IR35 Decision analysis BBC Kaye Adams appeal win.

My Analysis and observations

(Page 2) the burden of proof is on the Appellant to show that the conclusion is incorrect.

Digression A: Personally performs?

In Tanton the Court of Appeal

End of digression A

And so the Kaye Adams case transcript continued:

(Page 8) The relevant case law

This is pretty crucial stuff so rather than copy and paste it in here, I refer you to Page 18 para 16 onwards to para 25.

(Page 11 para 21) last sentence

But in each case the question the court has to answer is: what contractual terms did the parties actually agree?”

Page 12 para 23

But one thing, I think, is clear in legal principle, morality and the authorities . . . that for acts or documents to be a ‘sham’, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.”

Page 12 para 25

58 In other words, if the reality of the situation is that no one seriously expects that a worker will seek to provide a substitute, or refuse the work offered, the fact that the contract expressly provides for these unrealistic possibilities will not alter the true nature of the relationship. But if these clauses genuinely reflect what might realistically be expected to occur, the fact that the rights conferred have not in fact been exercised will not render the right meaningless.

Page 13 para 31

She added in paras 52, 53 and 55:

There is a LOT of “Chatter” here showing deliberations in progress about opposing counsels’ opposing opinions. It is very useful to acquire a feel for how courts allow themselves to deal with explicit contract terms.

Page 16 para 33

the Supreme Court held in Rock that a contract which stipulates that it cannot be amended except in writing — which is the situation in relation to each written agreement between the BBC and the Appellant in this case — can be amended only by way of a subsequent written agreement between the parties.

Page 16 A contract for services or a contract of service

The original old chestnut.

Page 17 para 36

First, the approach which needs to be adopted is the one described by Nolan LJ

Page 17 para 38

The extent to which the individual is dependent upon or independent of a particular pay master for the financial exploitation of his talents may well be significant.”

Pages 19 to 20 para 44

The traditional definition of an employment contract is the one set out by McKenna J in RMC at page 515, as follows:

And here surfaces MOO!

Mutuality of obligation

Page 21 para 46

The first of MacKenna J’s three conditions is commonly termed “mutuality of obligation”. In order for a contract to be an employment contract, there should be an obligation on the part of the putative employer to provide work and an obligation on the part of the putative employee to accept work. A feature of an employment contract is that the employer is obliged to pay the employee regardless of whether or not the services in question are performed — see Sir Christopher Slade in Clark v Oxfordshire Health Authority 41 BMLR 18 at page 30, Carmichael v National Power PLC 1999 ICR 1226 (“Carmichael”) at page 1230G, Stevedoring & Haulage Services Ltd v Fuller 2001 EWCA Civ 651 at paragraphs 9 and 10 and Usetech (HC) at paragraph 64.

And substitution

This is like reading every text ever written (and yes it feels like it, we are at page 21 of 53) about these matters, but they never quote their sources.

Page 21 para 47

Another feature of the “mutuality of obligation” is that it generally involves a requirement that the employee performs the work in question personally (leaving aside a limited or an occasional power of delegation). In other words, an unrestricted right to provide a substitute is inconsistent with a contract of employment — see Weightwatchers UK Ltd v The Commissioners for Her Majesty’s Revenue and Customs 2012 STC 265 at paragraph 37.

Control

Page 22 para 48 end

“some sufficient framework of control must surely exist. A contractual relationship concerning work to be carried out in which the one party has no control over the other could not sensibly be called a contract of employment

Page 22 para 51

(a) first, in the current age of flexible working, when employees frequently work from home, using their own equipment, the fact that a putative employee fulfils the terms of the agreement by working from home and using his or her own computer is not as potent a contra- indicator of employment status as it once was;

The written agreements

Page 23 para 55

(a) it specified that the Appellant was to provide the services of Ms Adams as presenter of the Kaye Adams Programme for a minimum commitment of 160 programmes (the “Minimum Commitment”) during the term of the agreement (Part A and clauses 3 and 6.1 of Part B);

So that’s deliverables between dates.

(b) it specified that, in return for the Minimum Commitment, subject to the compliance by the Appellant and Ms Adams with its and her obligations pursuant to the agreement, the BBC would pay the Appellant a minimum fee of £155,000 (the “Minimum Fee”) and that, if the BBC required Ms Adams to exceed the Minimum Commitment, then the Appellant would be entitled to invoice and be paid for the additional programmes at the rate of £968.75 per programme (clause 6.1 of Part B);

And there’s the price AND a rate for a deliverable.

Para f note this expression:

(Page 33)

From the producer’s evidence

(i) he confirmed that, while she was presenting the programme, Ms Adams would wear BBC headphones and while she was in the studio, Ms Adams would have a BBC computer available to her and would also have access to the BBC’s messenger service so that she could communicate with the team during the show. However, Ms Adams also had access to her own laptop and Ipad which she would use both inside and outside the studio; and

The arguments of the parties

  1. As we have observed in paragraphs 16 to 51 above, there is very little disagreement between the parties in relation to the legal principles which are applicable in this case.
  2. They are agreed that the appeal stands or falls on the question of whether the terms of each hypothetical contract between the BBC and Ms Adams were such that the relevant hypothetical contract should be seen as a contract for services (as the Appellant contends) or as a contract of service (as the Respondents contend).
  3. They are also agreed that the terms of each hypothetical contract are to be derived from the terms of each actual agreement between the BBC and the Appellant.
  4. Furthermore, they are also agreed that, in determining whether each hypothetical contract amounts to an employment contract, the three-stage test set out by MacKenna J in RMC should be applied — that is to say:

(Page 34)

(a) does the hypothetical contract involve “mutuality of obligation”?

  1. However, the parties do diverge in their construction of the terms of the hypothetical contract for the above purposes.

THEN, and these are of great interest because they amount to working practices that monied the contract IN FAVOUR of the appellant.

  1. We found both Ms Adams and Mr Paterson to be very credible witnesses and we have accordingly concluded, on balance, that, notwithstanding the terms of each written agreement, including clause 16.5 of Part B of each written agreement, the evidence described in paragraphs 87 to 89 above is so compelling that we are satisfied that, to the extent that the position summarised in paragraphs 87 to 89 above is contrary to the terms of each written agreement, the relevant written agreement did not reflect the terms of the actual agreement between the BBC and the Appellant which the relevant written agreement purportedly recorded. Accordingly, we find as facts that:
  1. In similar vein, although clause 16.7 of Part B of each written agreement ostensibly provided for Ms Adams to have a right of substitution “in exceptional circumstances” and subject to the BBC’s prior approval, the evidence of Ms Adams and Mr Hollywood mentioned in paragraph 57(t) and paragraph 59(b) above demonstrates that this right was illusory.
  2. Accordingly, we find as a fact that there was no right of substitution under each actual agreement between the BBC and the Appellant.

(Page 45 Para 102) the hypothetical contract. What might yours look like given this example?

Now we are getting to it: CONCLUSIONS

  1. Nolan LJ in Hall went on to explain that, in the case of such a person, it is far more meaningful to consider the extent to which the individual in question is dependent on one particular paymaster for the financial exploitation of his or her talents, the length of the relevant engagements, and the number of different clients involved in those engagements.
  2. In considering those features in the present case, there was some debate between the parties as to the precise percentage which Ms Adams’s work for the BBC over the two tax years of assessment in question bore to Ms Adams’s work overall, both in terms of financial remuneration and in terms of time taken. It is clear that the percentage in each case was significant — both parties agreed that her remuneration under the two contracts with the BBC amounted to over 50% of her income and, on the days on which she presented the programme, a significant part of her working day would be taken up with the programme. However, we do not think that Ms Adams’s other work over that period can aptly be described as being de minimis or insignificant, either in terms of remuneration or in terms of Ms Adams’s overall working time. Even on the basis of the Respondents’ own figures — which are lower than those of the Appellant — approximately 30%, on average, of Ms Adams’s gross income over the two tax years of assessment derived from engagements which were not with the BBC and it is therefore apparent that Ms Adams must have spent a meaningful part of her overall working time on those other engagements.

114. Thus, the overall impression which we have derived from the evidence before us is that Ms Adams generally carries on her profession as an independent provider of services and not as an employee.

The remainder considers if the two years in question constituted employments on their own; relevant but rejected.

  1. Notwithstanding the above, we believe that there are significant differences in the facts of the two cases which are material in this context. First, in Ackroyd, the contract between the BBC and Ms Ackroyd’s service company was 7 years’ long and it followed a contract which was 5 years’ long. In contrast, each contract in this case was for approximately 1 year. Secondly, the ratio of Ms Ackroyd’s non-BBC income to Ms Ackroyd’s BBC income was materially different from the comparable ratio in relation to Ms Adams. Ms Ackroyd’s non-BBC income was effectively de minimis.
  1. For the reasons set out in paragraphs 102 to 132 above, we have concluded that the appeal should be allowed.

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