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Case No: EATRF/1999/1011/AI
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT
APPEAL TRIBUNAL
Royal Courts of Justice
Strand, London, WC2A 2LL
Thursday 6th April, 2000
B e f o r e :
LORD JUSTICE STUART-SMITH
LORD JUSTICE WARD
and
LORD JUSTICE MUMMERY
- - - - - - - - - - - - - - - - - - - - -
|
ABBEY
LIFE ASSURANCE COMPANY LIMITED
|
Appellant
|
|
-
and -
|
|
|
MR
C TANSELL
|
Respondent
|
- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr C Jeans QC & Mr J Cavanagh (instructed by Abbey Life Legal
Department, Abbey Life House, 80 Holdenhurst Road, Bournemouth, BH8 8AL for the
Appellant)
Mr B Langstaff QC (instructed by The Disability Law Service, High
Holborn House, 52-54 High Holborn, London WC1V 6RL for the Respondent)
- - - - - - - - - - - - - - - - - - - - -
Judgment
As Approved by the Court
Crown Copyright ©
LORD JUSTICE MUMMERY:
The Issue
This appeal is about the scope of protection conferred by the Disability
Discrimination Act 1995 (the 1995 Act) on "contract workers ." They are workers
who do work for the alleged discriminator, but they are not employed by him.
They are employed by someone else and their services are contracted out.
The case turns on the interpretation of section 12 of the 1995 Act which makes
it unlawful to discriminate against disabled contract workers. The point
arises as a preliminary issue in an application to the Employment Tribunal by
Mr Christopher Tansell complaining of discrimination by Abbey Life Assurance Co
Ltd (Abbey Life) in the field of employment for a reason relating to his
disability.
The Facts
Mr Tansell is a computer consultant. On advice he purchased a shelf company
called Intelligents Limited (Intelligents). He is the sole shareholder. There
are three other directors. Mr Tansell offered his computing skills through that
company. He is an employee of his company. The court was informed that the
practice of self incorporation by computer consultants is common. Very large
losses may be involved when things go wrong. The protection of limited
liability is comforting.
Mr Tansell placed his name with several specialist employment agencies,
including MHC Consulting Services Limited (MHC). On 10 October 1997 MHC had
entered into a Manpower Services Agreement with Abbey Life for the provision of
freelance consultants and contractors in the sphere of information technology.
Mr Tansell was referred to Abbey Life by MHC. He was interviewed by Abbey Life
on 27 October 1997. On 31 October a contract was made between MHC and
Intelligents under which Intelligents, as contractor for the services of Mr
Tansell, agreed to provide computer consultancy services " for MHC to MHC's
Client, Abbey Life." The effect of that contract was to place Mr Tansell under
the control of Abbey Life as part of a team investigating the impact of the
so-called "millennium bug" on Abbey Life's computer systems. He was required to
comply with Abbey Life's work rules. Fees were paid by Abbey Life to MHC, who
in turn paid Intelligents. Mr Tansell was paid a salary by Intelligents, though
funds were also retained in the company.
Neither Mr Tansell nor Intelligents made any contract with Abbey Life for Mr
Tansell's services.
In February 1998 Mr Tansell was diagnosed as suffering from diabetes. That
condition is controlled through medication. He says that it is likely to last
for the rest of his life. His services with Abbey Life were terminated on 20
March 1998.
Mr Tansell presented an originating application to the Employment Tribunal on
4 June 1998 complaining of unfair dismissal and breach of contract. In the
light of the particulars supplied by him the complaint has been treated as one
disability discrimination.
In its Notice of Appearance Abbey Life denied that it had either employed or
dismissed Mr Tansell. It also denied that he was at any time a "contract
worker" or that it was the "principal" within the meaning of section 12 of
the 1995 Act. It requested a preliminary hearing to consider the question of
jurisdiction.
The Statutory Provisions.
Section 4 (1) of the 1995 Act makes it unlawful "...for an employer to
discriminate against a disabled person..."
It is no longer contended that Mr Tansell was an employee of Abbey Life
within the extended meaning given to "employment " in section 68 of the 1995
Act, which includes both employment under a contract of service and employment
under a "a contract personally to do any work."
Mr Tansell relies solely on the protection conferred by section 12.
Sub-section (1) makes it
"... unlawful for a principal, in relation to contract work, to discriminate
against a disabled person..."
Sub-section (3) applies the provisions of Part II of the 1995 Act (Employment)
"....to any principal, in relation to contract work, as if he were, or would
be, the employer of the contract worker and as if any contract worker supplied
to do work for him were an employee of his."
The definitions are contained in sub-section (6)-
" principal" means a person ("A") who makes work available for doing by
individuals who are employed by another person who supplies them under a
contract made with A;
"contract work" means work so made available; and
"contract worker " means any individual who is supplied to the principal under
such a contract."
Similar, though not identical , provisions for the protection of contract
workers from discrimination in the field of employment are contained in section
9 of the Sex Discrimination Act 1975 and in section 7 of the Race Relations Act
1976.
The Employment Tribunal Decision.
The Employment Tribunal sitting at Southampton on 22 September 1998
unanimously decided that Mr Tansell was neither an employee of, nor a "contract
worker " for, Abbey Life. The application against it was dismissed. They also
decided that MHC should be joined as a respondent, as Mr Tansell was a "
contract worker " for MHC, and that Mr Tansell could proceed with his
application against MHC. The Extended Reasons of the Tribunal (sent to the
parties on 6 October 1998) dealt fully with the rival arguments on the contract
worker point. The following conclusions should be noted:-
1. Intelligents was not a sham company. It was a separate legal entity.
2. No evidence was adduced to indicate that the chain of contracts between
Intelligents, MHC and Abbey Life was any more than a bona fide commercial
arrangement or that there was any attempt to circumvent the expressed
intentions of Parliament.
3. Section 12 "clearly sees a direct contractual relationship between the
"employer" and the "principal." No direct relationship existed in this case
between Intelligents and Abbey Life. It could not be artificially created by
ignoring the existence of Intelligents as a legal personality separate from Mr
Tansell.
4. Mr Tansell was a "contract worker " for MHC. It was the principal (A), as
it was MHC which made work available, through its contract with Abbey Life, for
doing by Mr Tansell, and he was employed by another person (Intelligents), who
supplied him under a contract made with MHC.
The Employment Appeal Tribunal.
On 15 September 1999 the Employment Appeal Tribunal allowed an appeal by MHC
and allowed a cross appeal by Mr Tansell so that his claim should be allowed
to proceed against Abbey Life rather than MHC. Permission to appeal to this
court was granted .
In the judgment delivered on behalf of the Appeal Tribunal by Morison J it
was held that the Employment Tribunal had not correctly interpreted section 12.
The essence of the Appeal Tribunal's reasoning is in paragraph 21 of the
judgment as reported in [1999] ICR 1211 at 1217-
"The applicant was employed by another person, namely, Intelligents.
Intelligents supplied his services, ultimately, to Abbey Life through MHC under
a contract between MHC and Abbey Life. Therefore, whenever there is an unbroken
chain of contracts between the individual and the end user, the end user is, by
definition, the "principal". It seems to us that this construction of section
12 (6) gives effect to the general principle which applies in social
legislation of this kind, namely, that the statute should be construed
purposively, and with a bias towards conferring statutory protection rather
than excluding it. Such a construction does not strain the language of section
12(6). It seems to us a possible construction which we are prepared to
adopt."
Abbey Life's Submissions.
Mr Christopher Jeans QC contended that the Employment Tribunal correctly
dismissed the claim against Abbey Life, that the Appeal Tribunal ought to have
dismissed Mr Tansell's appeal and that this appeal should be allowed.
On the plain and unambiguous meaning of section 12, as applied to the facts of
this case, Mr Tansell was not a contract worker. Abbey Life was not the
principal, as there was no supply of Mr Tansell to Abbey Life pursuant to a
contractual obligation existing directly between Intelligents, as the employer
of Mr Tansell, and Abbey Life, who made the work available for doing by Mr
Tansell. The supply contract was between Intelligents and MHC.
That did not mean that MHC was the principal or that Mr Tansell was a contract
worker for MHC. MHC did not make the work available for doing by Mr Tansell.
The fact was that he was not a contract worker for Abbey Life or for MHC. He
was working as an employee of Intelligents. In order to bring a case within
section 12, or the equivalent provisions of the other discrimination
legislation, it is necessary for the person who employs the worker to have a
direct contractual relationship with the principal who makes the work
available. That was the clear effect of the reference in the definition of
principal to " under a contract made with A." There is no such contract made
with A (i.e. Abbey Life) in this case. Mr Tansell therefore falls completely
outside the scope of section 12.
Mr Jeans contended that this result accorded with the intention of Parliament,
as clearly expressed in the language of section 12, and was supported by
authority.
1. Legislative Intention.
It is significant, Mr Jeans submitted, that Parliament did not create a
general statutory tort of disability discrimination. It legislated for defined
fields, such as employment, services, education and public transport. Even
within the defined fields it was not intended that everyone who suffered from
discrimination at work by reason of disability should be able to make a claim
under the Act. Thus in the employment field, although the concept of
"employment" was extended in section 68 beyond work done under a contract of
service, there are cases in which a person suffering from discrimination at
work falls outside the scope of the legislation. Mr Jeans gave two
examples.
The first is Mirror Group Newspapers Ltd v Gunning [1986] ICR 145, a
case on the Sex Discrimination Act 1975 in which the Court of Appeal held that
the provisions extending the meaning of "employment" did not apply to work to
be done under a contract (an agency agreement for the distribution of
newspapers) where the dominant purpose of the contract was the regular and
efficient performance of the relevant work (in that case the distribution of
newspapers) rather than the execution of the work by the contracting party
personally.
The second case is Ealing Hammersmith and Hounslow FHSA v Shukla [1993]
ICR 710 in which the EAT held that that the employment provisions in the 1975
Act were inapplicable where the work relationship (in that case between a GP
and the family health services authority) was not contractual but was based on
statutory provisions.
I agree that those decisions serve as a salutary reminder of the sound reasons
for setting proper limits to the purposive approach to statutory
interpretation, especially at a time when those limits are about to be
readjusted by the new interpretative principle introduced by section 3 of the
Human Rights Act 1998.
Mr Jeans accepted that one of the broad purposes of the 1995 Act is to
protect disabled persons from discrimination in the workplace by reason of
their disability. But he pointed out that Parliament has sought to achieve that
purpose not by a general and universal prohibition of all forms of such
discrimination at work in all circumstances, but by means of an intricate
scheme devised by Government and debated in Parliament attempting to achieve a
pragmatic balance of the various competing individual, social and economic
interests. The result of that process is expressed by the draftsman in
carefully chosen words.
Mr Jeans rightly reminded this court of Lord Diplock's speech in Duport
Steels Ltd v Sirs [1980] 1 WLR 142 at 157C on the respective
functions of Parliament and the judiciary. He said that
"Where the meaning of the statutory words is plain and unambiguous it is not
for the judges to invent fancied ambiguities as an excuse for failing to give
effect to its plain meaning because they themselves consider that the
consequences of doing so would be inexpedient, or even unjust or immoral. In
controversial matters such as are involved in industrial relations there is
room for difference of opinion as to what is expedient, what is just and what
is morally justifiable. Under our constitution it is Parliament's opinion on
these matters that is paramount."
He added at 157G-
"It endangers continued public confidence in the political impartiality of the
judiciary, which is essential to the continuance of the rule of law, if judges,
under the guise of interpretation, provide their own preferred amendments to
statutes which experience of their operation has shown to have had consequences
that members of the court before whom the matter comes consider to be injurious
to the public interest."
More recently in Inco Europe Ltd -v- First Choice Distribution [2000] 1
WLR at 592 E - F Lord Nicholls said this of the boundary between construction
and legislation-
"The courts are ever mindful that their constitutional role in this field is
interpretative. They must abstain from any course which might have the
appearance of judicial legislation. A statute is expressed in language approved
and enacted by the legislature."
Mr Jeans re-iterated his core point that the provisions of section 12 are
"plain and unambiguous " in their requirement of a direct contractual
link between, on the one hand, the principal, who makes the work available,
and, on the other hand, the employer, who supplies the individual to do the
available work. The standard case is that of a person on the books of a temping
agency, who is found work with A, who then refuses, for a discriminatory and
unlawful reason, to make work available for doing by that person. There is
nothing in the language of section 12, Mr Jeans submitted, which extends
protection against discrimination to an individual like Mr Tansell who has
chosen, in his own interests, to set up his own company, to work for his own
company and to use his company to supply his services to others through an
employment agency.
2. Authority.
Mr Jeans cited Lloyd -v- IBM (EAT/642/94), an unreported decision of
the Employment Appeal Tribunal, in support of his construction of section 12.
In that case the applicant, Dr Lloyd, complained of sex discrimination. She
supplied her services through her company, Userdata. That company made an
agreement with an employment agency, Gatton. That agency supplied her services
to IBM which later dispensed with them in circumstances leading to a
discrimination complaint. HHJ Levy QC gave the judgment of the Appeal Tribunal.
He stated (at page 9 of the transcript) that
"The supply of the contract worker to the principal must be pursuant to an
obligation between the supplier and the principal. The fact that the supply of
services of a contract worker, here Dr Lloyd, to the principal (here IBM),
results from an obligation in the contract between the supplier (here Gatton),
and another person (in the present case Userdata), is not sufficient. The fact
of supply is not enough. There must be an obligation to do so: see Rice -v-
Fon-a-Car [1980] ICR 133................The correct question here would be
to ask: " Was Userdata obliged to supply contract workers, (ie Dr Lloyd), to
the principal, (that is IBM), pursuant to a contract which Userdata had made
with IBM?"
Reference was also made to the Judgment of the Employment Appeal Tribunal
given by Slynn J in another sex discrimination case, Rice v Fon-a-Car
(supra) at 136:-
"It seems to us that the proper construction of section 9(1) [Sex
Discrimination Act 1975] is that the work referred to is work which is done by
someone who is employed by another person who supplies the work "under a
contract made with the principal" to supply the worker. It is not sufficient,
in a case to which section 9 (1) applies, merely that work should be done by
one person for the benefit of someone else unless there is an undertaking under
the contract to supply the worker."
On the facts of that case there was no contractual obligation on the other
person to supply the principal with individuals to work. The case turned on the
absence of an obligation to supply the individual rather than on the necessity
for a direct contract between the person supplying the individual and the
principal .
Conclusion.
I agree with the Employment Appeal Tribunal that Abbey Life falls within the
definition of a "principal " in section 12 of the 1995 Act. The Employment
Tribunal erred in law in holding that MHC was a "principal." I would dismiss
this appeal .
The language of section 12 clearly covers the standard case in which, for
example, a person makes office work available for doing by individuals employed
by a temping agency. The agency enters into a contract with that person to
supply individuals to do that work. That person is a principal. The individuals
who are supplied are contract workers doing contract work. By section 12 they
are protected from discrimination by the principal. Thus, it is not disputed
that section 12 would apply to this case if (a) Mr Tansell was employed by MHC
(instead of by Intelligents); or (b) if Intelligents had made a contract direct
with Abbey Life (instead of with MHC) to supply Mr Tansell to do the work made
available by Abbey Life.
In my judgment, the language of the section is also reasonably capable of
applying to the less common case in which an extra contract is inserted , so
that there is no direct contract between the person making the work available
and the employer of the individual who is supplied to do that work. Applying
the language of the definitions in section 12 to the facts of this case, Abbey
Life is the principal, even in the absence of a direct contract with Mr
Tansell's employer, because (a) Abbey Life made the work available for doing by
Mr Tansell ; (b) Mr Tansell was employed by another person, Intelligents; and
(c) Intelligents supplied Mr Tansell to Abbey Life under a contract made with
Abbey Life (the MHC contract).
It is true that the contract with Abbey Life was made by MHC and not by
Intelligents. But that makes no difference. The statutory definition only
requires the supply of the individual to be "under a contract made with A".
It does not expressly stipulate who is to be the party who contracts with A. It
stipulates that the employer should supply the individual to do the work.
Intelligents did that. The supply of Mr Tansell to work for Abbey Life could
only have been done by Intelligents, as it was his employer. The supply of the
individual also had to be under a contract made with A. It was. The contract
by MHC was made with Abbey Life. I accept that in many, if not most, cases the
contract with A will in fact be made by the employer who supplies the
individual. But the definition in section 12 does not require that to be the
case.
This result does not involve any unconstitutional border crossing by the
court. It is achieved by a conventional process of judicial construction of
legislation. The normal meaning of the language of the section is capable of
covering this case, as well as the standard case. An interpretation which
applies the section to the less common case, as well as to the standard case,
is more consistent with the object of the section and of the 1995 Act than an
interpretation which does not do so. In a number of authorities the appellate
courts have stressed the importance of giving the wide ranging provisions of
the discrimination legislation a generous interpretation. Waite LJ set out a
valuable exposition of the governing principles in Jones -v- Tower Boot Co
Ltd [1997] ICR 254 at 261H-263F. See also Harrods Ltd -v- Remick
[1998] ICR 156 at 163C-F.
The general purpose of the 1995 Act is to outlaw discrimination on the ground
of disability. Employment is one of the fields in which it aims to achieve that
goal. In order to achieve that result Parliament decided not to confine
liability for discrimination in employment to the employer who discriminates
against those employed by him under a traditional contract of service. Under
section 12 liability is also imposed on those who, without entering into
contracts of service with individual employees, make contracts for individuals
employed by others to do work made available for them to do. It would not be
consistent with the legislative object to withhold protection from
discrimination by a person to whom an employee, who was entitled to protection
from his employer, had been supplied to do same work. Hence the provisions for
the protection of contract workers in all the discrimination Acts.
Viewed in that context Abbey Life's argument boils down to this: the
difference between protection from discrimination and no protection in this
case turns on the number of contracts made for the supply of Mr Tansell to
Abbey Life. If he was supplied by Intelligents direct to Abbey Life then
section 12 applies. But if he was supplied by Intelligents to Abbey Life via
MHC section 12 does not apply. The particular contractual arrangements do
differ from the standard case as to parties and number. But for the employee
the realities of life in the workplace remain the same in each case. As
Morison J put it, the "end user" is the same. In these circumstances it is
more probable that Parliament intended to confer than to deny protection from
discrimination in cases where the supply of the employee was made by his
company to the principal through an employment agency rather than direct to the
principal.
As for the authorities it is my view that Lloyd -v- IBM was
wrongly decided and that Rice v Fon-a-Car is irrelevant.
Mr Langstaff QC, on behalf of Mr Tansell, advanced an alternative
submission which was rejected by the Appeal Tribunal. The argument is based on
section 12(3). The argument is ingenious. It is also wrong. It is contended
that if, contrary to the principal submission, Abbey Life was not the
principal, then MHC was the principal and fell to be treated by subsection (3)
as though it was the employer of Mr Tansell and he was the employee of MHC. On
that basis MHC was "another person" who is treated as the employer of Mr
Tansell and who supplied him under a contract made between them and Abbey Life.
That made Abbey Life, as well as MHC, a principal within section 12.
The fallacy in this contention is that MHC was not the principal, as the work
was not made available by MHC for doing by Mr Tansell. It was made available by
Abbey Life. If MHC was not the principal then the application of subsection (3)
will not assist Mr Langstaff.
For these reasons I would dismiss the appeal, affirm the decision of the
Employment Appeal Tribunal and allow the claim to proceed in the Employment
Tribunal on the basis that Abbey Life was at the material time the principal of
Mr Tansell within the meaning of section 12.
LORD JUSTICE WARD - I agree
LORD JUSTICE STUART-SMITH - I also agree
Order: Appeal Dismissed with no order regarding costs.
(Order does not form part of the approved judgment)
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