MPG Contracts Ltd v. (1) Mr A England (Junior) (2) Mr A England (Senior)
The EAT's decision in MPG Contracts Ltd v. Mr A England and another (UKEAT/0488/08/DM) judgment handed down on 8 May 2009, concerned, as the EAT described it, the well worn question of when is a contractor a worker for holiday pay purposes within the meaning of regulation 2(1) of the Working Time Regulations 1998.
The claimants were specialist self employed contractors. They were engaged on MPG’s standard terms of service which reserved the right to the claimants not to perform the services personally and to provide a substitute, provided the replacement was suitably qualified (the substitution clause).
The claimants provided services continuously to MPG from October 2007 until the relationship ended on 14 February 2008. The claimants then claimed holiday pay on the basis that they were workers during the relevant period i.e. they were obliged to perform personally the work for MPG.
In Employment Tribunal in Manchester decided that the claimants were in fact workers, reasoning that the substitution clause did not obliterate the essential obligation of personal service necessary for the claimants to be workers as it retained the right to MPG to approve a suitably qualified substitute, and that the substitution clause had been exposed as not being that because MPG had rejected the claimants introducing a substitute worker to the site.
The EAT decided the Employment Tribunal had erred in respect of its two findings on the substitution clause and took the unusual step of dismissing the claims as opposed to remitting the claims back for a further hearing.
The decision has two points of interest.
The first is that it reiterates the importance of contractual terms. They will determine whether there is an obligation to perform the work personally absent any finding by the Employment Tribunal that the terms are not in accordance with the intentions of the parties i.e. a sham. If there is an unfettered right not to provide the service personally, that will be determinative of the issue: the sub contractor will not be a worker. The mere fact that that the principal wishes to satisfy himself first that the substitute is competent, does not in any way undermine or fetter the right not to provide the services personally.
The second relates to the refusal of the EAT to follow part of the EAT decision of Judge Burke in Redrow Homes (Yorkshire) Ltd v. Buckborough  IRLR 34 which decided that the provision of a substitute, pursuant to contractual terms which compelled this when the sub contractor was not in the position to provide the labour, meant the sub contractor was providing services to the principal within the meaning of regulation 2(1) and thus qualified as a worker. The claimants in the MPG appeal amended their responses before the EAT to argue that their claims should be upheld based on the reasoning in the Redrow case. The EAT had no difficulty in rejecting that and refusing to follow the reasoning of Judge Burke (paragraph 20). While the EAT's reasoning is short, it rejects the argument that the mere act of providing a substitute amounts to an obligation personally to perform a service. Effectively, there must be personal service by the contractor. Providing a substitute is not that.
SUB-CONTRACTORS, SUBSTITUTION, WORKERS