Barclays Bank plc v Various Claimants: further blurring boundaries in employment status? – by Anna Williams
28 July 2020
This article was first published here on the UK Labour Law Blog on 6th July 2020 and is reproduced with the author and editors’ kind permission.
In a judgment handed down on 1 April 2020, the Supreme Court reversed the decisions of Nicola Davies J (as she then was) and a unanimous Court of Appeal, allowing the appeal on the ground that no vicarious liability can lie for the acts of an independent contractor: Barclays Bank plc v Various Claimants (‘Barclays’). This was one of a pair of decisions, each concerned with a limb of the vicarious liability test: the requisite relationship (Barclays) and the necessary connection between that relationship and the wrongdoing (WM Morrisons Supermarkets plc v Various Claimants (‘Morrisons’)). While much could be said, to use the language of recent case-law, about whether this latest development means that vicarious liability is still ‘on the move’ (Various Claimants v Child Catholic Welfare Society (‘Christian Brothers’)), has ‘come to a stop’ (Cox v Ministry of Justice (‘Cox’)), or has even been thrown into reverse, this post will instead focus on the judgment’s implications for the test(s) for employment or worker status across various contexts. Although Barclays may bring a certain kind of clarity, or at least predictability, to future vicarious liability cases, it nonetheless blurs boundaries in several areas of law. Three of these will be addressed below.
The decision in Barclays
The case concerned claims brought by 126 claimants in respect of sexual assaults alleged to have been committed by Dr Gordon Bates during medical examinations carried out on behalf of Barclays Bank (‘the bank’) between 1968 and 1984. Dr Bates died in 2009. In an action brought by the claimants against the bank, Nicola Davies J ordered a trial on the preliminary issue of vicarious liability.
Undergoing a medical examination was a requirement of the claimants’ employment at the bank and they were all job applicants or employees instructed to attend Dr Bates’ home (which had a room converted into a consulting room) at a particular date and time for an examination. For each examination, Dr Bates completed a pro forma report with the title ‘Barclays Confidential Medical Report’ and bearing the bank’s logo. In its correspondence with the claimants at the time, the bank referred to him as the ‘Bank’s Doctor’.
Dr Bates was paid a fixed fee per examination. At the relevant time, he also performed examinations for other companies, was employed by two health authorities, and undertook some medical writing.
Nicola Davies J determined (para. 27) that the appropriate test had two stages:
i) Is the relevant relationship one of employment or “akin to employment”?
ii) If so, was the tort sufficiently closely connected with that employment or quasi employment?
In answering the first question, Nicola Davies J considered that the ‘five policy criteria’ identified by Lord Phillips in Christian Brothers (para. 35) as ‘usually mak[ing] it fair, just and reasonable to impose vicarious liability’ were relevant:
i) The employer is more likely to have the means to compensate the victim than the employee and can be expected to have insured against that liability;
ii) The tort will have been committed as a result of activity being taken by the employee on behalf of the employer;
iii) The employee’s activity is likely to be part of the business activity of the employer;
iv) The employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee;
v) The employee will, to a greater or lesser degree, have been under the control of the employer.
Reading her judgment without the benefit of counsel’s submissions, it seems that Nicola Davies J accepted that the rule that vicarious liability cannot lie for the acts of an independent contractor (the ‘independent contractor rule’) had not been overruled but that ‘scrutiny of the relationship between the defendant and tortfeasor’ was required (paras. 43–44). She therefore applied the five criteria to determine that the first stage was met (para. 45). For similar reasons, she found that the second stage was also fulfilled (para. 46).
The bank appealed. Irwin LJ, giving the unanimous judgment of the Court of Appeal, went one step further. Referring to the recent case-law on vicarious liability, he stated that ‘the law now requires answers to the specified questions laid down in Cox and Mohamud, and affirmed in Armes, rather than an answer to the question: was the alleged tortfeasor an independent contractor?’ (para. 44). While he accepted that many of the cases in which those questions fell to be answered in the negative would concern independent contractors, this definition was ‘no longer to be the test’ (para. 44). He upheld Nicola Davies J’s reasoning on the five criteria (paras. 48–58), stressing the particular control that the bank had in specifying the kind of examination to be conducted (para. 57).
In the Supreme Court, the unanimous judgment was delivered by Lady Hale. Examining the Court’s recent judgments, she reasoned that they contained ‘nothing […] to suggest that the classic distinction between employment and relationships akin or analogous to employment […] and the relationship with an independent contractor […] has been eroded’ (para. 24). Proceeding on this basis, she found that Dr Bates was not an employee ‘nor, viewed objectively, was he anything close’. In coming to this conclusion, she noted that he was not paid a retainer; was free to refuse work; ‘no doubt’ carried his own insurance; and ‘was in business on his own account as a medical practitioner with a portfolio of patients and clients’. The bank was merely ‘[o]ne of those clients’ (para. 28).
Although Lady Hale’s judgment insists that the key question is ‘whether the tortfeasor is carrying on business on his own account or whether he is in a relationship akin to employment’, she recognised that the five policy criteria may still be relevant in ‘doubtful’ cases, naming ‘workers who may be technically self-employed or agency workers’ as examples (para. 27).
Crucially, Lady Hale made the following observations on employment status (para. 29). First, it is no longer the case that a person will be ‘an employee for all purposes – employment law, tax, social security and vicarious liability’. Second, ‘[a]sking [whether the tortfeasor is a limb (b) worker] may be helpful in identifying true independent contractors’. Third, although aligning the category of ‘akin to employment’ and limb (b) workers would be ‘tempting’, ‘it would be going too far down the road to tidiness for this court to align the common law concept of vicarious liability, developed for one set of reasons, with the statutory concept of “worker”, developed for a quite different set of reasons’.
Boundary I: distinguishing independent contractors
The first boundary that these dicta blur is that between independent contractors and those employed or in a relationship akin to employment – ironically, the very distinction that the Supreme Court was keen to assert.
Take, as an example, the following set of facts. A company, A, runs a chauffeur business. An individual, B, is engaged by A as its only regular driver. A has a contract to supply a driver regularly to C. In fact, the driver who is nearly always provided is B (although, on occasion, another driver is supplied when B cannot work). While working for C, B must wear a uniform fitted for him and provided by C, who usually pays B a fixed ‘gratuity’ per drive. One day, B finishes his shift with C and goes back into C’s house to return the uniform. Unfortunately, he leaves the handbrake off in C’s car. The car rolls down the hill, colliding with a car driven by D. D is injured and his car is damaged. D brings an action against C.
In modern employment law, this appears to describe an agency-type relationship. Certainly, it seems a stretch to view B as conducting business on his own account. However, this scenario is an (updated) version of the facts of Quarman v Burnett (‘Quarman’), the Victorian case cited by Lady Hale in setting out the defendant’s position on the independent contractor rule, which was ultimately adopted by the Supreme Court (para. 7).
This is not to suggest that the Supreme Court was wrong to say that the courts of England and Wales have historically recognised the independent contractor rule. Parke B’s dicta in Quarman, to the effect that there is no wider principle that individuals are responsible ‘for any injury which arises by the act of another person, in carrying into execution that which that other person has contracted to do for his benefit’, has clearly been adopted: see, for example, Salsbury v Woodland (also cited by Lady Hale).
Yet it is interesting that Lady Hale chose to cite a case primarily concerned with tripartite relationships and agency to demonstrate the historic pedigree of the ‘trite’ rule concerning independent contractors. Clearly, the law concerning vicarious liability has undergone significant development since Quarman. It now recognises that liability may transfer in the case of ‘borrowed employees’ (Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Limited) and even the possibility of dual liability for both the agency and end-user (Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd (‘Viasystems’) (cited in Barclays at para. 12)). And the Court recognised in Barclays itself that there may be borderline cases concerning ‘agency workers’ in which questions should be asked about whether the individual is ‘part and parcel of the employer’s business’ (para. 27).
Although the Supreme Court has purportedly reaffirmed an old rule, this recognition makes one wonder whether what is meant by the label ‘independent contractor’ in the context of vicarious liability has developed over time? Certainly, the Court’s apparent willingness to consider whether someone is ‘technically’ self-employed or in an agency relationship (para. 27) seems to be a step beyond what was envisaged in Quarman. (Of course, this is not to say that the outcome in Quarman would necessarily be different today.)
If it is true that there has been some movement in the definition of an ‘independent contractor’, it is unfortunate that its application to the facts of Barclays was given relatively short shrift (para. 28). This is particularly noticeable given that the first instance judgment purports to determine the issue of whether Dr Bates was an independent contractor (answering in the negative), albeit through the lens of the five policy criteria. It may well be the case that the Supreme Court’s conclusion was right on the facts. But the absence of clear guidance about which facts are most salient for determining the independent contractor question may prove problematic in hard cases. (The issue of the factors which the Court did pick up on will be discussed below.) This is compounded by the fact that the independent contractor status is often defined in the negative; that is, by the absence of an employment contract.
All this raises questions. If the concept of an ‘independent contractor’ does mean something different to modern courts than it did to Parke B, what does that entail for Lady Hale’s suggestion that vicarious liability was ‘developed for one set of reasons’? If that proposition is accepted, can it truly be said that these reasons are the same now as they were then? More broadly, is the concept of an independent contractor that the Supreme Court has in mind in the vicarious liability context the same as in other contexts?
Boundary II: the relationship between vicarious liability and the ‘limb (b) worker’ test
This relates to the second boundary blurred by the Supreme Court’s judgment: the relationship between vicarious liability and the ‘limb (b) worker test’. The Court’s statement that they are not aligned, but that the latter may be ‘helpful’ in considering the former, raises at least two questions. When will a person qualify as a limb (b) worker but not engage her employer’s liability? Can vicarious liability be engaged in respect of a person who is not an employee and who does not meet the limb (b) worker test? In this respect, it is worth noting that the Court has previously clarified that ‘limb (b)’ workers are a sub-category of the self-employed: Bates van Winkelhof v Clyde & Co LLP (‘Bates van Winkelhof’), paras. 25 and 31.
As to the first question, one scenario in which a person may be a ‘worker’, but nonetheless not engage the liability of her employer, may arise in tripartite situations. For example, agency workers are typically limb (b) workers of the agency even though they are not its employees. While employment law has shied away from the possibility of two employers (Patel v Specsavers Optical Group Ltd), this phenomenon has been accepted in vicarious liability (Viasystems). There may therefore be examination in future cases of whether the responsible party for the purpose of vicarious liability is the same as the one in respect of whom the tortfeasor is a ‘worker’.
Another example may be Uber drivers. According to the Court of Appeal’s judgment in Uber B.V. v Aslam (‘Aslam’), which is currently under appeal, Uber drivers qualify as limb (b) workers. This suggests that the first hurdle – excluding independent contractors – would be overcome in a vicarious liability case. Moreover, on the Court of Appeal’s reasoning in Aslam, particularly at paragraph 96, it is hard to see how the five criteria would not be met. Of course, this is not the end of the story. Much would depend on whether the alleged act was within the course of employment: see Morrisons.
Turning to the second question, it seems that the scenarios that the Supreme Court had in mind in Barclays are the special cases such as Christian Brothers and Cox. Thus, where the facts fall outside the employment sphere, the limb (b) worker test may simply not be relevant. While space precludes a fuller consideration of the common rationale, if any, behind these cases, this is a matter that may be worth close examination in future.
Other cases in which vicarious liability might be imposed are cases in which an individual fails the limb (b) worker test on a specific or ‘technical’ ground. One example could be the much maligned ‘mutuality of obligations’ concept imported into the test by the Windle decision. Given that the Supreme Court in Barclays expressly recognised the different ‘reasons’ behind vicarious liability, it may be open to future courts to take the view that certain aspects of the employment tests do not serve these reasons. However, the Court specifically referred to Dr Bates’ lack of retainer and his ability to refuse work, which are factors classically disputed in the context of mutuality of obligations, as indicia of his independent contractor status (para. 28).
Leaving aside the place, if any, that mutuality of obligations should have in employment law, it is unclear what purpose it serves in the vicarious liability context. The justification for vicarious liability which has gained most traction in the Supreme Court is that of enterprise liability and the creation of risk. As both Nicola Davies J and the Court of Appeal emphasised, the bank in the present case created a level of risk by both specifying the examinations to be conducted by Dr Bates and directing the claimants to undergo them. It is not apparent why, if enterprise risk is the justification for vicarious liability, the bank should be able to escape liability for risk it created by disclaiming any intention to create further risk through a continuing relationship with Dr Bates. Perhaps then the reference to retainers and refusal of work was intended to serve other ‘reasons’. If so, the fact that the Supreme Court’s judgment did not specify which reasons vicarious liability, as distinct from employment law, is intended to address may lead to difficulties in determining which aspects of the worker status test are ‘helpful’ in the vicarious liability context.
Another issue may be the right to substitute. In the Deliveroo case – by contrast to Aslam – the Central Arbitration Committee and the High Court held that Deliveroo cyclists are not limb (b) workers on the basis of their ostensibly broad right to send substitutes (CAC decision, para. 103). The decision is currently subject to an appeal to the Court of Appeal. But assuming that the substitution right was the only bar to limb (b) worker status, it is unclear (for similar reasons as with mutuality of obligations) whether courts would be able to overlook this factor for the purpose of determining whether vicarious liability may be engaged at all. Even if that first stage is satisfied, the right to substitute might mean that the five criteria (in particular, control) were not met. Of course, all this is premised on an apparent nonchalance as to the identity of those serving customers (CAC decision, para. 100), which rather makes one wonder about the possibility of direct liability: compare the CAC’s decision, para. 103.
Of course, the Supreme Court’s judgment is not explicit about the relationship between the limb (b) worker test and vicarious liability and so, especially due to the lack of guidance provided as to how the independent contractor rule is to be applied to particular facts, courts may take a different tack than that sketched out above. It will be intriguing to see how the Court of Appeal grapples with the subcontractor case in which permission to appeal is currently being sought: Levitt v Euro Building. Needless to say, while the independent contractor rule does bring a kind of certainty in limiting vicarious liability, issues at the borderline will remain blurry.
Boundary III: the different purposes of employment status in law
The final boundary blurred by Barclays is that between the different purposes of employment status across the law. While express recognition of these different purposes, or ‘reasons’, is to be welcomed, confusion remains. What are the reasons? How do they differ?
While the Supreme Court could not have been expected to exhaustively set out the purposes of employment law in a tort appeal, it has demonstrated an unfortunate tendency to shy away from providing general guidance in the field even in employment cases. Take Pimlico Plumbers v Smith. That judgment highlighted, but declined to address, both the issue of ‘umbrella contracts’ for worker status (para. 41) and the much-discussed equation of section 83(2)(a) of the Equality Act 2010 with section 230(3) of the Employment Rights Act 1996 in Bates van Winkelhof (para. 15). Although arguments may be had about the appropriate role of a second-tier appeal court in pronouncing on points not strictly necessary for the determination of the issue before it, the resulting situation does little to decipher which ‘reasons’ the Court views employment law to be addressing.
Another unexplained limitation comes from the Bates van Winkelhof decision itself. There, the Court was willing to ‘tidy’ up employment law by (arguably) constraining the interpretation of the Equality Act by imposing the Employment Rights Act definition upon it. Yet in Barclays the Court suggested that using the same definition in the context of vicarious liability would be ‘going too far down the road to tidiness’. On Lady Hale’s view, this comes back to the different ‘reasons’ that employment law and vicarious liability are said to serve. But clearly discrimination law targets a different harm from employment law writ large. There may be a limit to doctrinal ‘tidiness’, but it is hard to know precisely when, and why, it comes into play.
This is not to deny that there are also different ‘reasons’ governing the development of employment law and vicarious liability. It is fairly clear that the beneficiaries of these rules differ: workers/employees on the one hand and injured third parties on the other. Yet these ‘reasons’ operate at such a high level of generality that they shed little light on how either area of law should develop. It is to be hoped that more clarity will be forthcoming in the Aslam appeal, as Bogg and Ford recently urged, but as matters stand it is difficult to guess how the Court might choose to develop the ‘reasons’ behind the cases.
If, as Barclays states, these two areas of law serve different reasons, we can only assess the truth of that statement if we know what those reasons are. Moreover, the process of determining which aspects of the different notions of ‘employment’ are common to all or some areas of law can only begin to be worked out if those different reasons can be compared. Picking up on the discussion above, the question about whether the reasons behind the doctrines may have shifted can only be answered once those reasons have been identified. It seems that further elucidation of the ‘reasons’ the Supreme Court is envisaging is required.
The price for whatever certainty Barclays brings to vicarious liability has been a number of blurred boundaries in the law. However, the Supreme Court’s reliance on an old distinction could well have opened the door to considering anew the reasons behind the various doctrines utilising the concept of employment – and indeed whether that concept remains fit for all purposes. As Aslam is due to be heard this summer, we may soon see.
The author is grateful for helpful comments from the editors of the UK Labour Law blog, Douglas Leach and Sebastian Bates. All errors are her own.
This case has been discussed elsewhere on the blog by Robert Kellar QC here.