Case No: EATRF/1999/1011/AI
 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL  DIVISION)
ON APPEAL FROM THE EMPLOYMENT 
APPEAL TRIBUNAL
Royal Courts of Justice
Strand, London, WC2A 2LL

Thursday 6th April, 2000

B e f o r e :

LORD JUSTICE STUART-SMITH
LORD JUSTICE WARD
and 
LORD JUSTICE MUMMERY
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	ABBEY LIFE ASSURANCE COMPANY LIMITED		Appellant	
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	MR C TANSELL	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
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Mr C Jeans QC & Mr J Cavanagh (instructed by Abbey Life Legal Department, Abbey Life House, 80 Holdenhurst Road, Bournemouth, BH8 8AL for the Appellant)
Mr B Langstaff QC (instructed by  The Disability Law Service, High Holborn House, 52-54 High Holborn, London WC1V 6RL for the Respondent)
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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Mummery:

The Issue

	This appeal is about the scope of protection conferred by the Disability Discrimination Act 1995 (the 1995 Act) on “contract workers .” They are workers who do work for the alleged discriminator, but they are not employed by him. They are employed by someone else and their services are contracted out.

	The case turns on the interpretation of section 12 of the 1995 Act which makes it unlawful to discriminate against  disabled contract workers. The point arises as a preliminary issue in an application to the Employment Tribunal by Mr Christopher Tansell complaining of discrimination by Abbey Life Assurance Co Ltd (Abbey Life) in the field of employment for a reason relating to his disability.

The Facts

	Mr Tansell is a computer consultant. On advice he purchased a shelf company called Intelligents Limited (Intelligents). He is the sole shareholder. There are three other directors. Mr Tansell offered his computing skills through that company. He is an employee of his company. The court was informed that the practice of self incorporation by computer consultants is common. Very large losses may be involved when things go wrong. The protection of limited liability is comforting.

	Mr Tansell placed his name with several specialist employment agencies, including MHC Consulting Services Limited (MHC). On 10 October 1997 MHC had entered into a Manpower Services Agreement with Abbey Life for the provision of freelance consultants and contractors in the sphere of information technology. Mr Tansell was referred to Abbey Life by MHC. He was interviewed  by Abbey Life on 27 October 1997. On 31 October a contract was made between MHC and Intelligents under which Intelligents, as contractor for the services of Mr Tansell, agreed  to provide computer consultancy  services “ for MHC to MHC’s Client,  Abbey Life.” The effect of that contract was to place Mr Tansell under the control of Abbey Life as part of a team investigating the impact of the so-called “millennium bug” on Abbey Life’s computer systems. He was required to comply with Abbey Life’s work rules. Fees were paid by Abbey Life to MHC, who in turn paid Intelligents. Mr Tansell was paid a salary by Intelligents, though funds were also retained in the company.

	Neither Mr Tansell nor Intelligents made any contract with Abbey Life for Mr Tansell’s services.

	In February 1998 Mr Tansell was diagnosed as suffering from diabetes. That condition is controlled through medication. He says that it is likely to last for the rest of his life. His services with Abbey Life were terminated on 20 March 1998.

	Mr Tansell presented an originating application to the Employment Tribunal on 4 June 1998 complaining of unfair dismissal and breach of contract. In the light of the particulars supplied by him the complaint has  been treated as one disability discrimination.

 	In its Notice of Appearance Abbey Life denied that it had either employed or dismissed Mr Tansell. It also denied that he was at any time a “contract worker”   or that it was the “principal” within the meaning of section 12 of the 1995 Act. It requested a preliminary hearing to consider the question of jurisdiction.

The Statutory Provisions.

	Section 4 (1) of the 1995 Act makes it unlawful “...for an employer to discriminate against a disabled person...” 

	It is no longer contended that Mr Tansell was  an employee of Abbey Life within the extended meaning given to “employment ” in section 68 of the 1995 Act, which includes both employment under  a contract of service and employment under a “a contract personally to do any work.”

 	Mr Tansell relies solely on the protection conferred by section 12.

 	Sub-section (1) makes  it

“... unlawful for  a principal, in relation to contract work, to discriminate against a disabled person...”

	Sub-section (3) applies the provisions of Part II of the 1995 Act (Employment) 

“....to any principal, in relation to contract work, as if he were, or would be, the employer of the contract worker and as if any contract worker supplied to do work for him were an employee of his.”  

The  definitions are contained in sub-section (6)-

“ principal” means a person (“A”) who makes work available for doing by individuals who are employed by another person who supplies them under a contract made with A;

	“contract work” means work so made available; and

“contract worker ” means any individual who is supplied to the principal under such a contract.”

 	Similar, though not identical , provisions for the protection of contract workers from discrimination in the field of employment are contained in section 9 of the Sex Discrimination Act 1975 and in section 7 of the Race Relations Act 1976.

The Employment Tribunal Decision.

	The Employment Tribunal sitting at Southampton on 22 September 1998 unanimously decided that Mr Tansell was neither an employee of, nor a “contract worker ” for, Abbey Life. The application against it was dismissed. They also decided that MHC should be joined as a respondent, as Mr Tansell was a “ contract worker ” for MHC, and that Mr Tansell could proceed with his application against MHC. The Extended Reasons of the Tribunal (sent to the parties on 6 October 1998) dealt fully with the rival arguments on the contract worker point. The following conclusions should be noted:-

	1.	Intelligents was not a sham company. It was a separate legal entity.

	2. 	No evidence was adduced to indicate that the chain of contracts  between Intelligents, MHC and Abbey Life was any more than a bona fide commercial arrangement or that there was any attempt to circumvent the expressed intentions of Parliament.

	3.	Section 12 “clearly sees a direct contractual relationship between the “employer” and the “principal.” No direct relationship existed in this case between Intelligents and Abbey Life. It could not be artificially created by ignoring the existence of Intelligents as a legal personality separate from Mr Tansell.

	4.	Mr Tansell was a “contract worker ” for MHC. It was the principal (A), as it was MHC which made work available, through its contract with Abbey Life, for doing by Mr Tansell, and he was employed by another person (Intelligents), who supplied him under a contract made with MHC.       

The Employment Appeal Tribunal.

	On 15 September 1999 the Employment Appeal Tribunal allowed an appeal by MHC  and allowed a cross appeal by Mr Tansell  so that his claim should be allowed to proceed against Abbey Life rather than MHC. Permission to appeal to this court was granted .
	In the judgment delivered on behalf of the Appeal Tribunal by  Morison J it was held that the Employment Tribunal had not correctly interpreted section 12. The essence of the Appeal Tribunal’s reasoning is in paragraph 21 of the judgment as reported in [1999] ICR 1211 at 1217-

“The applicant was employed by another person, namely, Intelligents. Intelligents supplied his services, ultimately, to Abbey Life through MHC under a contract between MHC and Abbey Life. Therefore, whenever there is an unbroken chain of contracts between the individual and the end user, the end user is, by definition, the “principal”. It seems to us that this construction of section 12 (6) gives effect to the general principle which applies in social legislation of this kind, namely, that the statute should be construed purposively, and with a bias towards conferring statutory protection rather than excluding it. Such a construction does not strain the language of section 12(6).  It seems to us a possible construction which we are prepared to adopt.”

Abbey Life’s Submissions.
	Mr Christopher Jeans QC contended that  the Employment Tribunal  correctly  dismissed the claim against Abbey Life, that the Appeal Tribunal ought  to have dismissed Mr Tansell’s appeal and that this appeal should be allowed.

	On the plain and unambiguous meaning of section 12, as applied to the facts of this case, Mr Tansell was not a contract worker. Abbey Life was not the principal, as there was no supply of Mr Tansell to Abbey Life pursuant to a contractual obligation existing directly between Intelligents, as the employer of Mr Tansell, and Abbey Life, who made the work available for doing by Mr Tansell. The supply contract was between Intelligents and MHC.

	That did not mean that MHC was the principal or that Mr Tansell was a contract worker for MHC. MHC did not make the work available for doing by Mr  Tansell. The fact was that he was not a contract worker for Abbey Life or for MHC. He was working as an employee of Intelligents. In order to bring a case within section 12, or the equivalent provisions of the other discrimination legislation, it is necessary for the person who employs the worker to have a direct contractual relationship with the principal who makes the work available. That was the clear effect of the reference in the definition of principal to “ under a contract made with A.” There is no such contract made with A (i.e. Abbey Life) in this case. Mr Tansell therefore falls completely outside the scope of section 12.  
	Mr Jeans contended that this result accorded with the intention of Parliament, as clearly expressed in the language of section 12, and was supported by authority.

	1. Legislative Intention.

	It is significant, Mr Jeans submitted, that Parliament did not create a general statutory tort of disability discrimination. It legislated for defined fields, such as employment, services, education and  public transport. Even within the defined fields it was not intended that everyone who suffered  from discrimination at work by reason of disability should be able to make a claim under the Act. Thus in the employment field, although the concept of “employment” was extended in section 68 beyond work done under a contract of service, there are cases in which a person suffering from discrimination at work falls outside the scope of the legislation. Mr Jeans  gave two examples.

	The first is Mirror Group Newspapers Ltd v Gunning [1986] ICR 145, a case on the Sex Discrimination Act 1975 in which  the Court of Appeal held that the provisions extending the meaning of “employment” did not apply to work to be done under a contract (an agency agreement for the distribution of newspapers) where the dominant purpose of the contract was the regular and efficient performance of the relevant work (in that case the distribution of newspapers) rather than the execution of  the work by the contracting party personally.

	The second case is Ealing Hammersmith and Hounslow FHSA v Shukla [1993] ICR 710 in which the EAT held that that the employment provisions in the 1975 Act were inapplicable where the work relationship (in that case between a GP and the family health services authority) was not contractual but was based on statutory provisions.

	I agree that those decisions serve as a salutary reminder of the sound reasons for setting proper limits to the purposive approach to statutory interpretation, especially at a time when those limits are about to be readjusted by the new interpretative principle introduced by section 3 of the Human Rights Act 1998.

	Mr Jeans accepted that  one of the broad purposes of the 1995 Act is to protect disabled persons from discrimination in the workplace by reason of  their disability. But he pointed out that Parliament has sought to achieve that purpose not by a general and universal prohibition of  all forms of such  discrimination at work in all circumstances, but by means of an intricate scheme devised by Government and debated in Parliament attempting to achieve a pragmatic balance of the various competing individual, social and economic interests. The result of that process is  expressed by the draftsman in carefully chosen words.

	Mr Jeans rightly reminded this court of  Lord Diplock’s speech in Duport Steels Ltd v Sirs [1980] 1 WLR 142 at 157C on the respective functions of Parliament and the judiciary. He said that

“Where the meaning of the statutory words is plain and unambiguous it is not for the judges to invent fancied ambiguities as an excuse for failing to give effect to its plain meaning because they themselves consider that the consequences of doing so would be inexpedient, or even unjust or immoral. In controversial matters such as are involved in industrial relations there is room for difference of opinion as to what is expedient, what is just and what is morally justifiable. Under our constitution it is Parliament’s opinion on these matters that is paramount.”

He added at 157G-
“It endangers continued public confidence in the political impartiality of the judiciary, which is essential to the continuance of the rule of law, if judges, under the guise of interpretation, provide their own preferred amendments to statutes which experience of their operation has shown to have had consequences that members of the court before whom the matter comes consider to be injurious to the public interest.”   

	More recently in Inco Europe Ltd -v- First Choice Distribution [2000] 1 WLR at 592 E - F Lord Nicholls said this of the boundary between construction and legislation-
“The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation. A statute is expressed in language approved and enacted by the legislature.”

	Mr Jeans re-iterated his core point that the provisions of section 12 are “plain and unambiguous ” in their requirement of a direct contractual link between, on the one hand, the principal, who makes the work available, and, on the other hand, the employer, who supplies the  individual to do the available work. The standard case is that of a person on the books of a temping agency, who is found work with A, who then refuses, for a discriminatory and unlawful reason, to make work available for doing by that  person. There is nothing in the language of section 12, Mr Jeans submitted, which extends protection against discrimination to an individual like Mr Tansell who has chosen, in his own interests, to set up  his own company, to work for his own company and to use his company to supply his services to others through an employment agency. 
	2.	Authority.
	Mr Jeans cited  Lloyd -v- IBM (EAT/642/94), an unreported decision of the Employment Appeal Tribunal, in support of his construction of section 12. In that case the applicant, Dr Lloyd, complained of sex discrimination. She supplied her services through her company, Userdata. That company made an agreement with an employment agency, Gatton. That agency supplied her services to IBM which later dispensed with them in circumstances leading to a discrimination complaint. HHJ Levy QC gave the judgment of the Appeal Tribunal. He stated (at page 9 of the transcript) that

“The supply of the contract worker to the principal must be pursuant to an obligation between the supplier and the principal. The fact that the supply of services of a contract worker, here Dr Lloyd, to the principal (here IBM), results from an obligation in the contract between the supplier (here Gatton), and another person (in the present case Userdata), is not sufficient. The fact of supply is not enough. There must be an obligation to do so: see Rice -v- Fon-a-Car [1980] ICR 133................The correct question here would be to ask: “ Was Userdata obliged to supply contract workers, (ie Dr Lloyd), to the principal, (that is IBM), pursuant to a contract which Userdata had made with IBM?”
   
	Reference was also made to the Judgment of the Employment Appeal Tribunal given by Slynn J in  another sex discrimination case, Rice v Fon-a-Car (supra) at 136:-
“It seems to us that the proper construction of section 9(1) [Sex Discrimination Act 1975] is that  the work referred to is work which is done by someone who is employed by another person who supplies the work “under a contract made with the principal” to supply the worker. It is not sufficient, in a case to which section 9 (1) applies, merely that work should be done by one person for the benefit of someone else unless there is an undertaking under the contract to supply the worker.” 

	On the facts of that case there was no contractual obligation on the other person to supply the principal with individuals to work. The case turned on the absence of an obligation to supply the individual rather than on the necessity for a  direct contract  between the person supplying the individual and the principal .
Conclusion.
	I agree with the Employment Appeal Tribunal that Abbey Life falls within the definition of  a “principal ” in section 12 of the 1995 Act. The Employment Tribunal erred in law in holding that MHC was a “principal.”  I would  dismiss this appeal .
	The language of section 12 clearly covers the standard case in which, for example, a person makes office work available for doing by individuals employed by a temping agency. The agency enters into a contract with that person to supply individuals to do that work. That person is a principal. The individuals who are supplied are contract workers doing contract work. By section 12 they are protected from discrimination by the principal. Thus, it is not disputed that section 12 would apply to this case if  (a) Mr Tansell was employed by MHC (instead of by Intelligents); or (b) if Intelligents had made a contract direct with Abbey Life (instead of with MHC) to supply Mr Tansell to do the work made available by Abbey Life.
 	In my judgment, the language of the section is also reasonably capable of applying to the less common case in which an extra contract is inserted , so that there is no direct contract between the person making the work available and the employer of the individual who is supplied to do that work. Applying the language of the definitions in section 12 to the facts of this case, Abbey Life is the principal, even in the absence of a direct contract with Mr Tansell’s employer, because (a) Abbey Life made the work available for doing by Mr Tansell ; (b) Mr Tansell was employed by another person, Intelligents; and (c) Intelligents supplied Mr Tansell to Abbey Life under a contract made with Abbey Life  (the MHC contract).
	It is true that the contract with Abbey Life was  made by MHC and not  by Intelligents. But that makes no difference. The statutory definition only requires  the supply of the individual to be  “under a contract made with A”. It does not expressly stipulate who is to be the party who contracts with A. It  stipulates that  the employer should supply the individual to do the work.  Intelligents did that. The supply of Mr Tansell to work for Abbey Life could only have been done by Intelligents, as it was his employer. The supply of the individual  also had to be under a contract  made with A. It was. The contract by MHC was made with Abbey Life. I accept that in many, if not most, cases the contract with A will in fact be made by the employer who supplies the individual. But the definition in section 12 does not require that to be the case.  
	This result does not involve any unconstitutional border crossing by the court. It is achieved by a conventional process of  judicial construction of legislation. The normal meaning of the language of the section is capable of covering this case, as well as the standard case. An interpretation which applies the section to the less common case, as well as to the standard case, is more consistent with the object of the section and of the 1995 Act than an interpretation which does not do so. In a number of authorities the  appellate courts have stressed  the importance of giving the wide ranging provisions of the  discrimination legislation a  generous interpretation. Waite LJ set out a valuable exposition of the governing principles in Jones -v- Tower Boot Co Ltd [1997] ICR 254 at 261H-263F. See also Harrods Ltd  -v- Remick [1998] ICR 156 at 163C-F. 
	The general purpose of the 1995 Act is to outlaw discrimination on the ground of disability. Employment is one of the fields in which it aims to achieve that goal. In order to achieve that result Parliament decided not to confine liability for discrimination in employment to the employer who discriminates against those employed  by him under a traditional  contract of service. Under section 12 liability is also imposed on those who, without entering into contracts of service with individual employees, make contracts for individuals employed by others to do work made available for them to do. It would not be consistent with the legislative object  to withhold protection from discrimination by a person to whom an employee, who was entitled to protection from his employer, had been supplied to do same work. Hence the provisions  for the protection of contract workers in all the discrimination Acts.
      	Viewed in that context Abbey Life’s argument boils down to this: the difference between protection from discrimination and no protection in this case turns on the number of contracts made for the supply of  Mr Tansell to Abbey Life. If he was supplied by Intelligents direct to Abbey Life then section 12 applies. But if he was supplied by Intelligents to Abbey Life via MHC section 12 does not apply. The  particular contractual arrangements do differ from the standard case as to parties and number. But for the employee the realities  of life in the workplace remain the same in each case. As Morison J put it, the “end user” is the same. In these circumstances  it is more probable that Parliament  intended to confer than to deny protection from discrimination in cases where the supply of the employee was made by his company to the principal through an employment agency rather than direct to the principal.
 	As for the authorities it is my view that Lloyd -v- IBM was wrongly decided and that Rice v Fon-a-Car is irrelevant.
   	Mr Langstaff QC, on behalf of Mr Tansell, advanced an alternative submission which was rejected by the Appeal Tribunal. The argument is based on section 12(3). The argument is ingenious. It is also wrong. It is contended that if, contrary to the principal submission, Abbey Life was not the principal, then MHC was the principal and fell to be treated by subsection (3) as though it was the employer of Mr Tansell and he was  the employee of MHC. On that basis MHC was “another person” who is treated as the  employer of Mr Tansell and who supplied him under a contract made between them and Abbey Life. That made Abbey Life, as well as MHC, a principal within section 12.
	The fallacy in this contention is that MHC was not the principal, as the work was not made available by MHC for doing by Mr Tansell. It was made available by Abbey Life. If MHC was not the principal then the application of subsection (3) will not assist Mr Langstaff.
	For these reasons I would dismiss the appeal, affirm the decision of the Employment Appeal Tribunal and allow the claim to proceed in the Employment Tribunal on the basis that Abbey Life was at the material time the principal of Mr Tansell within the meaning of section 12.  
	Lord Justice Ward - I agree
	Lord Justice Stuart-Smith - I also agree
	 
Order:  Appeal Dismissed with no order regarding costs.
(Order does not form part of the approved judgment)