Young & Woods Limited v West

Whether a worker is employed under a contract of service depends on the true legal relationship created by the parties’ rights and duties and on the reality of the arrangement. The label self-employed or contract for services, and the parties’ expressed intention, are relevant but cannot decide the issue where they conflict with the facts. The central inquiry is whether the worker is in business on his own account. Control, equipment, helpers, financial risk, responsibility for investment and management, and opportunity for profit are relevant, with no exhaustive list.

A genuinely ambiguous relationship may be resolved by agreement, but parties cannot use a label to contract out of statutory protection. Classification is a question of law. Appeal dismissed.

Mr Cyril William West worked as a skilled sheet metal worker for Young & Woods Ltd from September 1975 until his dismissal on 30 March 1979. He had chosen to be treated as self-employed for fiscal advantages, but worked alongside employees, during normal hours, using the company’s equipment and materials, under work allocated by the foreman and for an hourly rate. He could neither employ a substitute nor make additional profit.

The Industrial Tribunal found that he was an employee under section 153(1) of the Employment Protection (Consolidation) Act 1978 and could proceed under section 54(1). The Employment Appeal Tribunal, by a majority, dismissed the company’s appeal. The central issue before the Court of Appeal was whether the declared self-employed status governed despite the practical relationship.

Appeal dismissed with costs. Stephenson LJ delivered the leading judgment. Ackner LJ agreed. Cairns LJ also agreed with the result, while giving a separate and more restrained formulation of the appellate approach.

1. The statutory question was whether West fell within the definition of employee in section 153(1) of the Employment Protection (Consolidation) Act 1978. The court had to determine the true legal relationship from the parties’ rights and duties and the reality of the work. The label self-employed and the parties’ genuine intention were relevant, but neither could alter a relationship which was in substance one of service.
2. The court adopted the business-on-own-account inquiry from Market Investigations Ltd v Minister of Social Security (1968) 3 All ER 732. Relevant factors included control, provision of equipment, use of helpers, financial risk, responsibility for investment and management, and opportunity for profit. No exhaustive list existed and no fixed weight could be assigned to the factors.
3. The facts pointing to employment were strong. West worked normal hours in the company’s factory, used its equipment and materials, received work from its foreman, was paid by time, could not profit from efficiency, and could not provide a substitute. The absence of tax deductions, holiday pay and sickness benefit pointed the other way but was not decisive. The burden of showing that the label was false was discharged.
4. The parties could not rely on their declared arrangement as an estoppel or as a means of contracting out of statutory protection. A genuinely ambiguous relationship could be resolved by agreement, as explained in Massey v Crown Life Insurance Co (1978) ICR 590, but West’s relationship was not sufficiently ambiguous for the label to determine it.
5. Stephenson LJ held that the legal classification and the true inference from established facts were questions of law. The appellate court could reverse an Industrial Tribunal’s decision where it adopted the wrong legal relationship. Cairns LJ emphasised that reversal should occur only where the agreement was clearly not a contract of service, but considered that the factors pointing to service outweighed the contrary factors. All judges agreed that an employer should not avoid statutory responsibilities by offering an employee a differently labelled contract.

1. Court of Appeal (Civil Division) ([1980] EWCA Civ 6): leave to appeal was granted; the company’s appeal was dismissed with costs.
2. Employment Appeal Tribunal: on 27 November 1979, by a majority, dismissed the company’s appeal and refused leave to appeal.
3. Industrial Tribunal: on 28 June 1979, found that West was an employee under the Employment Protection (Consolidation) Act 1978 and entitled to proceed with his unfair-dismissal complaint.