IN THE JERSEY EMPLOYMENT AND DISCRIMINATION TRIBUNAL
IN THE MATTER:
ALAN BIKO BANGS
SMALL SHORES ENTERTAINMENT LIMITED
27 March 2018
Advocate Mike Preston, Deputy Chairman
Advocate Olaf Blakeley
The Claimant is a shareholder of the Respondent and until 15 February 2016 was also a member of the Board of Directors. His complaint is based upon the fact that he was employed by the Respondent as a Manager/Registered Manager and DJ at the Havana Club, pursuant to a contract of employment.
By a Claim Form dated 27 April 2017 the Claimant claimed that he was dismissed on 14 February 2016 and that his dismissal was both unfair contrary to the Employment (Jersey) Law 2003 (the “Law”) and wrongful as he was not paid any notice pay. In addition, he claimed that various sums were due to him (the “Miscellaneous Claims”).
By a Judgment dated 17 August 2017 the Tribunal ruled that the claim for unfair dismissal had been brought out of time and that, as it had not been reasonably impracticable for it to have been brought in time, it could not be considered. It being the case that the Claimant wished to pursue various of the Miscellaneous Claims before the Royal Court, the Tribunal then gave directions for the determination of the following questions;
Was the Claimant an employee of the Respondent; and,
b. If so, was he entitled to unpaid wages for Bank Holidays.
The Respondent admitted that the Claimant was and remains a shareholder of the Respondent and that, until 15 February 2016, he was a Director of the company. However, it denies that he was ever an employee and so denies that he is entitled to any payment as claimed.
The following can only be a brief summary of the evidence relied upon by the parties at the hearing, all of which was considered in arriving at this Judgment. The Claimant gave evidence on his own behalf and was supported by RP who assisted him both in the presentation of his case and by giving his own evidence. It was the Claimant’s case that he was always an employee of the Respondent as was his “partner”, fellow director and shareholder in the Respondent, BM. The Claimant and BM had run the business of the Respondent which operated a nightclub. The Claimant’s evidence was that from 1 October 2010 until 14 February 2016 he was the DJ, the Manager and the Registered Manager of the licence at the nightclub, the licence being held in the name of a company.
The Claimant explained that at the outset the business was operated by himself, BM and another shareholder/director, JR. In about June 2011 there was a falling out between the Claimant and BM on the one hand and JR, which involved JR leaving the business. It was not alleged that JR was an employee but it was the Claimant’s evidence that he had always regarded himself as an employee. The difficulties in getting JR out of the business caused the Claimant and BM to agree to sign contracts of employment. As the Claimant was not able to afford to pay off JR, this was done by BM who thereby owned more shares than the Claimant and this came to be a problem when they too fell out. However, in happier times the Claimant recalled a meeting in the presence of the Respondent’s lawyer (Advocate Olaf Blakeley) at which contracts of employment in a standard form obtained from JACS were signed by both the Claimant and BM.
The business then operated for some years with the Claimant concentrating his efforts on the entertainment side whilst BM ran the financial and administration side. There came a time in 2014 when the Claimant was in a position to buy the half of JR’s shares that BM had purchased in 2011 but BM refused to sell them. The Claimant regretted not taking advice at that time as he later found that his position had been undermined by BM. On 14 February 2016, the Claimant was refused entry to the nightclub and was told that he was no longer welcome. On 20 March 2016 he received a letter confirming that the Respondent had resolved to remove him as a director referring to performance issues.
As a consequence of his departure from the business, the Claimant wishes to bring the Miscellaneous Claims but they were not for consideration in these proceedings. The Claimant simply said that he had signed a contract which provided for him to be paid as such. He said that he always received wage slips that showed that he was an employee. He recalled the meeting at Advocate Blakeley’s office at which the contract was signed although he did not know what had become of the signed document.
It was his case that he always worked Bank Holidays as these were busy nights but that he was “never given time off in lieu or paid double time”. He claimed a sum in respect of all Bank Holidays worked between 2010 and 2016 which he calculated as £13,800, acknowledging the limit on contractual awards in the Tribunal of £10,000.
RP’s evidence insofar as it was relevant to the issue of employment was that the Claimant worked at the nightclub (it would seem to him as an employee) and that he had shown RP his unsigned contract of employment at some point. RP could only assume that the Claimant had signed and returned the contract and it was that which governed his relationship with the Respondent. However, he had not seen the Claimant sign the contract or the signed contract at any time. The rest of his evidence concerned the fall-out from the breakdown in the relationship between the Claimant and BM. Of note was the fact that when examining company files at Advocate Blakeley’s office, it was RP who had come across the draft contract of employment in BM’s name and taken a copy of it for the purpose of these proceedings. It was not the case that either a draft or signed version of a contract in the Claimant’s name was present amongst those papers. It was the Claimant’s case that the contract which he had signed was identical in all material respects with the draft that RP had discovered. It was notable that whilst the claim referred to time off in lieu or payment of double time, the draft contract discovered by RP stated that an employee “working on a public holiday may take time in lieu or leave by arrangement with the management”. There was no mention of payment of double time and it was the case that the Claimant was himself “management” at all material times.
As for the Respondent, the Tribunal heard evidence from BM, his wife AM and from MM who was engaged by the Respondent to provide accountancy services. In addition, as indicated above, it became apparent during the course of the hearing that the Claimant was asserting that Advocate Blakeley was present during a meeting in respect to the signing of the Claimant’s contract of employment. Rather than adjourn a matter that already concerned events from 2016 and further delay the determination of the case, the Tribunal heard from Advocate Blakeley in evidence. This approach whilst unconventional was considered pragmatic and, in the view of the Tribunal, in keeping with the approach to be adopted in such proceedings. The Tribunal weighed the advantage of pressing on with the evidence as opposed to delaying (most likely for some weeks) so that the Respondent could seek alternative advice and then call Advocate Blakeley to give his account. It confirmed that neither party had an objection to this course before proceeding.
BM’s evidence was to the effect that when he, the Claimant and JR bought the business from the previous owner, they were all self-employed and paid fees as directors of the company with their social security status being that of self-employed individuals. The position did not change after the removal of JR and neither he nor the Claimant were employed by the Respondent after that dispute. The allegation that a meeting had taken place at which contracts of employment were signed in the presence of Advocate Blakeley was simply not true. BM could not explain how the draft contract discovered by RP had come into existence but he was clear that no such contract had ever been executed by him or by the Claimant.
AM likewise asserted that the Claimant was not employed by the Respondent. Prior to the removal of JR the role of bookkeeper at the nightclub was carried out by his wife SR. After they left, AM took on the role and was responsible for recording takings, preparing the payroll for all members of staff and dealing with invoices that needed to be paid. It was her evidence that the Claimant was never regarded as an employee and she was fortified in this view by advice that she had received from the Social Security Department to the effect that the Claimant and BM had been classed as “business owners” for social security purposes since a full survey of the business carried out by the Department in August 2011.
MM had been retained as the Respondent’s accountant since about 2013. His role involved assisting with quarterly GST returns, year-end financial statements and associated tax returns. MM was clear that at no time were the Claimant or BM treated as employees of the Respondent.
Advocate Blakeley confirmed that he had no recollection of a meeting at which contracts of employment were signed in his presence by the Claimant and BM. He had certainly not drafted any such documents and if they had been executed as the Claimant alleged then they would have been scanned on his system and kept on file for future reference. No such scanned or filed copies of executed contracts existed.
As to the legal position, Article 1A of the Law states as follows:
“1A ‘Employer’ and ‘employee’
(1) In this Law –
(a) ‘employer’ means a person who employs another person; and
(b) 'employee' means a person who is employed by an employer.
(2) For the purposes of paragraph (1), a person is employed by another person if the first person
works for the second person under a contract of service or apprenticeship with the second person.
(3) For the purposes of paragraph (1), a person is also employed by another person if the first person
enters into any other contract with the second person under which –
(a) the first person undertakes to do, or to perform personally, work or services for the second
(b) the status of the second person is not that of a client or customer of any profession or trade or
business undertaking that is carried on by the first person.
(4) It is immaterial whether a contract to which paragraph (2) or paragraph (3) refers is express or
(5) If the contract is express, it is immaterial whether it is oral or in writing.”
As noted in
Bisson -v- Dore & 1 Or. [10th February 2017 D-34/2016], and in the recent decision in
Hannah v Jam and Feather Ltd [10 October 2018 TRE213], the term ‘employee’ is widely defined in Article 1 of the Law. As that decision makes clear the Law draws a distinction between:
a ‘1A2 employee’, i.e. someone who is employed pursuant to a contract of employment;
a ‘1A3 employee’, i.e. someone who provides their personal services as part of a profession, business undertaking carried on by someone else; and
a self-employed individual who carries on a profession or a business undertaking on his or her own account and who enters into contracts with clients or customers to provide work or services to them.
Whether or not an employee is a 1A2 or a 1A3 employee is not the relevant issue. Either one is an employee as opposed to someone who is self-employed.
For a person to be an 1A2 employee that person must work under a contract of employment. In order to be understood as working under a contract of employment, three elements must be present in that contract:
(i) there must be a ‘mutuality of obligation’ between the parties so that there is in fact
(ii) the contract must contain a provision or provisions that the individual provides personal
(iii) the employer must exercise a sufficient degree of control over the work carried out by the
individual so as to make the employer the master.
There is a wider definition of ‘employee’ for a person to be a 1A3 employee, in that:
(i) a contract must exist between the employer and employee;
(ii) that pursuant to that contract there is an obligation on the individual to provide personal
service to the employer; and
(iii) the person for whom the personal service is performed is not a client or a customer of
the individual undertaking the work.
Mutuality of obligation
In Bisson the Tribunal considered the concept of ‘mutuality of obligation’ (at paragraphs 62-64) and concluded (citing Mollet -v- Sigma Group Limited [JET 19/2013] that:
“For a contract of employment to exist there must be, at the root of that contract, an obligation on the employer to provide work and an obligation on the employee to accept an offer of work”.
The Tribunal (in Bisson) concluded that if there is a mutuality of obligations between the parties but that there is no obligation to offer or accept work, then a person cannot be an Article 1A2 employee, but they could still be an Article 1A3 employee.
Personal service and control
Again, following Bisson (see paragraphs 65-69) it is clear that once it has been established that there is a contract the next stage is to consider whether or not the individual is required to personally perform the obligations that arise under the contract. If the individual is not required to perform the obligations personally then they cannot be either an Article 1A2 or Article 1A3 employee; as in Bisson without personal performance an individual cannot be an employee as a matter of Jersey Law.
The key issue is assessing whether or not personal service is required, the Tribunal, following Bisson has referred to the English Court of Appeal case of Pimlico Plumbers -v- Smith [2017 EWCA Civ 51] and the following five principles:
an unfettered right to substitute another person to do the work or perform the services is
inconsistent with an undertaking to do so personally;
(ii) a conditional right to substitute another person may or may not be inconsistent with personal performance. It will depend on the precise contractual arrangements and, in particular, the extent to which the right of substitution is limited or occasional;
(iii) a right of substitution only when the contractor is unable to carry out the work will, subject to any exceptional facts, be consistent with personal performance;
(iv) a right of substitution limited only by the need to show that the substitute is as qualified as the contractor to do the work, whether or not that entails a particular procedure, will, subject to any exceptional facts, be inconsistent with personal performance; and
(v) a right to substitute only with the consent of another person who has an absolute and
unqualified discretion to withhold consent will be consistent with personal performance.
As to control, the Tribunal in Bisson made it clear that in order for a person to be an Article 1A2 employee the employer must exercise control over the employee. In the absence of control, it is not possible to be an Article 1A2 employee as a matter of Jersey Law. However, control is not a relevant consideration in deciding whether or not an employee is an Article 1A3 employee. As Bisson makes clear (at paragraph 71) control means that the ‘employer must have ultimate authority over the employee so that the employee is subject to the employer’s orders and directions.’
If it was the case that the Claimant was an employee but that there was no written contract of employment, it would be necessary to determine what the terms of his employment were and, in particular, whether a term was to be implied that the Claimant would be due time off in lieu if he worked on Bank Holidays or payment if no such time off was arranged. The law as to how and in what circumstances terms come to be implied in contracts in Jersey is settled. A term will not be implied if it contradicts an express term of the contract. However, a term may be implied if it is a term that would customarily be implied into a contract of a particular kind or if the inclusion of such a term is necessary because otherwise the contract would be futile, inefficacious or absurd (Grove and Briscoe v Baker  JLR 348).
The Tribunal considered all of the evidence presented in writing and that given live at the hearing. It concluded that as a matter of fact, there was no written contract of employment as alleged by the Claimant. It had been for the Claimant to prove on the balance of probabilities that a contract in the form of the draft found regarding BM had been produced and entered into by him. The Tribunal was not satisfied to the appropriate standard that such a document existed or had ever existed.
The lack of a written contract did not mean that the Claimant could not have been an employee. However, as a matter of fact the Tribunal concluded that, applying the tests set out above, the Claimant was not an employee, even in the wider 1A3 sense. It was the case that it was only after the dispute arose with BM that the Claimant sought to assert that he was employed and that he had been from as long ago as 2010. Save for the fact that he received “wage slips” everything pointed to him being a business owner along with BM, with the two men sharing the responsibilities of the business as partners notwithstanding the corporate structure that was in place. It would have been possible for them both to have been employed by the Respondent but it is the finding of the Tribunal that they were not and that this, on the facts, is one of those occasions when the wider definition of 1A3 employees does not apply.
The Tribunal considered whether if it had found that it was the case that the Claimant had been a 1A3 employee and that he had been employed under an unwritten contract, it would have implied the required term into that contract. In this case it would have been necessary to imply a term to the effect that the Claimant’s work on Bank Holidays entitled him to time off in lieu or, in the absence of such time off, payment in lieu. Once again applying the tests above, the Tribunal found that it was not possible to imply into that contract the specific term necessary for the claim for payment in lieu of Bank Holiday work to succeed. It was neither a term that could be said to be required in such a contract as a matter of custom nor would not implying such a term render the contract futile, inefficacious or absurd. The Claimant had been involved in the business for several years without ever having raised complaint about the failure to pay him separately for such work. He was part of the “management” with whom an employee would on his case have arranged for such time off or payment but yet the matter was never raised. It seemed to the Tribunal most unlikely that this situation would have been allowed to continue if indeed it had been agreed on the part of the Respondent that the Claimant should have been paid for the time that he had not taken off in lieu of work carried out on Bank Holidays. Therefore, even if the Tribunal had found that the Claimant had been an employee it would not have implied the necessary term and no award would have been made.
In the circumstances, the Tribunal finds that the claimant was not an employee and as such no award is made in his favour.
Advocate Mike Preston, Deputy Chairman Dated: 29 October 2018