The Court of Appeal has held that a Stringfellows lap dancer was not an employee, and so could not claim unfair dismissal. The Court said it would be unusual for an employment relationship to exist where, as here, the individual does not receive payment from the "employer" and takes the economic risk.
Only employees are able to bring unfair dismissal claims. An employee is a person who works under "a contract of service or apprenticeship" (s230 Employment Rights Act 1996), and there are a large number of cases considering what distinguishes a "contract of service" from a contract for services (such as an independent contractor). The key tests are mutuality of obligation, personal service and control.
Stringfellow Restaurants Ltd v Quashie
Nadine Quashie worked as a lap dancer at Stringfellows. She worked according to a rota, although she was obliged to work a set number of the club's quieter days and was obliged to attend a weekly meeting. The dancers could take holiday whenever they wished, provided they notified the club. They were paid by the club's customers by way of vouchers and negotiated their own fees. When they exchanged the vouchers for cash with Stringfellows, the club would deduct fees as well as any fines the dancer had incurred for lateness or other infractions. This meant that on some nights Quashie did not make a profit. Although the dancers were allowed to work elsewhere, they were under the impression that management would disapprove if they did. After an allegation that she had been involved with drugs on the club's premises, Nadine Quashie was told she would no longer be allowed to dance at Stringfellows.
Quashie brought an unfair dismissal claim in the Employment Tribunal. The Tribunal found that she was not an employee, but this decision was overturned by the Employment Appeal Tribunal ("EAT"). Stringfellows appealed.
The Court of Appeal reinstated the Employment Tribunal's decision that Quashie was not an employee. The Tribunal had been entitled to reach its conclusion on the facts. The Court emphasized the Tribunal's findings that Stringfellows was not obliged to pay the dancers anything, and described the economic risk taken on by Quashie as a "powerful pointer" away from her being an employee. Quashie had to adhere to certain rules of conduct and dress, but was paying the club for the opportunity to provide services to the club's customers, rather than the club paying her for providing those services.
This decision turns heavily on its facts, which are unusual. Although not new law, the emphasis on economic risk and payment mechanisms is a useful reminder of some of the factors which will point against an employment relationship.