MJ Quinn Integrated Services Ltd v Jones

In determining employment status, a tribunal should begin with the written agreement and consider whether it was freely made. It must then examine the practical reality of the relationship. The decisive question is whether the written terms are the real and true agreement, or whether the parties have made a different agreement in practice.

The established considerations of mutuality, control, substitution and contractual consistency remain important. They are not, however, an exhaustive or rigid code in the employment context. A tribunal which finds that control and integration displace apparently inconsistent contractual terms must explain why those findings justify that conclusion.

For continuity under section 212(3)(c) of the Employment Rights Act 1996, a finding that an employee continued by custom requires an identified custom supported by evidence.

The Employment Tribunal held at a preliminary hearing that Mr Jones, a telecommunications engineer engaged under a document headed “contract for services”, was an employee for each individual assignment. It also held that he had sufficient continuity of employment to pursue claims for unfair dismissal, unlawful deductions and breach of contract.

The employer appealed. It challenged the status conclusion because the Tribunal had found contractual features consistent with self-employment but nevertheless relied on control and integration. It also challenged the finding that weeks without assignments counted by custom for continuity purposes under section 212 of the Employment Rights Act 1996.

The central issues were the proper approach to contractual status in the employment context and whether the asserted custom had an adequate evidential basis.

1. Appeal allowed and remitted. The status issue was remitted to the same Employment Judge for a complete rehearing, and the continuity issue was remitted for fresh determination, with permission for further evidence if the parties wished to adduce it.

2. The Tribunal was entitled to look beyond the written “contract for services”. The approaches in Ready Mixed Concrete and Tanton remained important frameworks, but they were not the whole inquiry after Autoclenz. The correct starting point is the agreement and whether it was freely entered into. The Tribunal must then investigate the factual matrix and the way the relationship operated. The overarching question is whether the documents record the parties’ real agreement or whether practice establishes a different agreement.

3. A substitution or other contractual term does not cease to be part of the agreement merely because it is not enforced. Its significance may nevertheless depend on evidence about how realistic it was in practice. The factual matrix must therefore be explored carefully in relation to substitution, control, integration and other relevant matters.

4. The Employment Judge had not adequately explained how the findings of control and integration displaced the contractual terms which pointed towards genuine subcontracting. The findings of control were unclear, and the Reasons did not explain why those findings permitted the self-employment features to be put aside when treating each assignment as employment. The EAT could not safely substitute its own conclusion on the existing evidence.

5. On continuity, the Tribunal had decided that the worker continued in employment by “custom” under section 212(3)(c) of the Employment Rights Act 1996, although custom had not been explored evidentially. The Employment Judge had to identify the alleged custom and explain how the evidence supported it. The finding concerning an “arrangement” was not reopened because there was no cross-appeal.

6. Remission to the same Employment Judge was appropriate. He was best placed to reconsider the evidence and could do so impartially under the corrected approach.

• Employment Appeal Tribunal: Allowed the employer’s appeal and remitted both preliminary issues to the same Employment Judge.
• Employment Tribunal, Southampton: At a preliminary hearing on 26 April 2016, with Reasons sent on 12 July 2016, held that the claimant was an employee under section 230 of the Employment Rights Act 1996 and had sufficient continuity to bring his claims.