To bring a complaint of unfair dismissal, claimants must show that they have employee status, among other things. In Anglian Windows Ltd t/a Anglian Home Improvements v Webb, the Employment Appeal Tribunal (EAT) held that as Mr Webb was operating as an individual under an agreement with a partnership, he could not also claim that he was an employee.
Basic facts
When he joined Anglian Windows as an Area Sales Leader (ASL), Mr Webb partnered with his wife, trading as Webb Consultants. He was advised by his accountant to continue that arrangement when he entered the ASL contract.
Clause 3.1 of that contract stated that: “The ASL is and shall always remain either a self-employed sole trader, a limited company or a partnership. The ASL shall not describe or hold him/her/itself out to be an employee or officer of Anglian …”.
When Anglian terminated Mr Webb’s contract, he claimed unfair dismissal because he was an employee as defined by section 230(1) Employment Rights Act (ERA) 1996. Anglian Windows argued that the claim should be struck out as having no reasonable prospect of success because Mr Webb did not have employee status.
Relevant law
Section 230(1) ERA states that an employee is “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment”.
Tribunal decision
Firstly, the tribunal distinguished the decision in Firthglow Ltd v Descombes and Anor that a “two-man partnership could not be ane basis that it employee” on thhad referred to “a partnership firm” rather than to “an individual within a partnership”.
Secondly, the tribunal relied on the fact that the judgment had made clear that even if each applicant was not an employee, that did not “rule out the possibility of any individual within the partnership from being able to mount a claim to employee status”.
Relying on this aspect of the decision in Descombes and other case law, the tribunal rejected Anglian’s application, holding that even though Mr Webb had operated as an individual within a partnership, that did not mean he could never establish employee status with the company.
The company appealed, arguing (among other things) that the tribunal had failed to understand the underlying legal reasoning of the EAT in Descombes. In other words, someone operating under a contract with a partnership could not simultaneously be an individual under a contract of employment under section 230 ERA.
EAT decision
Allowing the appeal, the EAT agreed with Anglian that the tribunal should have followed Descombes which had clearly stated that where someone was operating as an individual under an agreement with a partnership, they could not then claim that they were also an employee.
Although the tribunal was right to identify the “true or real position” of the person in the partnership, the exercise had to be carried out in a structured way, “with the words of the statute providing the starting point and constant focus”.
In this case, there could not have been a contract of employment as the tribunal itself had found that the ASL contract with Anglian had been entered into by Mr Webb on behalf of the Webb Consultants partnership and genuinely represented the interests of the parties. As these facts precluded the possibility of a contract of employment between Mr Webbs and Anglian, the tribunal should have concluded that his unfair dismissal claim had no reasonable prospect of success.
It, therefore, dismissed the complaint.