Stringfellows lap dancer was not an employee (CA)

An employment judge considered the issues of personal service, control and mutuality of obligation and held that Miss Quashie was not an employee. Although Miss Quashie had to provide her work personally and there was the necessary degree of control, the tribunal did not consider that the "level of control amounted to mutual obligation".

In particular, the tribunal held that the essential element of the wage/work bargain was not present. Stringfellows was not obliged to pay Miss Quashie anything. Rather, she paid Stringfellows to be able to dance at the club and her earnings came from its customers. How much she earned depended on how much customers paid (subject to authorisation for sums over £300). She often earned nothing because her vouchers did not cover the tip out fee, house fee, fines and commission. She did not need permission to go on holiday, although she gave notice for rota purposes.

Further, during the periods when she was not dancing at the club, Stringfellows was not required to pay her, she could work elsewhere, and could stay away for as long as she liked. There was no mutuality of obligation at all during these periods, which were not covered by an overarching contract of employment. Therefore, even if she had been an employee while dancing, she did not have the requisite continuous employment for her unfair dismissal claim to proceed.

Miss Quashie appealed to the EAT.

The EAT upheld Miss Quashie's appeal, holding that she had been an employee and had sufficient qualifying service to pursue an unfair dismissal claim against Stringfellows. (See Legal update, Dancer at Stringfellows was an employee: issues of illegality and unfair dismissal remitted to tribunal.)

The EAT held that there were mutual obligations on each night that Miss Quashie worked. She had to attend in accordance with the rota and, in return, Stringfellows had to give her the opportunity to dance. Further, in doing so, Stringfellows controlled her activities. She had to perform in accordance with its directions, and dance on the stage at various times during the night without pay. She could then earn money by being invited to a "sit down" and Stringfellows would take commission. This was a mutual benefit.

Stringfellows was obliged to pay Miss Quashie both under its voucher system and by observing the minimum £10 fee for every dance under its council licence. The imposition of fines or deductions suggested both the existence of an ongoing relationship and, as a form of contractual discipline, was consistent with an employment contract. The fact that Miss Quashie might not earn anything on a particular evening was immaterial: a requirement that wages will not be paid unless a certain performance is achieved is not inconsistent with the wage/work bargain.

The EAT also held that there was sufficient mutuality of obligation to give rise to an overarching employment contract covering the 18-month period during which Miss Quashie danced at Stringfellows. In addition to her commitment under the rota, Miss Quashie had to attend weekly meetings. Stringfellows could terminate the relationship if she failed to do so. Further, she had to notify Stringfellows when she was leaving and returning from holiday, and had to dance the day after getting back.

Stringfellows appealed to the Court of Appeal.

The court noted that, confusingly, the employment tribunal seemed to use the concept of "mutual obligations" in two distinct senses:

The court stated that, plainly, there was a contract involving mutual obligations of some kind when Miss Quashie was actually working. However, on a fair reading of the decision, the tribunal did not say that there had never been any contract in place at all.

The key question was the nature of the contractual obligations between Miss Quashie and Stringfellows while Miss Quashie was working. The court stated that the tribunal's most important finding in this regard was that Stringfellows was under no obligation to pay Miss Quashie anything at all. She negotiated her own fees with customers and only received money from Stringfellows (after deductions) that had come from customers.

On the facts, the EAT had not been entitled to conclude that this payment arrangement was no more than a mechanism whereby Stringfellows discharged its obligation to pay Miss Quashie. There was nothing inherently implausible in the tribunal's finding that Stringfellows was obliged to pay nothing. Further, although the parties disputed whether the council licence required Stringfellows to make the £10 per dance payment or whether this could come from the customers, before the Court of Appeal Miss Quashie accepted that this was not a contractual requirement in any event.

The court agreed with the tribunal that a partial analogy could be drawn with the case of Yuen v The Royal Hong Kong Golf Club [1997] UKPC 40, in which the Privy Council analysed the position of a golf caddie. The caddie was obliged to dress appropriately, behave well and charge a fee on a uniform scale, but only received monies from the golf club equating to those owed by the golfers for whom he caddied. In these circumstances, the Privy Council concluded that the caddie was not an employee of the club. The position in the present case was similar. Stringfellows did not employ Miss Quashie to dance; rather, she paid Stringfellows to be provided with the opportunity to earn money for dancing for clients.

In the court's view, the fact that Miss Quashie took the economic risk was another powerful pointer against employment status. It stated: "it would ... be an unusual case where a contract of service is found to exist where the worker takes the economic risk and is paid exclusively by third parties".

The tribunal's decision was further reinforced by the terms of Miss Quashie's contract, under which she accepted that she was self-employed. She conducted her affairs on that basis, paying her own tax. Although parties cannot agree to fix the status of their relationship, it is legitimate for a court or tribunal to have regard to the way in which the parties have chosen to categorise the relationship.

Although the tribunal's reasoning with regard to mutuality of obligations was not entirely satisfactory, reading the tribunal's judgment as a whole it was clear why it reached the decision that Miss Quashie was not an employee. This decision was "wholly sustainable and consistent with its findings of fact".