Stringfellows lap dancer found to be self-employed
The employment case involving Stringfellow Restaurants Ltd and Nadine Quashie has received much publicity over the last two years because of its employment status implications which include IR35.
Background
Nadine Quashie worked intermittently for a period of some 18 months as a lap dancer at the two Stringfellows' clubs in London, one being Stringfellows and the other, Angels. On 9 December 2008 she was told that she would no longer be permitted to work for the company as she was believed to have become involved with drugs on the premises. Her response was to bring a claim of unfair dismissal against Stringfellows.
Employment Tribunal (ET) decision
In 2010 the ET ruled that Ms Quashie had been self-employed mainly because there was no mutuality of obligation between the two parties, which is an essential element of a contract of employment.
There existed a club agreement which Quashie did not in fact receive. An appendix to the agreement set out "full contract terms" and contained rights and obligations for both parties. The ET found that in practice matters were conducted consistently with these terms. Appended to the club agreement were the house rules which, again, Quashie did not receive. However, she did receive a booklet entitled "Welcome to Stringfellows: the Cabaret of Angels". The ET noted that this contained much the same material as the house rules. In essence, the ET found that she was effectively bound by the terms of the contract, since the contract was performed in accordance with those terms, even though she had not received the formal document.
The club agreement provided that the dancer would be an independent contractor paid by the clients:
"Fees received by dancer: the dancer will be an independent contractor and as such all monies which she receives through Heavenly Money will belong to and be retained by her less the fees payable to the club. The dancer will be responsible for accounting for any VAT on money she receives and is to be responsible for her own tax and national insurance – see clause 9 of the contract."
Stringfellows were not obliged to pay Quashie anything and indeed did not pay her anything; rather she paid the club to dance at their venues. Often she would go to work and earn nothing because she had not earned sufficient to cover the cost of fees, house fines and commission.
There was no contractual obligation on Stringfellows to provide work and Quashie was not required to work a set number of nights per week but was required, if rostered, to work one Saturday and one Monday every two weeks in a month and one night a week at Angels.
The ET also found that there was no mutuality of obligation in the periods Quashie was not dancing at the club. Although she did need to notify Stringfellows when she went on holiday so that they could arrange their rotas, she was never required to obtain permission to take holiday and it was clear that there were periods when she was not dancing at the club. During such periods she was not required to attend work and Stringfellows were not obliged to pay her anything. Furthermore, Quashie was at liberty to work elsewhere during those periods.
Although she could be fined for not turning up, Quashie was not under any obligation to dance at the club.
She was not retained, not paid holiday or sickness pay or any other type of payment and could stay away for as long as she liked.
Quashie had a degree of financial risk in that she provided her own equipment (presumably stagewear) and sometimes incurred a loss. This, along with an absence of mutuality of obligations, pointed towards self-employment.
Employment Appeal Tribunal (EAT) decision
Upon appeal, the EAT overturned the ET's decision in April 2012 finding that the ET had erred in its conclusion that Ms Quashie was not an employee on each night she performed work and in the intervening stages when she was on the rota to perform work, on holiday and at all stages in between.
The wage/work bargain could have been satisfied if Quashie had agreed to dance in exchange for accommodation, free meals, fees paid directly to her university, or even for payment of 1p a night! She could make the bargain to dance to Stringfellows tune if the club agreed to let her be seen at the club so as to enhance her reputation, or to keep her hand in, or even for networking.
There was an expectation on both sides of continued engagements and that certainly existed between the dates on the rota.
There was an obligation to turn up each Thursday for a meeting without pay otherwise face penalty. Added to this was the obligation to dance two Saturdays and two Mondays each month.
Quashie could not take an extended holiday because any period of non-attendance that lasted over four weeks would have meant that she would have had to audition again.
The EAT concluded that Quashie was an employee working under an umbrella contract which would have given her a year’s continuous employment with the club and enable her to pursue a claim for unfair dismissal.
Court of Appeal (CA) decision
In December 2012 the CA upheld Stringfellows appeal against the EAT ruling.
The CA judges considered the ET's most important finding was that Stringfellows were 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 Stringfellows only monies received from clients after deductions.
Strong disagreement was recorded to the EAT concluding “that the only proper inference from the evidence was that the employer was contractually bound to pay wages.”
Reference was made to the 2007 High Court decision in Spearmint Rhino Ventures (UK) Ltd v Revenue and Customs Commissioners, where another lap dancing club operating in a very similar way to Stringfellows was held not liable to VAT because dancers were supplying their own services to the clients who paid them directly. The payments were made to the dancers in their own right and not as agents of the club.
An analogy was also made with the position of a golf caddie in the 1998 case of Cheng Yuen v Royal Hong Kong Golf Club. Arrangements between the club and a golf caddy went no further than to amount to a licence by the club to permit the caddy to offer himself to individual golfers on certain terms dictated by the administrative convenience of the club and its members. The caddy was required to wear a uniform, to behave well on the club premises and to charge a fee per round at a scale uniform for all caddies which was fixed and collected by the club and paid to the caddies. The club was not, however, obliged to give him work or to pay him other than the amount owed by the individual golfer for whom he caddied. Conversely he was not obliged to work for the club and he had no obligation to the club to attend in order to act as a caddie for golfers playing on the club premises. He did not receive any of the sickness, pension or other benefits enjoyed by employees of the club nor indeed any pay over and above that resulting from particular rounds of golf for which the golfer was debited by the club even if as a matter of machinery the club handed the fee to the caddy.
The CA found the analogy to be an apt one in that Stringfellows did not employ dancers to dance, rather Ms Quashie paid them to be provided with an opportunity to earn money by dancing for the clients.
That Quashie took an economic risk was considered to be “ a very powerful pointer against the contract being a contract of employment.”
Further and, adjudged by the CA to be strong reinforcement of the ET's original conclusion was the fact both parties intended to create a self-employed relationship.
According to some reports Ms Quashie is contemplating an appeal.
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