Hudson Contract Services Ltd v Construction Industry Training Board

For industrial training levy purposes, whether an entity is an employer in the construction industry is determined by the activities of its workforce. The statutory definition includes both directly employed workers and persons engaged under contracts for services. A construction establishment is likewise assessed by reference to what its employees do, including statutory employees, and may be an administrative head office.

The requirement that construction activities take place at or from an establishment involves a fact-sensitive inquiry into whether there is a sufficient connection between the establishment, the worker and the worker’s activities. Different employers may incur liability on distinct payments in the contractual chain.

This was a statutory appeal under section 11(1) of the Tribunals and Inquiries Act 1992 from the Employment Tribunal’s dismissal of Hudson’s appeal against a levy assessment issued by the Construction Industry Training Board.

The assessment was made under the Industrial Training Act 1982 and the Industrial Training Levy (Construction Industry Training Board) Order 2015. The central questions were whether Hudson was an employer in the construction industry and whether its Bridlington head office was a construction establishment engaged wholly or mainly in that industry, from which construction activities took place.

1. Appeal dismissed. Hudson was an employer in the construction industry and its Bridlington head office was a construction establishment for the purposes of the levy.
2. The expression “employer in the construction industry” in Article 3(1) of the Industrial Training Levy (Construction Industry Training Board) Order 2015 was to be construed as a composite phrase. The statutory meaning of employer applied. Since “employee” under section 1(2) of the Industrial Training Act 1982 includes persons engaged under contracts for services, the activities of Hudson’s statutory employees had to be taken into account.
3. What an employer does is determined by what its employees do. Hudson’s large workforce of statutory employees performed construction work. Hudson was therefore in the construction industry, notwithstanding that its directly employed staff performed administrative functions.
4. A construction establishment under Article 5(2) was similarly assessed by reference to the activities of its employees, including statutory employees. The concept principally accommodated employers with mixed workforces and determined where the levy was to apply. Hudson’s head office was wholly or mainly engaged in the construction industry.
5. Whether construction activities took place “from” the head office was a question of fact requiring a sufficient connection between the employee, the employee’s activity and the establishment. The connection was established because Hudson contracted with the operatives, held the relevant contractual and operational information, paid them from Bridlington, made tax deductions and dealt with status issues there. The Tribunal had adequately resolved the issue, so remission was unnecessary.
6. Article 5(4) concerned responsibility for the levy where ownership or responsibility for a construction establishment changed during the levy period. It did not require an employee to have only one employer. Article 7(2) could produce liability based on distinct payments in a contractual chain, and this did not make the scheme unlawful.

• High Court (Administrative Court): Hudson’s statutory appeal was dismissed. The Employment Tribunal’s decision was upheld.
• Employment Tribunal: on 18 May 2018, dismissed Hudson’s appeal under section 12(4) of the Industrial Training Act 1982 against the levy assessment.