Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Stringfellows wins unfair dismissal appeal

by
8th Jan 2013
Save content
Have you found this content useful? Use the button above to save it to your profile.

Former Stringfellows lap dancer Nadine Quashie lost her claim for unfair dismissal after the Court of Appeal found in the nightclub’s favour in December.

For almost two years the case has been making waves in the tabloid press, and in legal and accounting circles because of its implications for other employment status situations, including IR35.

According to the Court of Appeal decision, [2012] EWCA Civ 1735, the case started in December 2008 when the club told Quashie she could no longer work there because it believed she had become involved with drugs on the premises.

Quashie failed in her initial claim for unfair dismissal in 2010 when an employment tribunal ruled that she had been self-employed. But on appeal, her representative John Hendy QC convinced the judge that the commission and nightly fees (and fines, where applicable) demanded by the club amounted to a contract of employment.

“On each night she attended the claimant was obliged to work as directed by the management,” noted tribunal appeal judge McMullen. Taking into account the wider picture including factors such as control and mutual obligations, he ruled Quashie was an employee.

Stringfellows appealed against that decision and argued that since the original tribunal judge had come to a justifiable finding on the basis of the facts presented, the appeal judge was not entitled to overturn the decision.

Thomas Linden QC, for Stringfellows, argued before the Court of Appeal that under its agreement with the dancer the club was not obliged to pay her for the work she did. This was at odds with the wage/work bargain which lies at the heart of the contract of employment, he argued.

The appeal court judges ultimately agreed and found in favour of Stringfellows in a decision published just before Christmas.

The Stringfellows agreement with its dancers, presented at the original tribunal, described them as independent contractors, with the company providing a forum “at which the dancer is able to perform for the benefit of members of the public present in return for payment by them to her”.

The appeal judges concluded that the original tribunal’s most important finding was that the employer was under no obligation to pay the dancer anything at all: she negotiated her own fees with the clients, took the risk that on any particular night that she would be out of pocket; and fees received back from the employer were sums received from clients, less deductions.

“The EAT [employment appeal tribunal] was not, with respect, entitled to conclude that the arrangement for payment was no more than the mechanism whereby the club discharged its obligation to pay the dancer,” the appeal judges ruled. Even if the tribunal appeal judge found that the original tribunal had been wrong to conclude there was no contract, it was not justified in reviewing the original findings and substituting its own analysis of the evidence.

In the appeal court decision, Lord Justice Elias presented a handy summary of the main tests on which employment or self-employment should be assessed:

  • control test - focusing on the nature and degree of control exercisable by the employer
  • business integration test - whether the work provided is integral to the business or merely accessory to it
  • economic reality test - whether the worker is in business on his or her own account, as an entrepreneur
  • multi-factorial test, based on a number of different factors originally set out in the 1968 Ready Mixed Concrete case.

The decision re-examined the elements of Quashie’s case that turned on the mutuality of obligations (one of the RMC factors), but these were outweighed by the court’s judgment on other points.

“The fact that the dancer took the economic risk is also a very powerful pointer against the contract being a contract of employment. Indeed, it is the basis of the economic reality test,” the appeal court noted.

The fact that the parties intended the dancer to have self-employed status reinforced the original employment tribunal decision, it noted later. She accepted under the terms of her contract that she was self employed, and conducted her affairs on that basis. She was not entitled to sick leave or holiday pay and was responsible for paying her own tax. 

The 2007 High Court decision in Spearmint Rhino Ventures (UK) Limited v Revenue and Customs Commissioners  was cited as a precedent, where a similar lap-dancing club was not liable to VAT, as the dancers were supplying their own services to clients who paid them directly.

The appeal decision also drew a parallel with the caddy in the 1998 Cheng Yuen v Royal Hong Kong Golf Club case. The Stringfellows dancer’s arrangement was very similar to a licence by the golf club to permit the caddy offer himself to individual golfers on certain terms dictated by the administrative convenience of the club and its members. 

Lord Justice concluded: “In so far as the EAT was saying that the result would be the same even if the employer was merely providing the dancer with an opportunity to present her skills - which is essentially what the tribunal did find - I respectfully disagree. Those mutual obligations would constitute a contract but they certainly would not compel the conclusion that it was a contract of employment. The analogy with the caddie was in my view an apt one.

“For these reasons I would uphold the appeal.”

There are reports that Quashie is said to be considering an appeal.

Replies (15)

Please login or register to join the discussion.

John Stokdyk, AccountingWEB head of insight
By John Stokdyk
08th Jan 2013 17:24

Commentary from David Kirk

We are indebted to Claritax Books for bringing this news to our attention in a commentary piece by David Kirk.

He notes that Elias LJ is known as an employment status specialist who was responsible in the Stephenson v Delphi Diesel Systems case (which he cited in the Quashie judgment) for advancing the controversial idea that someone who was working must have been doing so pursuant to a contract "for that duration the individual clearly undertakes to work and the employer undertakes to pay for the work done".

In the Quashie decision, the judge backtracks a bit, Kirk noted. "His thesis in Stephenson is that mutuality of obligation establishes whether there is a contract at all, and control whether that contract is one of employment. In Quashie he says: ‘Even where the work-wage relationship is established and there is substantial control, there may be other features of the relationship which will entitle a tribunal to conclude that there is no contract of employment in place even during an individual engagement.’

"This explicitly states that there may be other features to consider besides control to determine the nature of the contract, but also implies that the ‘work-wage relationship’, as he calls it, needs to be established – that is to say, it cannot be just assumed.

"It will be interesting to see how he develops this in future judgments, as the subject is certain to come up again."

Thanks (0)
avatar
By Ian McTernan CTA
09th Jan 2013 11:42

Sensible decision

Based on the facts of the case (insofar as we know them) this seems a very sensible decision about where the line is drawn between employment and self employment.

Thanks (0)
avatar
By The Rogue
09th Jan 2013 12:07

Drugs

Behind Stringfellows' initial "dismissal" were drugs allegations.  Whether she was employed or self-employed they were entitled to sever the working relationship.

Thanks (0)
Replying to richard leighton:
avatar
By reilloc
09th Jan 2013 17:23

Employee Disciplinary Procedures

The Rogue wrote:

Behind Stringfellows' initial "dismissal" were drugs allegations.  Whether she was employed or self-employed they were entitled to sever the working relationship.


They may ultimately ge able to end their relationship but for an employee there procedures to be followed to try to establish that the disciplinary offence actually happened on the balance of probability.
Thanks (0)
avatar
By KenKLM
09th Jan 2013 12:13

Life's too complicated

Let's go back to the good old days when an employer can employ or dismiss as he pleases based on performance given it is he/she that takes all of the financial risks . Employees to be paid for doing what you are supposed to do . Get rid of all this red tape and bureaucracy so that employers are not scared to employ and we might start moving the economy forward ? 

Thanks (0)
avatar
By grinandbearit
09th Jan 2013 12:55

Drugs

Can't agree that if she had been employed the club could dismiss her. The allegations were not proven, the above only stating that it was 'believed she had become involved with drugs on the premises'. Without proving the case she would surely have been wrongfully dismissed. 

Thanks (0)
avatar
By The Rogue
09th Jan 2013 13:08

Drugs

That did occur to me after I had posted and, of course, we know nothing about the allegations and whether there was any truth in them.

I suppose that, like in my company, such allegations against an employee would be swiftly examined by the management and, if appropriate, the employee dismissed.  If someone is self-employed perhaps the level of proof required is lower although could there be a libel claim if the dancer denies the allegations?

Thanks (0)
Replying to Tax Dragon:
Quack
By Constantly Confused
09th Jan 2013 15:55

Question

The Rogue wrote:

That did occur to me after I had posted and, of course, we know nothing about the allegations and whether there was any truth in them.

I suppose that, like in my company, such allegations against an employee would be swiftly examined by the management and, if appropriate, the employee dismissed.  If someone is self-employed perhaps the level of proof required is lower although could there be a libel claim if the dancer denies the allegations?

 

Surely her name is only in the press (and linked to drug allegations) because she created a court case (rightly or wrongly)?  Can you libel someone if the only reason you said 'we suspected she was on drugs' is because you were defending yourself in court?

Serious question.

Thanks (0)
avatar
By The Rogue
09th Jan 2013 16:34

Question

My libel comment was slightly tongue in cheek.  I don't know where the drugs allegation was first made but if it was at the point of initially parting company and it was made in the presence of others then is libel (or slander) possible?  As I understand it (and I am not an expert) comments do not have to be published in the press or other national media to be libel.

People far more versed in libel law than me will no doubt have a better opinion.

This case is already more complicated than it needs to be so the thought of introducing libel amused me.

Thanks (0)
avatar
By carnmores
10th Jan 2013 16:22

@JS do keep up John!

if you look back to Quotes of the Year

https://www.accountingweb.co.uk/article/2012-quotes-year/535511

you will see that i mentioned Quashie Quashed on 31/12/2012

i await my claritax book prize or voucher from Jessops!

 

Thanks (1)
David Winch
By David Winch
10th Jan 2013 20:17

Libel in evidence

Any witness in court proceedings can never be sued for libel or slander based upon the evidence which he / she gives in court.

The public interest in protecting a witness and encouraging him / her to speak freely is deemed more powerful than the public interest in protecting the reputation of a person mentioned in court. Also having a different rule might lead to endless litigation because there could be litigation about what witnesses said in the previous round of litigation, and it would never end!

It used to be the case that NO litigation could be started about what any witness said or produced as evidence in court - but that rule has recently been modified by the Supreme Court. (The case was Jones v Kaney [2011] UKSC 13 - I have blogged about it HERE.)

So now if an expert witness who is being paid to give an expert opinion is found to be negligent he is liable in damages for losses suffered by his client as a consequence of his negligence. In effect that brings the position of an expert witness in litigation into line with that of a professional person advising his client in everyday business and professional life.

But even an expert witness is still immune from any action for libel or slander based on his / her evidence in court.

So if in evidence I say my client has smelly feet (when he does not) there is nothing he can do about that.  But if I say in evidence that his business was worthless before the fire that burned down his factory and closed the business (and my opinion on that is negligent and wrong) then the client can sue me for the additional payout which he would have received from his insurer if I had given correct evidence.

David

Thanks (2)
avatar
By carnmores
10th Jan 2013 21:59

it was all down to that
Dodgy Professor who knew ****all about probability

Thanks (0)
David Winch
By David Winch
11th Jan 2013 00:09

Professor

The Professor to whom you refer is Sir Roy Meadow who acted as an expert witness (normally instructed by the prosecution) in a number of infant cot death cases in which there had been allegations of infanticide.  It is suggested that he unintentionally misled juries and courts as a result of straying outside his area of (medical) expertise and falling into a fallacy about repeated cot deaths in families and the inferences properly to be drawn from that repetition regarding the likelihood of foul play.

Undoubtedly that was damaging to the reputation of expert witnesses in court.

But it is also fair to point out that the latest change in the law follows on from a similar removal of immunity for barristers (which happened in 2001) and stems directly from a civil law case rather than a criminal case.

The Jones v Kaney case concerned the evidence of a psychologist giving an opinion on the adverse effects (including post traumatic stress disorder) suffered by a claimant in a personal injury case (he was a motor cyclist who had been injured in a road traffic accident).

It was alleged that the psychologist negligently signed an expert witness statement (to be used in the legal proceedings) in which she apparently conceded that the injured claimant was deceptive and deceitful in reporting his symptoms when, in fact, the psychologist was not actually of that opinion (but had felt under some pressure to sign).  That apparent concession undermined the claimant's case for substantial damages.

The issue in law was whether the injured claimant could sue the psychologist for negligently signing a statement with which she did not agree - or whether she was protected by witness immunity.

The Supreme Court held that the injured man was in law entitled to sue the psychologist, acting as an expert witness, for her alleged negligence to recover from her (and her PI insurers) the additional amount which he ought to have been able to recover from the insurers covering the other driver.

David

Thanks (1)
Quack
By Constantly Confused
11th Jan 2013 10:48

See

I knew David would know the answer to my musing!

Thanks (0)
avatar
By carnmores
11th Jan 2013 16:35

@David

thanks i was being unusually benevolent in not naming Sir (sic) Roy it must be the mountain air - what really stuck in my craw was his abuse of statistics, and was it really unintentional or did he get carried away by his own hubris?. Panajandrums often do.

Thanks (0)