Mutual lapdancing obligations

2nd January 2013

Guest article by David Kirk MA FCA CTA, author of Employment Status 2012-13

When does an employment status case get into the tabloid press?  When it involves a lap-dancer at Stringfellows – that’s when. Now that the case of Stringfellow Restaurants Ltd v Quashie has found its way to the Court of Appeal, that has given them three bites at the cherry.

The case is actually interesting from a legal point of view too. The judges are not all agreed: the Employment Tribunal held that Miss Quashie was not an employee; the Employment Appeal Tribunal held that she was; and the Court of Appeal have now gone back to the original decision. It is not necessary to rehearse all of the factors here: the important ones are that she was paid by the clients rather than Stringfellows, albeit in vouchers called ‘heavenly money’ (yes, seriously) which she then had to exchange for earthly notes and coins at Stringfellows; and that she had to pay Stringfellows for the privilege of dancing, so had no guarantee of earning anything.

In the Court of Appeal Elias LJ focussed on the economic reality of the situation, saying: ‘It would, I think, be an unusual case where a contract of service is found to exist when the worker takes the economic risk and is paid exclusively by third parties.’

This was reinforced by the intentions of the parties, where he held that these were mutually agreed to be ones of self-employment, not by their saying so to each other, but in her case by her declaring the income as self-employed on her tax return. There have been other cases of this but it is useful to see it reiterated here by a judge who speaks with such authority on the subject.

Finally, the case is noteworthy for another reason. Lord Justice Elias is one of the Court of Appeal’s leading employment law specialists, who (when a judge lower down in the system) introduced, but failed to explain, a controversial idea that someone who was working must have been doing so pursuant to a contract (see Stephenson v Delphi Diesel Systems Ltd: ‘for that duration the individual clearly undertakes to work and the employer undertakes to pay for the work done’, an idea repeated in later judgments of his). This matters in cases where the worker can walk off the site at any time that he chooses, in which case other authorities would suggest that he had no obligation to work (as also a volunteer would generally not).

The learned judge in Quashie is back-tracking on this a bit. His thesis in Stephenson is that mutuality of obligation establishes whether there is a contract at all, and control whether that contract is one of employment. In Quashie he says: ‘Even where the work-wage relationship is established and there is substantial control, there may be other features of the relationship which will entitle a tribunal to conclude that there is no contract of employment in place even during an individual engagement.’ This explicitly states that there may be other features to consider besides control to determine the nature of the contract, but also implies that the ‘work-wage relationship’, as he calls it, needs to be established – that is to say, it cannot be just assumed. It will be interesting to see how he develops this in future judgments, as the subject is certain to come up again.

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