To bring a claim of unfair dismissal, claimants have to show that they are employees (in other words, that they have a contract of employment). In Stringfellows Restaurants Ltd v Quashie, the Court of Appeal said that a lapdancer was not an employee as her employer was not under any obligation to pay her.
Ms Quashie worked as a lapdancer for about 18 months at two clubs belonging to Stringfellows.
She was paid in “Heavenly Money”, a form of voucher that customers bought at the club which were then exchanged into cash by Stringfellows. However, the club applied certain deductions from the vouchers including a commission fee, a house fee and fines for being late for a shift; being late for a stage dance/song; being late for the weekly Thursday meeting; or missing a free dance.
Ms Quashie was also required to adhere to a rota and to work one Saturday and one Monday twice a month in addition to her usual set days.
When she was dismissed for misconduct in December 2008, she brought a claim for unfair dismissal. Stringfellows said that, as she was not an employee, she had no right to bring the claim.
Tribunal and EAT decisions
The tribunal agreed that Ms Quashie was not an employee as there was no obligation on the employer to provide her with work nor was there any obligation to pay her (known as mutuality of obligation).
The EAT disagreed, however, holding that there was mutuality of obligation. Ms Quashie was obliged to turn up for work on the nights she was rostered to work and could not send a substitute. In addition, she was expected to turn up to perform her work; otherwise she would be subject to a fine and the employer had full control over her when she was at work.
Court of Appeal decision
The Court of Appeal has now overturned that decision, holding instead that Ms Quashie was not an employee because there was no mutuality of obligation, as required under the multi-factorial test set out in the case of Ready Mixed Concrete (South East Limited) v Minister of Pensions and National Insurance.
Although it accepted that there were mutual obligations “of some kind” (such as dancing at the club on certain days) when she was at work, they were not consistent with a contract of employment. She paid her own tax, did not receive sick pay or holiday pay and had even signed an agreement that the club was not under an obligation to pay her which no one had suggested was a sham.
The Court made clear that there not only has to be an “umbrella contract” (an overarching contract in which there are periods of work), but there also has to be a contract in the gaps in between. A contract cannot exist, it said, without an “irreducible minimum of obligation”.
The club itself did not employ the dancers to dance. Instead Ms Quashie paid them so that she could have the opportunity to earn money by dancing for the clients. She negotiated her own fees with the clients, took the risk that on any particular night she would be out of pocket and received back from the employer only monies received from clients (whether by way of cash or Heavenly Money) after deductions.
It concluded that it would “be an unusual case where a contract of service is found to exist when the worker takes the economic risk and is paid exclusively by third parties. On any view, the Tribunal was entitled to find that the lack of any obligation to pay did preclude the establishment of such a contract here”.