; the weekly earnings varied with the hours worked, i.e., a net weekly wage between £18 to £27. Early in March 1968 the company’s then clerk manager, Mr. Hipkins, was told by Mr. Summers that he would prefer to be self employed as a sub-contractor. It was agreed between them that Mr. Summers would stamp his own national insurance card at the self-employed person’s rate and pay tax under Schedule D; and that he would be paid an increased hourly rate of 14s. Mr. Summers worked for the company in the material period under the following arrangements: in pursuance of the conditions set out in document order 12794 dated March 11, 1968, printed on one of the company’s order forms as follows:
“Please supply: Labour only to operate our J.C.B. or Ford Digger at 14s. per hour on the conditions set out below: –
- The amount of hours paid will be for hours worked and signed for on our time sheet only. (Machine time only.)
- No hours will be paid for breakdown time.
- Two-thirds of 14s. per hour will be paid for machine standing time on a signed time sheet
…………….
- You be responsible for cleaning and maintaining our machine, we to supply all materials.
- Payments will be made one week in arrears.
- You to be responsible for your income tax, insurance and holiday pay, etc.
- Any damage caused through neglect to our machine will be charged to you at cost.
- The machine must not be removed from any site without the consent of our office.
- No work to be undertaken for any customer without the consent of our office.
- Time sheets must reach our office no later than Monday night if payment is to be made on Thursday.
- The hour meter reading must be put on the time sheet each week. No subs will be given.
……………………………..
For and on behalf of [the company]
- E. Hipkins”;
He was paid gross weekly wages by the company without deductions for national insurance or tax; all contracts for hire of a machine continued to be arranged between the company and the hirer; if Mr. Summers picked up any hiring work he had to supply the name and address to the company for approval before undertaking the work; Mr. Summers used the company’s machines at all times; he was not free to take them where he liked, but only on the particular contract hire arranged or approved by the company; he continued to pick up the machines at the plant yard at a time which would enable him to get to the site at the time agreed between the company and the hirer; on the site Mr. Summers continued to work subject to the wishes of the site foreman or agent as to what to do, where to do it and when to do it, except that he was keen to ask them for extra hours of work to increase his remuneration; he received no paid holidays; he took them when he liked, but always notified the company when he proposed to do so; on one occasion only Mr. Summers refused a job offered by the company because it was too far away; prior to the material period if the company had told him to go to a particular job he was obliged to go; his gross weekly payments from the company (i.e., without payment of national insurance stamp or tax) varied between £6 and £42; his average gross weekly payment was £38; he was paid no travelling allowance; he received no pay for sickness; he gave notice to the company when he took time off; he omitted to do so one Saturday morning and the company made a deduction from his next weekly payment for loss of machine hiring payment; he provided a substitute on occasions when he could not work seven hours; the company accepted this as the substitute was a qualified operator; if minor aspects of the job were unsatisfactory no deduction was made from Mr. Summers’ weekly payment; this was the same position as before March 1968, as a favour to Mr. Summers the company deducted one per cent. of his payments in respect of the training board levy; the company were concerned at all times to keep the machine in a state of regular and profitable hire, that is, to reduce idle time to a minimum and Mr. Summers had to comply with this requirement. Mr. Summers was off work from May 11, 1968, to July 6, 1968, inclusive due to a lacerated ligament in his right leg. During that period he received no payment.
Mr. Morrissey worked in the material period under precisely the same arrangements as Mr. Summers as set out above.
The company had expanded considerably in the period 1963 to 1969 and it was difficult to obtain machine operators. Accordingly the company had been obliged to accept the arrangements suggested by Mr. Summers and Mr. Morrissey above because they were good workmen and the company needed their labour. The arrangements set out above were only agreed with a small number of the company’s operators. At the time of the inquiry they were agreed with eight of the 18 excavation drivers working with the company. The remainder were given written terms under the Contracts of Employment Act 1963 to cover normal hours of work, overtime, remunerations, paid holidays, sickness or injury, provision for notice on termination of employment by employer and employee, pension arrangements, and period of employment. They also worked in the same way on the site. They received a guaranteed minimum week of 42 hours even when, for example, rain prevented the actual performance of work, but Mr. Summers and Mr. Morrissey did not. They were paid also if the machine broke down due to negligence, unlike Mr. Summers and Mr. Morrissey. The company covered all the machines on all risk insurance policy. Neither Mr. Summers nor Mr. Morrissey had any private insurance to cover them when they worked for the company. They both worked in the material periods for the company only. The company was concerned at all times to know the whereabouts of the machines and to keep them active to earn money. Mr. Summers and Mr. Morrissey were obliged to do their jobs for the company within the time limits required by the company, and for the same reason they had to notify the company when they would not be available to do jobs previously arranged. Certain carpenters working for the company might leave sites to do small jobs to suit their own time because they were not connected with machines, but Mr. Summers and Mr. Morrissey could not because the machine at such times would be idle and not earning money for the company. Since approximately December 1968, Mr.
Summers had been listed in the classified telephone directory as an earth moving contractor. He applied for a telephone in or about September 1968.
It was contended on behalf of the company that the full time employees of the company were employed under contract of service, and Mr. Summers and Mr. Morrissey were either under contracts for services or were independent contractors; the relationship between Mr. Summers and the company was not permanent, Mr. Summers risked a loss; he was in business on his own account; he freely negotiated his own price for a particular job; and that no single test was decisive, and a general view of the relationship did not show that a contract of service existed.
On consideration of the above matters the Secretary of State concluded that during the periods from March 11, 1968, to May 12, 1968, and July 8, 1968, to September 26, 1968, in respect of Kenneth Summers and May 20, 1968, to September 26, 1968, in respect of Peter Morrissey: Kenneth Summers and Peter Morrissey were each employed under a contract of service and were gainfully occupied in employment thereunder in Great Britain; by virtue of section 1 (2) of the National Insurance Act 1946 and subsequently by virtue of section 1 (2) (a) of the National Insurance Act 1965, Kenneth Summers and Peter Morrissey were each included in the class of employed persons for the purposes of that Act; by virtue of section 1 of, and paragraph 1 of Part I of Schedule 1 to the National Insurance (Industrial Injuries) Act 1965, Kenneth Summers and Peter Morrissey were each employed in insurable employment within the meaning of that Act; by virtue of sections and 3 and 11 (1) of the National Insurance Act 1965 and sections 2 and 3 (1) of the National Insurance (Industrial Injuries) Act 1965, the company were liable as employers to pay contributions for Kenneth Summers and Peter Morrissey under the Acts.
On May 5, 1969, the Secretary of State gave his decision in terms set out in a copy notice exhibited to the case, and on the same date a copy of the notice was sent to the company’s solicitor.
By letter dated August 8, 1969, the company through its solicitors required the Secretary of State to state a case in the High Court, and in accordance with R.S.C., Ord. 111 the Secretary of State did so.
The grounds of appeal were that, on the facts set forth in the case, the Secretary of State was wrong in law and misdirected himself in deciding that Peter Morrissey and Kenneth Summers were in insurable employment and that the company were liable to pay contributions for them under the Acts.
Anthony Lester for the company.
Gordon Slynn for the Secretary of State for Health and Social Security formerly the Secretary of State for Social Services.
LORD WIDGERY C.J.
This is an appeal, by case stated, by Global Plant Ltd., formerly J. Greaves & Co. (Plant Hire) Ltd., against a decision of the Secretary of State for Social Services, the appeal being brought under section 65 of the National Insurance Act 1965. The question which the Minister had been asked to determine was whether the company were liable as employers to pay contributions in respect of two named employees for a period in the year 1968. The Minister determined that the company were so liable, and the appeal is brought to this court on the ground that the decision is erroneous in point of law by virtue of section 65.
The statutory provision which gives rise to the dispute is brief and simple. It is contained in section 1 of the National Insurance Act 1965 which provides:
“(1) Subject to the provisions of this Act –
(a) every person who –
(i) immediately before the date of the commencement of this Act was insured under the Act of 1946; or
(ii) on or after the said date, being over school leaving age and under pensionable age, is in Great Britain, and fulfils such conditions as may be prescribed as to residence in Great Britain, shall be insured under this Act;
………………..
(2) For the purposes of this Act, insured persons shall be divided into the following three classes, namely –
(a) employed persons, that is to say, persons gainfully occupied in employment in Great Britain, being employment under a contract of service
…………….”
The question for the Secretary of State therefore is this: whether the two named individuals mentioned in the case were at the relevant time gainfully occupied in employment in Great Britain, being employed under a contract of service.
The facts of the matter as found by the Minister are these. The company are engaged in the hiring out of industrial plant. They began in a relatively small way in the early 1960’s and expanded extremely rapidly. They seem to operate, primarily at any rate, with two types of machines, a machine called a “J.C.B. Digger,” which is used for cutting earth trenches, and another machine known as an “International Drott,” which is used mainly for moving side inclines and cutting roads through fields, The company own substantial numbers of these machines and let them out on hire. When they let them out on hire, they remain responsible at all times for the fuelling and the repair of the machines and their insurance, and the company make the contracts of hire with main contractors on building sites or road construction and the like.
The two men whose position in relation to the company is in issue in this case, Mr. Kenneth Summers and Mr. Peter Morrissey, both worked for the company as drivers of those machines. The position of the two men is identical and I need not attempt to separate them. The position of each of them prior to 1968 was as follows. He was taken into the employment of the company by the company’s plant manager; he handed in his National Insurance card and his P.45 tax form as would any employee under a contract of service. He received payment at 7s. 7d. an hour, but it is not clear to me from the case whether there was a minimum number of hours guaranteed to him. I am inclined to think there was not, but it is not vital to the determination of this matter anyway. Having entered into this arrangement with the company, Mr. Summers agreed that he was to drive machines belonging to the company, to and on the site of contractors to whom these would be hired. Mr. Summers agreed that he would work the hours laid down by the hiring contractor, and he was paid weekly in a pay packet which showed the appropriate deductions for National Insurance at an employed person’s rate and “Pay as You Earn” tax. He also received a travelling allowance of £4 to £4 10s. week He always reported to the site foreman at the customer’s site on which the machine was to work, and he was there told by the site foreman or site agent as the case might be what to do, when to do it, and where on the site the work was to be done,
The actual hours of work varied considerably according to the requirements of the various customers. Mr. Summers had no right to choose where he should go to work with the company’s machines. He drove to the site nominated by them and did the work directed by the site foreman or agent. He received paid holidays, two weeks a year plus Easter, Christmas and Bank holidays, and when he wanted to take time off he always told the plant manager before he went. His weekly earnings averaged between £18 and £27 nett at all times. I pause there to observe that no one doubts that, during the period of Mr. Summers’ service to which the conditions I have just recited applied, he was working for the company under a contract of service. It had all the badges of a contract of service, badges to which I must return more fully in a moment.
But early in March 1968 Mr. Summers told the company through their plant manager that he would prefer to be self employed as a sub-contractor. That is a reference to what the reported cases show to be a growing practice in modern times whereby people contract to supply labour to others, and what Mr. Summers was evidently offering was that his status should be changed, that he should no longer be a servant of the company, but that he should contract with the company to provide his services for them as sub-contractor.
According to the case, it was thereafter agreed that he would stamp his own insurance card in future at the self-employed person’s rate; he would pay his own tax under Schedule D; he would be paid an increased hourly rate of remuneration going up from 7s. 7d. per hour to 14s. an hour, and other detailed arrangements were made set out in a document attached to the case. That document is in a quasi-contractual form; it is actually printed on one of the company’s order forms, but it sets out the terms of a bargain between Mr. Summers and the company. It starts: “Please supply labour only to operate our J.C.B. or Ford Digger at 14s. per hour on the conditions set out below.” Then the conditions are set out. We find that the hours paid for shall be machine time only, breakdown time will not be paid for; 14s. an hour will be paid for machine travelling time – I am not attempting to give all the conditions but merely to cite examples which are relevant. The document provides that “You” which is Mr. Summers “will be responsible for cleaning and maintaining our machine, we,” the company “to supply all materials.” In the paragraph numbered 10 of that document, it is provided that “No work to be undertaken for any customer without the consent of our office.” Mr. Summers is being invited to supply his labour; He is obtaining a substantially higher rate per hour for the work which he does, but he is not given any travelling allowance as he previously had, no provision is made for his having holidays, no provision is made for his having sickness benefit if he is ill. One can fairly see, I think, at once that those terms in many respects look more like terms appropriate to a contract for services than they do to a contract of service, and there is nothing to be surprised about in that because the parties were trying to convert this relationship into a contract for services.
After that arrangement had been made, the consequences were, as I have already described, that Mr. Summers’ financial arrangements with the company were substantially changed, whether in the end to his advantage or disadvantage nobody knows, but it seems quite clear to me that apart from the financial arrangements everything went on precisely as before. Mr. Summers drove the company’s machines on the sites selected by them under the control of the site foreman or site agent on the site; he could only go to the sites chosen by the company, and he had to get there at the time stipulated by the company as being that required by the customer, before the receipt of the machine.
It is perfectly true, as Mr. Lester has emphasised more than once, that there is, in theory at any rate, a significant difference between the old arrangements and the new, and it is this, that prior to the new arrangement being made, Mr. Summers as a servant was no doubt obliged to work every working day under the terms of his contract, and if he failed to observe his contract by refusing to work, he could no doubt be dismissed. Under the new arrangement, there is no obligation on Mr. Summers disclosed in the documents to work at all, it merely provides that if and when he works he shall be remunerated on a particular basis. I fully recognise that there is here a difference, and a difference which might be of some significance, because it is much more consistent with a contract for services than a contract of service that the employee may pick and choose, as it were, the times when he shall work. But I am not all that impressed by the point, if I may so put it, because I have little doubt that the intention of the parties was that Mr. Summers should continue to work exactly as he had before even though in terms his new bargain did not require him to do so. Also on this point, and I mention it to dispose of it, there is a dictum in the judgment of Cooke J. in Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, 187, where he said:
“The company” that is to say the appellant company in that case “then refer to the fact that Mrs. Irving’s work was performed under a series of contracts, each for a specific survey. They say that the relationship of master and servant is normally conceived of as a continuous relationship, and that the fact that there is a series of contracts is more consistent with those contracts being contracts for services than contracts of service. For my part, I doubt whether this factor can usefully be considered in isolation. It must I think be considered in connection with the more general question whether Mrs. Irving could be said to be in business on her own account as an interviewer.”
Like Cooke J., I recognise that there is significance in this point, but it certainly is not conclusive in itself or in any sense of overwhelming importance.
The problem for the Minister in this case, having found those facts. was to determine whether in the result the position of Mr. Summers after the change in March 1968 was the position of a servant working under a contract of service or the position of an independent contractor working under a contract for services. That was the question upon which the liability of the company in this case depended.
One must next look, at any rate briefly, at the law which has to be applied in deciding whether a given situation produces a contract of service or a contract for services. A great deal has been said on this subject over the years, because in a great many branches of the law the distinction between these two contracts is relevant. I think it is well accepted now that the idea of the degree of control exercised by the employer over the servant being the decisive factor in this question has been very largely modified. It is recognised nowadays that other factors, other, that is, than simply the degree of control exercised by the alleged master, have to be taken into account in separating a contract of service from a contract for services. I do not propose to go over the authorities which have been cited to the court in the course of the hearing today, but I find assistance in a classification of the main considerations upon which this issue turns from the same judgment of Cooke J. in Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, 184, where he said:
“The observations of Lord Wright, of Denning L.J. and of the judges of the Supreme Court suggest that the fundamental test to be applied is this: ‘Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is ‘yes,’ then the contract is a contract for services. If the answer is ‘no,’ then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.”
That test is taken a little further in another judgment by Cooke J. in Construction Industry Training Board v. Labour Force Ltd. [1970] 3 All E.R. 220. In that report Cooke J. was referring to the tests for distinguishing a contract of service from a contract for services. He referred to a decision of MacKenna J. in Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance [1968] 2 Q.B. 497, and said, at p. 224:
“These tests are now so familiar that in my judgment it is unnecessary to set them out in detail. I merely observe this. First, that no list of tests which has been formulated is exhaustive, and that the weight to be attached to particular criteria varies from case to case. Secondly, although the extent of the control which the alleged employer is entitled to exercise over the work is by no means a decisive criterion of universal application, it is likely in many cases to be a factor of importance. On the one hand, the tribunal pointed out that an hourly paid workman has no opportunity to deploy managing skills or make money by so doing. On the other hand, the tribunal took account of the undeniable fact that in the building industry there are many self-employed persons. I think that in the circumstances of this case, the tribunal was entitled to take account of that.”
So the position of the Minister when this matter was referred to him for determination was that he was required to apply the principles of law to which Cooke J. refers in those two extracts, and if he found that certain factors pointed one way and certain factors pointed in another he had to decide for himself what weight should be given to each factor, and in the end decide upon which side the balance had come down.
Turning for a moment to the test of Cooke J. taken from the Market Investigations case [1969] 2 Q.B. 173 and applying it to the facts of the present case, it seems to me that the factor of control is a factor which operates strongly in favour of the Minister’s decision. It is perfectly true that the control on the site was not exercised by the company’s representative but by the representative of their customer, the site foreman. I cannot see that that makes any difference, and in my judgment the position would be exactly the same if the company had sent its own representative to the site there to transmit to Mr. Summers the necessary instructions from the client company. This is in my judgment, as far as control is concerned, a clear case in which the employee was controlled by his employer in the way in which the work was to be done. It cannot be put more strongly than it was put in the case stated when it was said that the site foreman “told him what to do, when to do it, and where to do the work on the site.”
So far as the other factors referred to by Cooke J. are concerned, this was not a case in which the employee provided his own equipment. Far from it; he was using at all material times this very expensive equipment provided by the company. He was not required to hire labourers, although it is recorded that if he could not work himself it was open to him to send another substitute driver if he was qualified to do the work.
When one turns to consider what degree of financial risk was taken or what degree of responsibility for investment and management he has, the result in my judgment would be nil. It is pointed out by Mr. Lester that this man ran a certain risk by changing the terms of his employment, as he did, because under the old terms he may have had a guaranteed week and to have been sure of a certain weekly income even though the weather was inclement and no work could be done, whereas under the new arrangement he would not be paid for those hours when the machine could not work for weather or other reasons.
I quite understand all that, but I do not think that is the kind of financial risk or, as it has been put in other cases, the chance of profit or loss, which is a cogent factor in determining whether an arrangement creates a contract for services. What I think Cooke J. and other judges who have applied the same kind of test in the past had in mind was that if a man agrees to perform an operation for a fixed sum and thus stands to lose if the work is delayed, and to profit if it is done quickly, that is the man who on the face of it appears to be an independent contractor working under a contract for services. I do not think that any of the points referred to by Cooke J. are points which in this case operate to the advantage of the company, On the contrary they seem to me to go the other way.
Of course, that is not an end of the matter. There are, as I have pointed out, other matters which are favourable to the company in the consideration of these facts. One must not overlook that the intention of the parties was that the relationship should be that of an independent contractor, and although the parties cannot by intention make a transaction into something which it is not, yet it is recognised that such intention is a factor for consideration in these cases. Accordingly, Mr. Lester can claim that as a factor in his favour. He can also claim as a factor in his favour that, as I have already observed, there was no obligation, as far as one can see, on Mr. Summers after March 1968 to work at any particular time or in any particular locality. He seems to have acquired, in theory at any rate, an opportunity to pick and choose which is more consistent with an independent contractor than an employee.
The Minister having been required to make a decision on that basis, what is the position of this court? There is no doubt whatever that the only right of appeal to this court is a right of appeal on a point of law, and some difficulty may arise in the application of that rule because the question” contract of service or no?” is inevitably a mixed question of law and fact. The question of whether it is a matter primarily of law or fact has been considered before. Indeed as far back as the days of the Workmen’s Compensation Act 1906 one finds in Simmons v. Heath Laundry Co. [1910] 1 K.B. 543 that Cozens-Hardy M.R., in relation to this very issue which the Minister had to decide in the present case, said, at p. 548:
“In such a case there may be a contract for services, but there is not a contract of service. In any particular case it will be for the arbitrator, after considering all the circumstances, to decide whether the injured professional person is or is not a ‘workman.’ This is not a question of law, but a question of fact. …”
That is echoed in the same case by Buckley L.J. who said, at p. 553:
“The question in this case then resolves itself into this: Was there such evidence before the learned judge as that he upon those principles could and did find as a matter of fact that this girl in giving lessons upon the pianoforte was contracting to use her skill to achieve the result of instructing the child in playing the piano, or was she placing herself in the position of owing the duty of obeying the mother’s orders as to how she should give her lessons?”
Buckley L.J. treated it as a matter of fact.
The point has been more recently considered in a case under the present legislation, Phipps v. Minister of National Insurance (unreported), November 30, 1951. There Parker J., faced with a problem similar to the one before the court today, said:
“This appeal can only be on a question of law, and the point that has been taken on behalf of the Minister of National Insurance is that the decision as to whether or not a person is employed on a contract of service is a question of fact and not of law. If that be the right view, then the only way in which the question of contract of service or not could come before this court would be if the allegation was that on the facts found the Minister on that evidence could not hold as he did hold; in other words, if one were setting out the point of law on which this court was to decide, it would be whether on those facts the Minister could find what he did, and whether on those facts he was right in law in coming to that conclusion. I have been referred to the cases dealing with this matter …” – he refers to Simmons v. Heath Laundry Co. [1910] 1 K.B. 543, to which I have just referred, and he also refers to Cassidy v. Ministry of Health [1951] 2 K.B. 343, 352, where Somervell L.J. approved of the decision in Simmons’ case; then Parker J. goes on – “If Mr. Ashworth’s submission” – on behalf of the Minister – “is right, clearly it could not be said that the Minister, as a matter of law, could not find the fact that he has found that there was no contract of service, but I feel that it would be wrong for me to decide that question sitting here as a court from which there is no appeal, in a case where the applicant is not represented.”
So Parker J. is not finally expressing a view on the matter there.
But Diplock J. in Terrar v. Minister of Pensions and National Insurance (unreported) July 13, 1960 goes very much further. Dealing with the same problem, when speaking of a determination made by the Minister in that case, he said:
“In order to set aside that determination, limited as I am to setting aside determinations which are erroneous in law, Mr. Turner-Samuels must satisfy me either that there was no evidence upon which the Minister could reach the decision that he did that the appellant was an independent contractor – and I do not think Mr. Turner-Samuels contends that there was no evidence of that; if he does so contend, I certainly do not accept that contention – or, alternatively it seems to me that he must fall back upon the principle which is applied from time to time by appellate courts when they dislike the opinion of the tribunal of fact. That is set out perhaps most clearly in Edwards v. Bairstow [1956] A.C. 14. Either one can reach the same result by talking about primary facts and secondary facts – and by that I mean inferences from primary facts – on which the appellate court is entitled to intervene, or else one can do it rather more simply, as appears in Lord Radcliffe’s speech where he said, at p. 36: ‘If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, wthout any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. …'”
In my judgment that is the proper approach for me to take in the present case, and I say that notwithstanding certain dicta of Lord Parker C.J. in Morren v. Swinton and Pendlebury Borough Council [1965] 1 W.L.R. 576. That was a case in which the issue of contract of service or no had to be determined substantially from a written contract. The terms of service therefore were a matter of construction of the contract, and in connection with the construction of the contract Lord Parker C.J., and the other members of the court of whom I was one agreed, said, at p. 583:
“Mr. Threlfall has pressed upon the court that the question of what is the legal quality of the contract is a question of fact, and being a question of fact it is for the Minister and not for this court to determine, provided that there is any evidence which would justify the Minister in arriving at this conclusion. I am quite unable to accept that. The terms of the contract of course are fact, and to that extent the determination depends upon fact, but it seems to me perfectly clear that once the primary facts are found, then it is a pure question of law as to what is the reasonable inference based on the legal interpretation of the contract. In my judgment the only inference that could reasonably be drawn by someone properly directing his mind as to the law in the present case is that the appellant was an employee in the sense that he was employed by the respondents under a contract of service.”
At first sight it looks as though Lord Parker C.J. is saying that the conclusion to be drawn from the primary facts on the issue with which I am concerned is a conclusion drawn as a matter of law, and in so far as he is dealing with the construction of a written agreement he would, if I may say so with respect, obviously be right. I do not think that Morren’s case in any way destroys the validity of the approach of Diplock J. to the question which I have to decide, that approach being the one in Terrar’s case (unreported) to which I have referred.
It seems to me, therefore, that I must first examine the Minister’s decision to see whether it contains a false proposition of law ex facie. It does not; neither counsel has suggested that it might.
It is next relevant to consider whether the decision reached by the Minister is one which was supported by no evidence, in which event of course his decision would be wrong in law. That is not a conclusion open to me in this case because there clearly was some evidence upon which the conclusion could be supported.
Then finally I must consider, in the words of Lord Radcliffe in Edwards v. Bairstow [1956] A.C. 14, 36 quoted in the judgment of Diplock J. in Terrar’s case, whether the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. It is not, as I see it, for me to balance again the arguments pro and con the decision which the Minister has reached, giving the separate factors the weight which I think they should or should not have. That balancing, operation is a matter for the Minister. All that I have to ask myself is whether the conclusion which he has reached is one that no person acting judicially and properly instructed as to the relevant law could have come to in this determination. I am perfectly satisfied that although there were pointers either way, it would be quite out of the question to suggest that the Minister’s decision was one open to attack on the ground to which I have last referred.
In the end, therefore, it seems to me that the company have failed to establish an error of law in the present appeal, and that the appeal must be dismissed.
Appeal dismissed.
No order as to costs.
Solicitors: Alan, George & Sacker for Maurice Putsman & Co., Birmingham; Solicitor, Department of Health and Social Security.
- N. W.
