Hudson Contract Services Ltd v The Construction Industry Training Board

Liability for an industrial training levy attaches to an employer in the construction industry. An employer performs relevant construction activities through all persons falling within the extended statutory definition of employee, including self-employed operatives. The legislation does not make construction risk, commercial output, supervision or direct control determinative.

A construction establishment is relevant to assessment, rather than liability. Workers may be employed “from” a head office although they work at sites, have no contact with that office and are not supervised there. The necessary connection may arise from the contractual relationship, payroll and compliance functions conducted there. Article 5(4) of the Industrial Training Levy (Construction Industry Training Board) Order 2015 allocates levy responsibility for an establishment; it does not require every worker to have only one employer.

Hudson supplied the services of self-employed construction operatives selected by its construction-industry clients. It contracted with, paid and dealt with tax and status issues concerning those operatives from its Bridlington head office. The Construction Industry Training Board assessed Hudson to levy for the third period under the Industrial Training Levy (Construction Industry Training Board) Order 2015.

An Employment Tribunal upheld the assessment. Lambert J dismissed Hudson’s statutory appeal in the Administrative Court: [2019] EWHC 45 (Admin). Hudson’s second appeal concerned whether it was an employer in the construction industry under the Industrial Training Act 1982, whether its head office was a construction establishment, and the effect of article 5(4) of the 2015 Order.

1. Appeal dismissed. Lady Justice Simler, with whom Sir Jack Beatson and Lord Justice Underhill agreed, held that Hudson was an employer in the construction industry and that its Bridlington head office was a construction establishment. The Board’s levy assessment therefore stood.

2. Under section 11(2) of the Industrial Training Act 1982 and article 3 of the Industrial Training Levy (Construction Industry Training Board) Order 2015, liability is imposed on an employer in the industry. The existence of a construction establishment affects the assessment of levy, but is not a condition of liability. The statutory question is whether the employer performs construction-industry activities.

3. The extended definition of employee in section 1(2) includes self-employed workers. A company can perform activities only through its employees. Hudson therefore performed the construction activities carried out by its self-employed operatives. The statutory language supplied no basis for a separate requirement that Hudson assume construction risk, deliver a construction output, or direct, control or supervise the work.

4. Article 5 limits assessment to an establishment engaged wholly or mainly in the construction industry for the required period. It covers persons employed “at or from” an establishment. That expression is not confined to workers who leave a yard or base with tools or equipment. Hudson contracted with the operatives, held their contracts, paid them, dealt with tax and status matters, and conducted those functions from Bridlington. Those facts entitled the Tribunal to find that the operatives were employed from that office, notwithstanding that they worked at clients’ sites and were not supervised by Hudson.

5. Article 5(4) identifies the person responsible for levy in respect of a construction establishment at the start of the levy period, including where ownership or responsibility changes. It does not deem a client to be the sole employer of an operative or displace Hudson’s statutory status as employer.

• Court of Appeal (Civil Division): dismissed Hudson’s second appeal and upheld the levy assessment: [2020] EWCA Civ 328.

• High Court, Queen’s Bench Division, Administrative Court: Lambert J dismissed Hudson’s appeal from the Employment Tribunal: [2019] EWHC 45 (Admin).

• Employment Tribunal: upheld the Board’s assessment to levy.