PFS Security Ltd. v Smith

This is an application for permission to appeal by PFS Security Ltd (PFS) against the decision and order of the EAT (Mr Justice Keith sitting alone) whereby he upheld the decision of His Honour Judge McMullen QC that the notice of appeal issued by PFS against the decision of an employment tribunal (ET) disclosed no reasonable grounds of appeal and that no further action should be taken by the EAT upon that notice.

In February 2004, Mr Mark Smith was dismissed from his employment with PFS on the ground of his alleged misconduct. In March 2004, he commenced proceedings in the ET, alleging that he had been employed by PFS since August 2001 and that his dismissal had been unfair. The notice of appearance filed by PFS expressly accepted as accurate the dates of employment alleged by Mr Smith. It asserted that the dismissal had been on account of misconduct, namely Mr Smith’s refusal to carry out instructions and had been fair. The hearing took place in June 2004 and the merits of the case were determined in Mr Smith’s favour. He was awarded £2,614 compensation.

PFS then appealed to the EAT, raising only one ground of appeal. They alleged, for the first time, that Mr Smith had not completed the period of employment necessary to entitle him to compensation for unfair dismissal. Their contention was that, when first taken on in November (not August) 2001, Mr Smith had been an apprentice, placed with PFS under a Modern Apprenticeship Scheme. He had not been employed by them at that time. He had first been employed by them from 10^th December 2003, when he was offered and accepted a job as an engineer, to replace an engineer who had left. His dismissal had taken place less than 3 months later. Somewhat generously, in the light of the express admission in the notice of appearance, His Honour Judge Ansell considered that this was an issue which should be considered (if at all) by the ET on a review of its own decision. He stayed the appeal to give PFS the opportunity to apply for a review.

Notwithstanding that the application was out of time, the ET agreed to review its own decision. A further hearing took place on 17^th January 2005. Both parties called further evidence. Mr Smith dealt with the circumstances in which he had first been taken on in August/September 2001, the circumstances in which he had joined the Modern Apprenticeship Scheme, how, until late 2003, he had worked for PFS always under the supervision of a trained engineer and had attended college one day a week. This evidence dovetailed with the evidence he had given at the first hearing about the circumstances in which he took a job as an engineer and worked without direct supervision from late 2003.

The ET examined the available documents. There was a learning agreement signed by three parties. This named Mr Smith as ‘learner’, PFS as ‘the company’ and the Learning and Skills Council of Wiltshire and Swindon was the third party. The responsibilities of each party were set out. There was also a bipartite agreement between PFS and Swindon College in which PFS was described as the ‘employer’. It was signed on the same day as the learning agreement, 1^st November 2001.

The ET found as a fact that Mr Smith was interviewed for a job with PFS in August 2001. He was taken on and underwent an employee induction process on 3^rd September. His position at this time was trainee alarm engineer. He was paid £80 per week. The ET held that, at that time, he was an employee. His employment was not conditional upon him obtaining a place as a modern apprentice at Swindon College. They held that, if no such place had been available, the employment would have continued. They accepted Mr Smith’s submission that the contract of employment continued in existence when the training contract began and the two thereafter ran concurrently. They rejected PFS’ contention that Mr Smith had been taken on from the outset on a training contract and had not been an employee until he accepted a job as an engineer. The ET held that Mr Smith’s employment had run continuously from September 2001 until February 2004. Their earlier decision stood.

PFS sought to restore its appeal to the EAT. HH Judge McMullen took the view that no issue of law was now raised by the appeal. Undeterred, PFS filed a fresh notice of appeal claiming that it now had more documents which had not been available at the review. Judge McMullen considered that notice and held that PFS had not satisfied the test for the admission of fresh evidence. He said that the notice of appeal did not disclose any reasonable grounds. PFS asked for that ruling to be reconsidered following an oral hearing.

Keith J reviewed the facts and the basis of the ET’s decision. He held that the ET’s decision was entirely in accordance with the decision of the EAT in Flett v Matheson [2005] IRLR 412, in which the effect of a modern apprenticeship learning agreement had been considered and the relevant authorities on apprenticeship had been reviewed. He summarised the position thus:

“The essence of the agreement in that case, as in this, was that the employer would pay the apprentice, supply the apprentice with the opportunity for work experience, and allow him access to training, but that training would be carried out by the training provider. The Employment Appeal Tribunal held that in those circumstances the Claimant had not been employed under a contract of apprenticeship, importantly because he was not going to be trained by the employers, but that he was employed under a contract of employment. The fact that he did the same work as a novice employee would have done and had received wages meant that he was employed under a contract of employment overlaid by the tripartite training arrangements. There is no material difference between that case and this, so that if in that case the apprentice was employed under a contract of employment, so too was Mr Smith.

The Company’s present appeal proceeds on a fundamental misconception, which was that because he was an apprentice he could not have been an employee as well. But the fact that Mr Smith was in lay terms an apprentice because he had entered into training arrangements which referred to him as a foundation modern apprentice does not mean that he was working for the Company under what the law regards as a contract of apprenticeship. He was working for the Company under what the law regards as a contract of employment because all the incidents of employment were present in this case – the carrying out of work for which he was paid wages, albeit with time off to enable him to be trained by a training provider.”

Keith J then considered the fresh evidence point. He considered that the documents on which PFS wished to rely did not undermine the reasoning of the ET on the review and so could not have had an important effect on the result of the hearing. That disposed of the case at the EAT.

PFS sought permission to appeal to this Court. Their application was two weeks out of time. The explanation for this was that PFS were awaiting the transcript of Keith J’s judgment. That is not really a satisfactory reason but I would not shut them out from the Court of Appeal if there was merit in the proposed grounds of appeal.

PFS’ application was listed at 9.45am with a time estimate of 30 minutes. PFS was to be represented by Mrs Helen Saunders, an employee of the company. Unfortunately, she did not arrive until just after 10.15. I heard her submissions for about 15 minutes until 10.30 and then adjourned them to be completed after the hearing of an appeal which had been listed to begin at 10.30. I warned Mrs Saunders that her case might not be resumed until the afternoon. She raised no objection to this course. However, a while later, I received a message to the effect that she could not stay beyond 11.30am and would be content with a written judgment.

The grounds of appeal as drafted by Mrs Saunders were:

It seemed to me that Mrs Saunders wished to allege that the decision of the ET was perverse, in the sense that it was not founded on evidence. It appeared from her written argument that her main complaint was that the ET’s decision was not consistent with the documents which had been produced at the review hearing. In particular, it was said that the three-party agreement described Mr Smith as a ‘learner’; therefore he could not be an employee.

In my judgment, it is clear that the ET accepted that Mr Smith had been taken on as an employee before he joined the training scheme and that, if he had not joined that scheme, he would have continued just as an employee. As it was, he was an employee throughout the period from September 2001 to February 2004. When his training contract began, it ran concurrently with his contract of employment. As Mr Justice Keith said, after considering the decision of the EAT in Flett, that was a perfectly sensible conclusion. PFS were labouring under the mistaken impression that a person had to be either a trainee/learner/modern apprentice or an employee. In my view, Mr Justice Keith and the ET were right in holding that he could be and in fact was both an employee and a modern apprentice at the same time.

It has been drawn to my attention that the decision of the EAT in Flett has now been considered by the Court of Appeal. On the facts of Flett, the Court of Appeal decided to remit the case to the ET. However, the Court approved the EAT’s statement that a modern apprenticeship might well be regarded as a contract of employment with the training rights and duties overlying it. There is nothing in the judgments of the Court of Appeal which undermines the ET’s findings in this case or Keith J’s consideration of it.

From her oral submissions, it was apparent that Mrs Saunders’ main complaint was that the EAT had refused to admit the fresh evidence which had been produced after the review hearing was over. This comprised a document which was an ‘enrolment form’ for Swindon College. It was completed by Mr Smith on 6^th September 2001. Mrs Saunders’ case was that this document proved that Mr Smith’s evidence was untruthful. She submitted that it showed that he had been taken on at the College in September 2001 and not in November as he had claimed. I have looked at it. I agree that the document might be support for the proposition that Mr Smith started at the College in September 2001. However, it does not demonstrate that. Mr Smith might have completed an enrolment application form in the September but not have attended the College until the November. I can see that, if this document had been produced at the review hearing and had been deployed in cross examination of Mr Smith, it might have undermined his evidence about the course of events. Even if it had (which is by no means clear) that is not to say that it would have had a significant effect on the outcome of the review hearing. It would have still been open to the ET to hold that Mr Smith had been taken on by PFS as an employee from the start.

But the fact is that the document was not produced at the review hearing. To grant permission for this appeal to proceed to a hearing on the basis that the EAT had erred in refusing to admit this material as fresh evidence would be to contemplate the possibility that PFS should have a third bite at the cherry of defending Mr Smith’s claim. Only if the material appeared to be of real significance and if there appeared to be a good explanation for PFS’ failure to produce the document at the right time would I contemplate granting permission for such an argument to be advanced to the full court. Mrs Saunders alleged that the fact that the enrolment form was not produced at the right time was Mr Smith’s fault. She alleged that it was not until shortly before the review hearing that PFS realised that they needed to show that Mr Smith had started at the College in the September. PFS had then asked the College to produce any relevant documents but this document had not been produced in time for the review hearing.

I cannot accept the submission that the failure to produce this document at the review hearing was, even arguably, Mr Smith’s fault. This failure was the fault of PFS. First, instead of challenging Mr Smith’s statement that he had been continuously employed from September 2001 until February 2004, they initially accepted it. Then, they sought to challenge it on a review. It behoved them to obtain all the material relevant to their case in time for the review hearing. This document existed at the time and, if they had thought of it, they could have had it for the asking. There is no reason to think that, on the basis of this so-called fresh evidence, the Court of Appeal would be prepared to contemplate this matter going back to the ET for a third time.

For these reasons the application for permission is refused.