Subordinate

It is often difficult for tribunals to decide if someone is an employee or a worker, not least because there is no single test. In Halawi v WDFG UK Ltd t/a World Duty Free and anor, the Court of Appeal held that Ms Halawi was neither, because she did not work under a contract which required her, personally, to do the work and her employer had no control over how she worked.

Basic facts

Ms Halawi worked at Heathrow Terminal 3 as a beauty consultant, based in a duty free outlet called World Duty Free. She did not have a contract of employment, but instead invoiced a management agency called CSA, based on the hourly rate that they set. CSA, in turn, provided a management service to Shiseido, a cosmetics firm, whose products she sold and whose uniform she wore.

When World Duty Free withdrew her airside pass, she was unable to continue working. She claimed unfair dismissal and discrimination, which meant she had to show that she was either an employee or a worker of either World Duty Free or CSA by which she undertook to work personally for one or other of them.

Tribunal and EAT decisions

The tribunal found, as a matter of fact, that Ms Halawi did not have a contract with either World Duty Free which provided her with the store approval that she needed to work airside; nor CSA which just provided her with training, uniform and equipment. Nor was there any “mutuality of obligation” between CSA and Ms Halawi as the agency did not have to offer her work, nor did she have to accept it.

Crucially, she was not required to do the work personally but could send a substitute for a shift (something she had actually done in practice). If she did not work, she did not get paid and had no entitlement either to sick pay or holiday pay. The tribunal therefore concluded that she was neither an employee nor a worker, which meant that both of her claims failed.

Although the issue of whether someone is an employee or an independent contractor has proved “a most elusive question”, the EAT said it was essentially a question of fact, having regard to all the factors and circumstances. In this case, it was clear that Ms Halawi did not have an employment contract (nor one that could be construed as a contract) with either World Duty Free or CSA. She had in fact set up her own company and it was this company which invoiced CSA for her time and services.

Nor could she be a worker as she was not required personally to do the work, contrary to section 83(2) of the Equality Act. The fact that neither of the respondents had any control over how Ms Halawi did her work and that she could not show she was economically dependent on them all fed into the conclusion that she was not in an employment relationship of subordination.

She appealed on the basis that the decision did not give effect to the meaning of “employment” in EU law, which recognised a relationship of employment if one party was in a relationship of subordination (in other words, economic dependency) to the other. Personal service was not, in fact, required..

Court of Appeal decision

The Court of Appeal agreed that section 83(2) must be interpreted so as to be compatible with EU law; and that there is an autonomous meaning in EU law of the term "employee", which the legislation of member states cannot diminish. However, there was no need to “fine tune” the requirement for subordination, given the tribunal’s findings that she was not subject to WDF's control in the way she carried out her work.

Contrary to the argument that the tribunal gave too much weight to Ms Halawi’s right of substitution, the Court held that it could not disregard the finding that she had a power of substitution which was inconsistent with the personal performance of services. Although rarely used, it was not found to be a sham.

Lack of control was paramount in this decision. However, both the EAT judge and the Court of Appeal expressed concern about the implications of their findings which left Ms Halawi with no remedy if she had been a victim of discrimination. Based on the facts, however, they made clear they had no other choice and refused to refer the case to the Court of Justice of the European Union.