The employment tribunal found that, when the appellant was providing her services through a limited company for the purpose of selling Shiseido cosmetic products in a duty-free outlet managed by the respondent, she was not an employee of the respondent for the purposes of section 83(2) of the Equality Act 2010.

Halawi v WDFG UK Ltd T/A World Duty Free: Court of Appeal, Civil Division: 28 October 2014

‘Worker’ – Contract to perform work or services personally – Respondent operating retail outlets and offering space to cosmetics company – Cosmetics company entering into agreement with another company, CSA – CSA providing management services to cosmetics company, including dealing with staffing of outlet spaces – Appellant working as beauty consultant in cosmetics company’s outlet on airside of airport terminal

The respondent operated retail outlets at airports. It offered outlet space to cosmetic companies for the exclusive storage of the products of the company. Those spaces were normally staffed by uniformed staff on behalf of the cosmetics company. The respondent had such an agreement with a Japanese cosmetics company, Shiseido. In 2000, Shiseido entered into an agreement with CSA, in which CSA had agreed to provide it with management services, which included dealing with the staffing of its outlet spaces.

In 2001, the appellant began working as a uniformed beauty consultant in a Shiseido outlet on the airside of an airport terminal. According to the employment tribunal (the tribunal), that was with the assistance of CSA. In 2002, that changed when the appellant set up a limited company (N Ltd). N Ltd thereafter invoiced CSA for the appellant’s time and services at an hourly rate set by CSA and CSA in turn invoiced Shiseido. Shiseido was in turn paid by the respondent for stock which it sold at a profit.

In 2011, the respondent withdrew the appellant’s airside pass, which effectively prevented her from working at the outlet. The appellant brought proceedings against the respondent on the basis that the withdrawal was discriminatory on the grounds of race and/or religion. The tribunal concluded that the appellant was not an employee for the purposes of section 83(2) of the Equality Act 2010 (the 2010 act). That act contained the principal rights conferred by European equality law.

In so concluding, the tribunal found that the only documentation recording the relationship between the appellant and the respondent was a handbook, described as containing business partner guidelines, and that that had not constituted a contract of employment between the parties. It also attached importance to the fact that the appellant could send a substitute. The Employment Appeal Tribunal dismissed her appeal. The appellant appealed.

The issue before the court was whether a person who provided services through an employee-controlled company to a service company, was an employee. It therefore fell to be determined whether the appellant had been an employee of the respondent. The court considered Bates van Winkelhof v Clyde & Co LLP ([2014] 3 All ER 225) (Bates), in which the Supreme Court held that, while subordination might sometimes be an aid to distinguishing workers from other self-employed people, it was not a freestanding and universal characteristic of being a worker. Consideration was also given to Framework Directive (EC) 2000/78 (establishing a general framework for equal treatment in employment and occupation).

The appeal would be dismissed.

Applying settled European authority, the existence of the relationship of employment did not turn on whether the parties had entered into a formal contract, which would be recognised in domestic law as having constituted employment, but on whether it met the criteria which had been laid down by European law. The criteria included a requirement that the putative employee should agree personally to perform services and a requirement that the putative employee should be subordinate to the employer (see [4], [60], [61] of the judgment).

Those criteria were capable of being applied even in the complex situation in the present case. The appellant had not been an employee of the respondent and she had not established that there was any incompatibility between section 83(2) of the 2010 act and European law. Although Bates had concerned the meaning of employment for the purpose of a different statutory provision, European law would equally recognise the need to fine tune the requirement of subordination which had been laid down by the Supreme Court and that that holding applied equally to discrimination law.

The tribunal had made clear findings of fact that the criteria had not been satisfied. In particular, the tribunal had found that the appellant had not been subject to the respondent’s control in the way she had carried out her work. There had been no documentation to support the existence of employment and independence had not been a necessary feature of her work.

In those circumstances, the requirement for subordination did not need to be qualified and the requirement had to be satisfied for employment to be found. The lack of subordination was consistent with the appellant’s lack of integration into the respondent’s business. While the court had to look at the substance and reality of the situation, it could not disregard the findings of the tribunal (see [4], [44], [59]-[61] of the judgment).

Allonby v Accrington and Rossendale College: C-256/01 [2004] All ER (D) 47 (Jan) considered; Danosa v LKB Lizings SIA: C-232/09 [2010] All ER (D) 178 (Nov) considered; Jivraj v Hashwani [2011] All ER (D) 246 (Jul) considered; Associata ACCEPT v Consilul National pentru Combaterea Discriminarii: C-81/12 [2013] All ER (D) 127 (May) considered; Bates van Winkelhof v Clyde & Co LLP [2014] All ER (D) 173 (May) considered.

Paul Diamond (instructed by Cameron Solicitors LLP) for the appellant; Diya Sen Gupta (instructed by Lewis Silkin LLP) for the respondent.