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Provision of services via a limited company: ‘in employment’ for the purposes of the Equality Act?

The Court of Appeal has this week given judgment in the case of Halawi v WDFG UK Ltd, looking at the definition of ‘in employment’ for the purposes of protection against discrimination.

Ms Halawi provided her services to a business called Caroline South Associates (CSA).  CSA provided management services to Shiseido cosmetics. Ms Halawi worked selling Shiseido products in a duty-free shop space run by World Duty Free (WDFG) at Heathrow airport. She did so via a limited company formed specifically for this purpose and through which she invoiced CSA on a monthly basis for work done.  Ms Halawi did not have a written contract with either WDFG or CSA.

She had no obligation to provide work and CSA had no obligation to offer it.  She did not get sick pay, holiday pay, or pay when she did not work.  She could (and did) provide a substitute to carry out the work for her.  WDFG withdrew her airside pass, meaning she could no longer access and therefore work at the airport. She claimed in the tribunal that she had been unfairly dismissed and had been discriminated against.  The employment tribunal held that she was neither a worker nor an employee and that she did not fit in the wider category of ‘in employment’ for the purposes of the Equality Act 2010 (EqA).  She appealed to the EAT, which accepted that the tribunal had reached the right conclusion by assessing the reality of the relationship as a whole, taking into account in particular the absence of personal service and mutuality of obligation.

A further appeal to the Court of Appeal led to an examination of whether UK discrimination law meets the requirements of EU law in the extent of protection offered to individuals. The Court of Appeal accepted that Ms Halawi had failed to satisfy two key tests for employment under EU law – she had not agreed personally to perform services for the Respondent and was not ‘controlled’ by the Respondent.  Beyond having a right to restrict her access to the workplace, WDFG had no control over how she worked.  As such, there was no subordination, a fundamental element of the definition of employment in EU law.

Both the EAT and the CA expressed reservations about the potential repercussions of the decision, in that it left Ms Halawi with no remedy if there had been discrimination – but accepted that there was no alternative interpretation of the facts.  A request for a reference to the ECJ was rejected.  

This must on the facts be the correct analysis.  The EqA defines ‘employment’ as ‘employment under a contract of employment, a contract of apprenticeship or a contract personally to do work’ (s83(2)).  This is a wider concept than (but encompasses) both ‘employment’ under the Employment Rights Act 1996 (ERA) and ‘workers’ under s230(3) of the ERA.   It can therefore cover a category of individuals not protected by unfair dismissal law under the ERA – ie, those who are self-employed, provided they are obliged to perform the work personally and cannot employ their own staff to do the work or provide a substitute.

This reflects the Supreme Court’s earlier findings in Jivraj v HashwaniHere, the Supreme Court devoted considerable care to analysing the European and domestic case law on the meaning of ‘employment’ for discrimination purposes.  In summary, it found:-

  • Domestic case law suggested that if the dominant purpose of a contract is the execution of personal work, then an individual will be protected against discrimination. But, in the Supreme Court’s view, this could not be the sole test – the focus must be on the reality of the contract and the relationship between the parties;
  • The ECJ has distinguished between those who are in effect employed (even if they don’t have the formal label of employee) and those who are ‘independent providers of services who are not in a relationship of subordination with the person who receives the services’ (the former being protected, the latter not);
  • The definition in the legislation (in Hashwani, the Religion or Belief Regulations) refers to ‘employment under…a contract personally to do work’.  It does not simply reference ‘working under’ a ‘contract personally to do work’ (or some equivalent).  In the Hashwani case, the applicant was an arbitrator and as such, could not naturally be described as ‘employed under a contract personally to do work’ as the relationship between arbitrator and contracting parties could not naturally be described as one of employment at all.

The Halawi case is (as far as I am aware) the first appellate decision on the interpretation of ‘in employment’ for discrimination protection purposes under the EqA as opposed to the previous Religion or Belief regulations (as in Hashwani).  It approves the principles in Hashwani and endorses the same interpretation of s83(2) EqA.  It does, however, leave a lingering measure of discomfort: I think we can realistically accept that on the facts Ms Halawi rightly stood little chance of establishing employment status for the purposes of unfair dismissal, but given the wider ramifications of discrimination law, the fact that she had no remedy if indeed discrimination had taken place, is a little uncomfortable.

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