Quashie v Stringfellows Restaurants Ltd – employment status and illegality in a contract of employment

This case in the Employment Appeal Tribunal concerns how the employment status of workers (in this case a lapdancer) are defined – and whether they are therefore entitled to exercise rights that only employees have (such as the right not to be unfairly dismissed under s.94 Employment Rights Act 1996). Further, Quashie v Stringfellows Restaurants Ltd covers the circumstances when a contract of employment can be stated to be illegal.

The facts in Quashie v Stringfellows Restaurants Ltd

Ms Quashie (“the Claimant”) was employed as a lapdancer by the well-known Peter Stringfellow. She commenced employment with Stringfellows Restaurants Ltd (“the Respondent”) in June 2007. She provided lapdancing services for the Respondent until 12 December 2008 when she was dismissed by the Respondent for misconduct for allegedly taking or dealing drugs. The Claimant submitted an Employment Tribunal claim within the relevant time periods for unfair dismissal (among other claims) and a Pre Hearing Review was held in November 2010. At the Pre Hearing Review the Employment Judge deliberated on two issues: that of whether the Claimant was an employee and secondly whether the Claimant’s contract with the Respondent was illegal. The Employment Judge held that the Claimant was not an employee and dismissed the claim for unfair dismissal (“the employment status decision”). She further held that there was insufficient evidence to determine on the balance of probabilities whether the Claimant’s contract with the Respondent was illegal (“the illegality decision”).

The Claimant appealed the employment status decision and the Respondent appealed the illegality decision.

The law relating to the employment status of workers

There are two types of contract of employment – a contract of service and a contract for service. Where there is a contract of service the contracting party is generally held to be an employee. If there is no written contract of employment or if the nature of the work provided is ambiguous then a well-established test in employment law is used to determine whether the contract is a contract of service or a contract for service.

The three main elements that must exist if a contract of employment is to be deemed to exist  (among others) are:

1. Control – the employer must be able to substantively control and have ultimate authority over the employee
2. Mutual obligation – there must be exchange of work for remuneration and an exchange of mutual promises for future performance (i.e. the employee to do the work and the employer to provide work)
3. Personal service – an obligation for the person to provide their work personally (and not be able to send a substitute in their place)

Should the person providing their services be able to demonstrate on the balance of probabilities that all three of the above conditions are fulfilled then they will be deemed to have a contract of service with their employer.

The Employment Appeal Tribunal’s decision in Quashie v Stringfellows Restaurants Ltd

The Employment Judge at the PHR had found that two of the conditions necessary for a contract of service (control and the obligation to provide services personally) were present in the Claimant’s contract of employment. The EAT therefore had the responsibility of deciding whether the Employment Judge’s finding on mutuality of obligation was correct.

The Employment Appeal Tribunal determined that there was sufficient facts in the circumstances to suggest that there was mutuality of obligation between the Claimant and the Respondent. On the facts the Respondent was obliged to pay the Claimant in sterling, the Respondent was obliged to provide work on the nights that the Claimant was booked in for, the Claimant was obliged to work on the evenings that she had been booked in for, she was obliged to attend Thursday evening meetings – and would be sanctioned if she did not attend, and the Respondent controlled the rota. The EAT believed that the simple fact that the Claimant was obliged to provide work and the Respondent was obliged to pay for that work demonstrated an obligation.

On the second point of appeal (illegality) the Respondent alleged that the Claimant had acted unlawfully on issues relating to tax and that this therefore rendered any contract of employment illegal and void. The EAT allowed the Respondent’s cross-appeal and submitted the case to the Employment Tribunal for a merits hearing on unfair dismissal and whether the contract was illegal.

Our specialist employment lawyers’ thoughts on Quashie v Stringfellows Restaurants Ltd

It has previously been generally accepted that lap dancers are self-employed for the purposes of employment law. The Claimant herself worked on a self-employed basis at her previous employer and recognised that she was self-employed at the commencement of her contract of employment. These were all findings of fact made by the Employment Judge at the PHR. The interesting fact is that in the circumstances of this case the three elements necessary for a contract of employment were made out and the Claimant succeeded in demonstrating that she had a contract of employment, regardless of the precedent. However, the findings in Quashie v Stringfellows Restaurants Ltd should not be stretched too far – the facts of this case (and therefore the outcome) are particular to the circumstances of the individual Claimant.