In the run up to Christmas you may have overlooked the Court of Appeal’s Judgment in Stringfellow Restaurants Ltd v Nadine Quashie [2012] EWCA Civ 1735, which was handed down on the 21st December. This is more popularly referred to as the case of the lapdancer suing Peter Stringfellow and is a case I’ve followed since the outset.
The legal point of interest in this case is whether Nadine Quashie was an employee of the club. If so she could bring a claim for unfair dismissal, whereas if she was self-employed (as Stringfellows claimed) she could not. The Employment Tribunal (ET) initially held that she was self-employed, but the Employment Appeal Tribunal (EAT) reversed that and deemed her to be an employee. Then in this most recent hearing the Court of Appeal (CA) overturned the EAT’s decision and decided that she was self-employed. Ms Quashie is said to be thinking about appealing to the Supreme Court, which would be the final appeal forum. There could be life in this dispute yet.
However, for the time being the CA has held that Ms Quashie was self-employed. She looked after her own tax affairs and did not receive holiday or sick pay if not available to dance. The CA was particularly influenced by the fact that Ms Quashie had to pay the club for dancing there. Every time she started a shift she had to pay a fee (called a “tip-out”) to the “House Mother”. At the end of the shift the dancers paid the money they had collected through the night (usually in a form called “Heavenly Money”) back to the club, who would then deduct a commission fee, house fee and any fines levied on the dancer (e.g. for lateness, missing a dance or meeting etc). It was therefore quite possible for a dancer to be out of pocket after a shift and the CA based its finding heavily on the fact that the “economic reality” of the relationship was that the dancer was self-employed;
“ … were the provisions of the contract consistent with it being a contract of service? In my view, the most important finding in that regard was the Tribunal’s inference from the evidence that the employer was under no obligation to pay the dancer anything at all. The principal evidence for that was that 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.”(para 45)
And
“The club did not employ the dancers to dance; rather she paid them to be provided with an opportunity to earn money by dancing for the clients.” (para 50)
And
“The fact that the dancer took the economic risk is also a very powerful pointer against the contract being a contract of employment. Indeed, it is the basis of the economic reality test”(para 51)
That makes a powerful case. It is true that some employees take on a degree of economic risk , e.g if they are paid a small basic salary but rely upon payment of commission for the bulk of their remuneration. Commission can go up and down and to that extent there is an economic risk, albeit a restricted one. Employees do not usually have to share in the losses of the business or to pay for the privilege of working there, which takes the level of economic risk to a much greater extent.
But, there is more in this case because Ms Quashie although she did not get paid holiday or sick pay if absent, had to let the club know when she was available and although theoretically able to dance at other clubs it never occurred and was thought to be impermissible in reality by all the dancers. The EAT had been critical of the ET in these issues and made its decision that Ms Quashie was an employee on each night she worked on the basis that there was a mutual obligation to provide work and wages and there was a sufficient degree of control. However, the CA felt the EAT had misunderstood the evidence before the ET which rendered its finding wrong.
This seems like a harsh decision on the facts, but I think the CA is right. Does this indicate that the Courts will now pay more attention to the “economic reality” test rather than the “control” or “mutuality of obligation” tests? Are we still guided by the “multi-factoral” approach laid down in Ready-Mixed Concrete? I don’t think this case goes that far. It will still be necessary to carefully analyse the facts of every working relationship carefully when this issue arises and advising employers and employees alike on this issue will be as tricky as ever.