Employment Status: Varnish, Velodromes and Vento, the Second Lap or perhaps a Change of Gear?

For those of you that read it, you may recall my previous e-bulletin of the same name addressing the case of Ms J Varnish v British Cycling Federation t/a British Cycling & United Kingdom Sports Council t/a UK Sport Case No. 2404219/2017. In that e-bulletin I mentioned that it was unclear whether the decision would be appealed and concluded with ‘Where will this lead us? Well, that’s a topic for a future e-bulletin’…
 
… here it is, the future e-bulletin. As many of you will be aware, the case has been appealed and was heard on 19 and 20 May 2020.
 
I set out in the first instalment of this e-bulletin that the Tribunal below concluded Miss Varnish was neither an employee or worker. That decision was appealed on three grounds:

  • Ground 1 was that the ET had erred in law in finding there was no mutuality of obligation.
  • Ground 2 was that the ET had erred in law in concluding Miss Varnish was not a worker.
  • Ground 3 was that the ET’s reasoning was irrational in relation to some of the findings of fact.

In summary, the EAT agreed with the decision at first instance and dismissed the appeal. The ET had not erred in its approach to the assessment of this issue nor had it ‘reached conclusions that no reasonable tribunal, properly directed, could have reached’.
 
I will not rehearse the facts here. The original judgment is set out in the judgment of the EAT. The ET found there was no mutuality of obligation and although there was personal performance required, it wasn’t personal performance of work provided by British Cycling. In regards to benefits provided under the Athlete Agreement, the ET found they were benefits and not remuneration as they weren’t taxable and athletes could choose whether to use them. The ET concluded that due to the circumstances that led to the conclusion Miss Varnish was not an employee, she was also not a worker.
 
The EAT made reference to guidance provided in Quashie v Stringfellow Restaurants Ltd [2013] IRLR 99 –
 
9. Where, as in this case, the contract is to be gleaned from a mixture of written documents and working practices, an appellate court should not readily interfere with the determination of the first instance court. Absent some misdirection from the tribunal, it can only do so if no reasonable tribunal, properly directing itself, could have reached the decision it did.’
 
The EAT in discussing whether someone is an employee, stated that the question is whether the person works or worked under a contract of service. They considered the three stage test in Ready Mixed Concrete (South East) Ltd v List of Pensions and National Insurance [1968] 2 QB 497:

  • Stage 1 – is there an agreement that an individual will provide their own work or skill in performance of service for the employer?
  • Stage 2 – it is agreed that in the performance of the service there will be a sufficient degree of control over the employee to make the other party the employer.
  • Stage 3 – are the other provisions of the contract consistent with a contract of service?

The EAT endorsed the approach that stage 3 requires an assessment of the whole contract and obligations within it to determine if it is a contract of service. This is a judgment exercise based on analysing the whole picture. It was reiterated that ‘the EAT will not readily interfere unless there is some misdirection of law or the conclusion reached is one that no reasonable tribunal, properly directed, would reach.
 
The EAT concluded with regard to stage 1, that the ET had looked at not only this aspect of the Ready Mix test but also the wider test under Cotswold Developments Construction Ltd v Williams [2006] IRLR 181. That test is –
 
‘(b) if one contract, is it the natural inference from the facts that the Claimant agreed to undertake some minimum, or at least some reasonable, amount of work for Cotswold in return for being given that work, or pay?’
 
It was clear to the EAT that the ET did not find against Miss Varnish because there was insufficient work performed, but that it wasn’t work at all as she didn’t use her own work or skill to provide a service for the British Cycling. The conclusion was that it was a contract where services were provided to Mis Varnish not the other way around.
 
The ET was entitled to conclude that although Miss Varnish had to train very hard, this did not amount to personal performance and was not an error in law. The Tribunal was entitled to reach that decision. That doesn’t mean the situation couldn’t be different in another athlete case as the test under Ready Mix requires the Tribunal to look at all the facts and circumstances. These cases involve evaluative judgments.
 
The EAT can only interfere with such evaluative judgments of the Tribunal if there is some clear misdirection or if the conclusion reached is one that no reasonable tribunal properly directed could have reached.’
 
Ground 2 was also dismissed for the same reasons, namely that there was no error in law and the ET’s decision on this point was a permissible finding.
 
Ground 3 deals with irrational conclusions. The EAT expressed surprised that the ET found that the inability to negotiate terms of employment was inconsistent with a contract of employment, but held that the inability to negotiate terms did not distort the overall picture as it was one of many factors taken into account. The ET’s conclusion that compulsory membership of British Cycling pointed away from Miss Varnish being an employee ‘cannot be said to be obviously wrong and certainly wasn’t irrational’. Again this was one factor of many. The finding by the ET that Miss Varnish’s responsibility for her own tax and financial affairs pointed away from employment status was not irrational and was a minor point that was not determinative.
 
The take-away from this is that the ET must look at all the whole picture and so long as the ET does so, the EAT will not readily interfere with Tribunal below on evaluative judgments.
 
Lucy Taylor