The EAT has held that a staff member supplied through a service company cannot claim discrimination
The decision from the Employment Appeal Tribunal in the case Halawi v World Duty Free is the first from an appeal court (and, therefore binding on employment tribunals) on the meaning of "employee" under the Equality Act 2010. The EAT held that an individual engaged through a personal services company was not an employee for the purposes of a discrimination claim under the Act.
The definition of "employee" in this statute is wide: it is someone working under an employment contract or a contract to do work personally. This means it could include those self-employed who have a contractual obligation to perform work personally and who cannot provide a substitute.
Facts
Halawi sold cosmetics in a duty-free outlet at Heathrow Airport. Her airside security pass was removed by the outlet operator, World Duty Free, following complaints from her colleagues about her. Halawi argued that she had been discriminated against.
Her work arrangements were complicated as she provided her services through her own personal services company, Nohad Ltd, to Caroline South Associates. This company in turn provided staff, including Halawi, and other services to another company, Shiseido, whose cosmetic products were sold in the duty-free outlet. The outlet and its staff were controlled by World Duty Free.
EAT
Halawi brought her claim against World Duty Free and Caroline South Associates and, therefore, had to show that she was an employee of one of those companies for the purposes of the Act. There was no contract of employment between Halawi and these two companies, because she provided her services through Nohad Ltd and did not contract with either company as an individual.
The EAT considered whether Halawi had a 'contract personally to do work'. This limb of the definition of employment is a question of fact: courts and tribunals will look at all of the factors and circumstances of the relationship between the parties to decide whether a claim comes within it.
Given the way in which the contractual arrangements were structured, Halawi was unable to show that they fell within the definition. She argued that such contractual requirements were not required by European law. However, even if this argument had been accepted, she was unable to demonstrate an employment relationship on the facts.
It was established that:
- Caroline South Associates, Shiseido and World Duty Free had no obligation to provide her with work
- she was free to refuse any shifts assigned to her
- she was permitted to appoint a substitute to perform her services, and had exercised that right.
As such, there was no mutuality of obligation, economic dependency or element of subordination that would usually be associated with an employment relationship. Throughout her engagement, there was an absence of other features typical of an employment relationship, such as sick pay or holiday – if Halawi did not work, she did not get paid, and she had never complained about this. The EAT upheld the employment tribunal's decision that there was no employment relationship.
Comment
This decision is not surprising given the findings of fact made by the tribunal, which the EAT was bound to adhere to. However, the EAT did note that it was "uneasy" that the arrangements in this case were such that Halawi could have been a victim of discrimination yet had no right to complain to a tribunal about it. Nevertheless, the EAT acknowledged that, as with the more developed case law involving agency arrangements, the necessary legal tests must be satisfied for such a claim to be successful and, in Halawi's case, they had not been.
Matthew Towers is an associate in the employment group at Hogan Lovells.
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