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MARTIN FODDER & JEREMY LEWIS ON IMPORTANT NEW DECISION FROM COURT OF APPEAL ON WORKER STATUS FOR WHISTLEBLOWERS

The Court of Appeal has reversed the decision of the Employment Appeal Tribunal which had decided that a junior doctor’s contention that he was “a worker” in relation to Health Education England should be struck out as having no reasonable prospect of success. The decision is of importance not only to junior doctors but also more generally. Martin Fodder and Jeremy Lewis, two of the authors of Whistleblowing, Law and Practice, 3rd Edition, OUP, 2017 of Littleton, consider the judgment. David Reade QC and Nicholas Siddall (both also of Littleton) appeared in the case representing Health Education England.

Overview

In Day v (1) Lewisham and Greenwich NHS Trust and (2) Health Education England [2017] EWCA Civ 329, the Court of Appeal have given important guidance on the proper construction of the extended meaning of worker, for whistleblowing purposes, in s.43K ERA.  Two key issues arose; (a) whether s.43K could be relied upon where the claimant also had another employer and (b) the application of the test in relation to who substantially determines the terms.  On the first issue the Court has essentially approved the reasoning of Simler P in McTigue University Hospital Bristol NHS Foundation Trust [2016] IRLR 742 which, as we argued in Whistleblowing Law and Practice, was clearly the preferred approach. On the second issue the Court, whilst reaffirming that there can be more than one employer under the s.43K test, appears to have departed from the EAT line of cases, and in turn raised (but not fully answered) questions as to the meaning of the phrase “substantially determined”.

The facts

Dr Day applied to the predecessor of Health Education England (HEE), the London Deanery, to train in emergency medicine. The Deanery was responsible for organizing training programmes of and posts for post-graduate trainee doctors (but not actually providing those posts). Dr Day entered into a training contract with the Deanery, which expressly stated that it was not a contract of employment. Subsequently Dr Day was placed by HEE with Lewisham and Greenwich NHS Trust (Lewisham) where he worked as a specialist registrar in Acute Care Common Stem Emergency Medicine at Lewisham’s Queen Elizabeth Hospital under a contract of employment with Lewisham. Whilst working at the Queen Elizabeth Hospital, Dr Day made a complaint that patients’ safety was compromised by serious under-staffing. He made those complaints to the hospital. He claimed that he also made complaints at meetings with HEE which were held to review his progress in training.

Dr Day then began proceedings in the Employment Tribunal alleging that he had suffered detriment from both Lewisham and the HEE as a consequence of having expressed his concerns, which he claimed amounted to protected disclosures. The parties were agreed that Lewisham employed Dr Day under a contract of employment. But HEE said that there was no worker relationship between it and Dr Day, and applied to strike out Dr Day’s claim against HEE. The ET granted that application. The EAT upheld the strikeout.

Worker status?

Dr Day’s contention was that, notwithstanding that he was an employee of Lewisham, he also had a worker relationship with HEE under the extended definition of “worker” in section 43K (1)(a) ERA, contained in Part IVA of the Act, which relates to whistleblowing claims. Section 43K(1) provides that:

For the purposes of this Part ‘worker’ includes an individual who is not a worker as defined by section 230(3) but who—

(a) works or worked for a person in circumstances in which—

(i) he is or was introduced or supplied to do that work by a third person, and

(ii) the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them.”

There are then a range of other types of relationships to which the extended definition applies (set out in subparas (b) to (d)). The sub section  concludes by providing that:

any reference to a worker’s contract, to employment or to a worker being ‘employed’ shall be construed accordingly.”

Section 43K(2) then provides:

(2) For the purposes of this Part “employer” includes –

(a) in relation to a worker falling within paragraph (a) of subsection (1), the person who substantially determines or determined the terms on which he is or was engaged

The ET accepted that it was arguable that Dr Day had been “supplied” by HEE (as “introducer”) to Lewisham to do the work he did for Lewisham (as “end user”). But Dr Day lost because, in the view of the ET, the terms on which he was engaged to do the work were not “substantially determined” by HEE. The terms and conditions of Dr Day’s employment by Lewisham were determined by negotiating bodies on which HEE had no representation. There was a training relationship which ran alongside the employment relationship but in the view of the ET that relationship was not material to the terms of engagement.

However when the case reached the EAT a further issue was decided against Dr Day. HEE argued that the opening words of section 43K(1) (“the term ‘worker’… includes an individual who is not a worker as defined by section 230(3) but who…”) meant that where an individual qualified as a section 230(3) worker, none of the separate situations in which the meaning of ‘worker’ might be extended by section 43K could apply. The two classes of ordinary worker on the one hand and extended definition worker on the other were mutually exclusive.  On this view, the extensions were to be available only where needed because the whistleblower would otherwise not have an employer to bring a claim against at all. They were not additional rights to sue in respect of a complaint which would already be answered by someone who was an employer under section 230(3).

Can an employee still be someone else’s worker?

The Court of Appeal [2017] EWCA Civ 329, 5th May 2017 upheld Dr Day’s appeal. Lord Justice Elias gave the leading judgment with which Gloster LJ and Moylan J agreed. In our view, the EAT’s reasoning on this point always looked suspect viewed in terms of the underlying policy of the whistleblowing legislation. It would be little comfort to establish that there was an employment relationship with one employer, if the act of victimisation was carried out by the other entity against whom the employee needed to rely on section 43K to establish a worker relationship. Further, by the time the matter reached the Court of Appeal, in McTigue v University Hospital Bristol NHS Foundation Trust [2016] IRLR 742, Simler P had supplied an answer as to how that difficulty could be overcome as a matter of construction of the opening words of s.43K(1). In short, it meant that if there was already an employment relationship by virtue of s.230(3) ERA, s.43K had no application to also establish a worker relationship with that employer, but this was not a bar to relying on s.43K ERA to establish a worker relationship with someone else. As we discuss in “Whistleblowing, Law and Practice” (at paragraph 6-20 to 6-29), that approach makes sense both as a matter of construction and policy. It now has the approval of the Court of Appeal.

It was acknowledged on both sides in the Court of Appeal that the opening words of s.43K(1) had to have some limitation on them: they could not be read literally. Otherwise, as Elias LJ pointed out, an agency worker (qualifying as a worker under s.43K against the agency) who had a second, unrelated, job serving in a restaurant in the evenings would be precluded from seeking to rely upon the extended definition of worker with respect to the agency work.

Consistent with the approach taken by Simler P in McTigue, Elias LJ accepted the contention on behalf of Dr Day that the provision needed to be interpreted in the sense that “worker  includes an individual who as against a given respondent is not a worker as defined by section 230(3).” Elias LJ gave three reasons for this conclusion:

  • the whistleblowing legislation should be given a purposive construction: that did not permit the court to distort the language of a statute on the vague premise that action against whistleblowers is undesirable and should be forbidden but here, some words needed to be read into the provision because a literal construction could not be what Parliament intended.
  • a worker might need protection against the introducer even if he had protection against the end-user if, as was alleged by Dr Day in this case, the victimisation came from the introducer itself.
  • Dr Day could in principle be employed by both the end-user and the third party introducer (see above) and there was no obvious rationale in a provision which said that if the individual was a section 230(3) worker in respect of either the end-user or the third party, he could not rely upon the extended definition against the other. If it did have that effect the odd consequence would be that (a) if s/he is not a section 230(3) worker with respect to either, s/he may fall within the extended section 43K definition of worker in respect of both and each may be an employer, but (b) if s/he was a section 230(3) worker with effect to one of them, s/he could not be a section 43K worker with respect to the other.

What, then, was the intention of the opening words of section 43K? In Elias LJ’s view it was understandable that Parliament might want to make it clear that the section was simply extending the standard definition and that there was no need to engage with section 43K at all if the worker fell within the scope of section 230(3).

Did HEE “substantially” determine the terms on which Dr Day was engaged? 

The other aspect of the appeal in Day concerned the issues raised in s.43K(1)(a)(ii) and s.43K(2) as to who substantially determined the terms. Elias LJ emphasised that neither of these provisions require a comparison between the parties, other than the claimant, who exercise some influence over the terms. So far as concerns 43K(1)(a)(ii), the focus is on excluding cases where the terms on which the individual is engaged are substantially determined by the worker himself. Clearly if that is the case, he cannot bring himself within this extended definition of “worker”. Elias LJ commented that this is so even if the end-user and/or introducer can also be said substantially to determine the terms of engagement. We return to this below because it highlights a potentially significant difference from the line of previous EAT decisions.   Elias LJ commented that only an individual who is not a “substantial” participant in determining the terms of engagement is assisted by s.43K(1)(a). Section 43K(1)(a)(ii) envisages that this may be both the end-user and the introducer; either because the introducer and the end-user determine the terms jointly, or because each determines different terms but each to a substantial extent.

On behalf of HEE it was submitted that notwithstanding that both introducer and end-user might substantially determine the terms of engagement, the definition of employer in subsection 43K(2)(a) was limited to the person as between the two of them who played the greater role in determining the terms of engagement. This, it was argued, followed from the reference to “the person” in that sub-section. Elias LJ rejected this: section 6 of the Interpretation Act 1978 provides that the singular includes the plural unless the contrary intention appears. In Elias LJ’s view it did not do so in this instance. Indeed HEE’s construction involved impermissibly giving a different meaning to “substantially determines” in subsection (1) than in subsection (2). Elias LJ considered that in some cases both introducer and end-user would be employers and each would  then be subject to the whistleblowing provisions.

Turning to the approach to s.43K(2) ERA, the Court of Appeal concluded that the tribunal and ET had incorrectly approached the question by asking who, as between the HEE and Lewisham, played the greater role in determining the terms and that the EAT’s analysis was ‘at least consistent’ with that incorrect approach. There had been a failure to acknowledge that more than one party (apart from the claimant) could substantially determine the terms and asking whether HEE had done so. That may be viewed as a harsh reading of the EAT’s judgment, which did not in terms refer to any comparison and instead (at para 14) relied on the employment tribunal’s findings of fact that HEE was not responsible either for the terms governing training of doctors (the Gold Guide) or the terms and conditions on which the work was performed. However Elias LJ placed reliance on the absence of any self-direction on the part of the ET that there could be more than one employer under s.43K(2), together with the terms of the parties’ skeleton arguments below.

But Elias LJ did not agree that if the correct test had been adopted, the inevitable conclusion would have been that the ET must have found in Dr Day’s favour. In doing so he referred to an issue which emerged during the course of submissions: when considering the terms on which the person is engaged, is the tribunal limited to considering contractual terms and required to ignore other matters which might affect the way in which the work is carried out but are not contractual in nature. The argument for that approach was that in Sharpe v Bishop of Worcester [2015] ICR 1421 (considered in Whistleblowing Law & Practice at paragraph 6-32) the Court of Appeal had held that in order for section 43K to bite, there must at least be a contract of some sort with the putative employer.  Reading between the lines, it may be that Elias LJ was sceptical of that reading of the decision in Sharpe.  We suggest that scepticism was well-founded. Sharpe was dealing with the situation where the terms on which the work was carried out was not determined by a contract at all.  That may be contrasted with the typical agency relationship where the relevant terms are contained in contracts at least between worker and agency and between agency and end-user, but there may be no direct contractual relationship between worker and end-user. Nothing in Sharpe determines that s.43K(1)(a) cannot apply in such a situation.

In any event Elias LJ concluded that even if some of the terms of engagement had to be contractual (following the assumption in Sharpe that the relationship needs to be contractual) he did not accept that it followed that a tribunal should limit itself to focusing solely on the contractual terms. Section 43K required the tribunal to focus on what happens in practice, and “a tribunal should make the assessment on a relatively broad brush basis having regard to all the factors bearing upon the terms on which the worker was engaged to do the work”. That guidance was welcome since, as Elias LJ noted, it avoids sterile debate as to whether, for example, the contractual status of an instruction as to how work is to be done. 

Meaning of “substantial” – a lurking quandary?

The guidance provided by the Court of Appeal on the test of who “substantially determined” the terms has, to a considerable degree, endorsed the approach that had been established in a trio of EAT decisions: Keppel Seghers UK Ltd v Hinds [2014] IRLR 754; Day and McTigue. But in one potentially significant respect there was a departure. 

The wording of s.43K(1)(a)(ii) requires that two conditions be satisfied: (a) that the claimant does not (in practice) substantially determine the terms and (b) that the other parties (or one of them) do (or does). In the EAT in Day (at para 40) Langstaff J concluded that the test in 43K(1)(a)(ii) implicitly requires a comparison as between (a) the claimant on the one hand, and (b) the other person or persons, who are involved in determining the terms on which the claimant is or was engaged to do the work. If cumulatively the other persons determine the terms more than the worker, then the condition in s.43K(1)(a)(ii) is satisfied. That view was followed by Simler P in McTigue at para 34.  But as noted above, Elias LJ reasoned (at para 11) that for the purposes of s.43K(1)(a)(ii), the worker might be found to have substantially determined the terms even if the end-user and/or introducer (or both cumulatively) also did so. It would seem that on this view, the claimant could fail at the s.43K(1)(a)(ii) hurdle if found to have made a “substantial” contribution to determination of the terms, even if the worker has a lesser influence than the other parties, or the others taken together. The effect therefore appears to be to make it potentially more difficult to rely on s.43K(1)(a).

However that still begs the question as to what is meant in this context by the term “substantially”. This question was not directly addressed in the Court of Appeal. Instead the Court was content to leave the matter to be addressed on remission as a question of fact, taking into account the suggestion of considering the matter in the round based on a relatively broad assessment.

In the EAT in Day it was argued that the term “substantially” should be given the same meaning as in relation to the definition of disability in the Equality Act 2010, as meaning “more than merely trivial”.  Langstaff J concluded that the issue did not arise (at least in relation to s.43K(1)(a)(ii)) because the question was determined by the comparison between (a) the claimant and (b) the other parties. Nor was it addressed in relation to s.43K(2) ERA – which lends some support for the Court of Appeal’s view that a comparison had impermissibly been applied to determine who had the greater influence as between the two respondents.

The question as to the meaning of the term “substantially” does though squarely arise on the approach taken by Elias LJ. We suggest that Langstaff J was right to say, in the EAT in Day (at para 40), that in context “substantially” cannot mean simply “more than trivial”.  Any other view would be inconsistent with the purposive approach to the legislation which the Court of Appeal in Day approved.

More broadly, the issue highlights a quandary when it comes to considering the approach which may best meet the purposes of the legislation. It may be assumed that the term “substantially” has the same meaning for the purposes of s.43K(1)(a)(ii) and s.43K(2). As such the lower the threshold is set, the more likely it is that the claimant may be found to meet the threshold of substantially determining the terms, so that no question arises under s.43K(2).  Conversely, the higher the threshold is set, the more likely it will be that the conditions in s.43K(1)(a) are satisfied, but equally the more difficult it may be to show that a particular respondent (in this case HEE) substantially determined the terms.

Taken together with the guidance given by the Court of Appeal in Day we suggest that the following applies:

  1. It is neither sufficient to show that the threshold is something more than trivial, nor to require that the influence must be greater than that of the other parties viewed cumulatively. 
  2. A comparison of the influence exercised by the claimant compared to the other parties could still be relevant since even if not necessary, it must surely be sufficient if the claimant in practice had a greater influence over the terms than the cumulative influence of the other parties.
  3. Between those poles (ie more than trivial and a requirement for greater influence than others), the tribunal is given a wide latitude to determine whether the threshold is met (a) by the claimant under s.43K(1)(a) or (b) by one or more respondents under s.43K(2).
  4. A relatively broad brush assessment is required having regard to all factors bearing on the terms on which the worker was engaged to carry out the work.
  5. Whilst in Day the only issue on remission concerned whether HEE substantially determined the terms, in future cases parties may need to give careful consideration on the facts as to how best to pitch the case as to what amounted to substantially determining the terms.  Whilst it may suit the respondent to argue for a low threshold in order to argue under s.43K(1)(a)(ii) that the claimant substantially determined the terms, depending on the facts the arguments may then rebound against the same respondent when attention turns to s.43K(2) ERA.
Posted: 09.05.2017 at 12:29
Tags:  Comments  Employment Law
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