Tripod Partners is to appeal Appiah’s win, and rightly so

There are several questionable elements in the employment tribunal’s ruling in M Appiah v Tripod Partners Ltd and Home Office.

And it seems I’m not alone in thinking that the January 6th 2025 judgment is doubtful (at best) in several areas because disclosures obtained by ContractorUK reveal that the agency in the case, Tripod Partners, is appealing, writes Adrian Marlowe, CEO of Lawspeed and chair of Association of Recruitment Consultancies.

What do Tripod Partners say of their decision to appeal the Appiah win?

In fact, on January 20th 2025, Tripod Partners’ commercial director Gareth Welch told contractoruk.com:

“Please be advised that Tripod Partners are preparing an appeal to the tribunal findings, and are unable to comment further at this stage.”

Three takeaways from the evidence in Tripod versus Appiah

Well my comment at this stage, based on the information available in the tribunal’s ruling (which mentions Mr Welch), is that all the evidence seems to show:

1. The party that Tripod Partners contracted with was K&K Ltd (Michelle Appiah’s limited company or “PSC”);
2. There was no direct contract between Appiah and Tripod Partners (whether construed or otherwise) -- and therefore based on these two above points:
3. No wages were payable to, or had been paid to, Appiah.

Not dissimilar to a tripod, these are three prongs from the ruling which I would extend to ContractorUK readers as being ‘facts,’ and they mean there simply cannot have been any unlawful deduction from wages.

Appiah’s claim against Tripod Partners should have failed

In previously writing about Appiah and this non-IR35 case related to the IR35 off-payroll working rules, I’ve therefore argued that the employment tribunal should have dismissed Appiah’s claim.

However, what did not help that sensible conclusion being reached was Graham Smith, chief financial officer of Tripod Partners, accepting in court that K&K Ltd was “no more than a vehicle for payment for the claimant’s [Appiah’s] work”.

N.B. For clarity, K&K Ltd is never named in the judgment, but it was Appiah’s “PSC” when she was contracting via Tripod Partners for the Home Office. The company’s full name was KIA & KHY Ltd. It’s now dissolved.

A Personal Service Company (but not as UK law knows it)

Smith’s characterisation of Appiah’s personal service company would not appear to be correct -- in law.

A PSC is a separate legal entity, with which (in this case) there was a trading contract.

And that contract had been relied upon by both Tripod Partners and Appiah.

The deemed employer conclusion is extraordinary 

From one seemingly erroneous point comes another.

Despite a PSC constituting a separate legal entity, the Employment Tribunal (ET) reached the extraordinary conclusion that a ‘deemed employer’ for tax purposes means that it is the employer for all statutory payment purposes.

Here we have a key part of why Tripod Partners lost because this extraordinary conclusion largely contributed to employment judge Housego’s decision in favour of Appiah.

To our understanding as a legal firm specialising in recruitment law, such a conclusion cannot be correct because it ignores the statutory definition of ‘employer’ in the Employment Rights Act.  

Shunning the Employment Rights Act, and parliament too

The ET deducing here that ‘deemed employer’ for tax purposes equates to being the employer for all statutory payment purposes also cannot be what parliament intended. In particular, in Chapter 10 ITEPA -- IR35 -- it laid down that payments arising from a qualifying engagement are, “to be treated as earnings from an employment” -- defined (in the chapter) as “the deemed direct payment.”

To my reading, “treated as” is different from stating ‘they are earnings’ from an employment.

Unfortunately for any contractors who like their cases open-and-shut, the head-scratching aspects of this ruling don’t end there.

Appiah was assessed as having  worker status

The tribunal concluded that Appiah was “a worker.”

Under the Employment Rights Act 1996, Section 230, a “worker” is defined, in general terms, as someone who is contracted to provide personal services to another person.

Ostensibly, the tribunal failed to grasp that a contract was in place between Appiah and Tripod (despite the ET observing “the contract is between two limited companies”), in which case Tripod could not be the employer of Appiah.

In the hearing, judge Housego concluded that K&K Ltd was Appiah’s employer.  

Wages is another key area we’re not sure the ET got right

In the Employment Rights Act, Section 27 defines “wages” as sums paid in connection with employment, namely under a contract of employment or other kind of contract.

Well, as no such contract was found to exist between Appiah and Tripod, there could not be any payment of wages from which there could be any unlawful deduction(s).

Section 13 of the Employment Rights Act, which prohibits unlawful deductions from wages, therefore cannot apply and the judgment is therefore unsound.  

If the claim against the Home Office was struck out, then…

There is an additional confusion.

The Employment Tribunal decided that the Home Office was not obliged to pay Appiah. And so her claim against the Home Office (“unlawful deductions”) was dismissed.

Yet applying mere logic, as there was no contract between Appiah and Tripod, Tripod was not obliged to pay Appiah either, so the claim against Tripod should have been dismissed on this very same basis.  

The Uber case poses another nagging question

Need another reason to head-scratch?

I’ll oblige.

If principles from the ‘Uber case’ (Uber BV & Others Vs Aslam & Others)  applied to Tripod Partners, the same principles should have applied to the Home Office as well, in which case the ET would have been wrong to dismiss Appiah’s claim against the Home Office.

Misdirection, technicalities, and a dim view -- potentially

Due to potentially erring in more than one area, the ET appears to have misdirected itself in Appiah v Tripod Partners.

Technically, the incoming appeal by Tripod Partners should succeed for all the reasons outlined in this article.

But does this mean that Tripod should be appealing?

As the agency is appealing, the question may seem academic.

However, while on the face of it, Tripod Partners was wrong to deduct employer NICs from payments made to K&K Ltd, the Employment Appeal Tribunal (EAT) may take a dim view of this as the starting point.

Employment Appeal Tribunal risks for Tripod Partners

To right this widely-perceived wrong (we are far from alone in head-scratching at the ET’s rationales in different places of its ruling), the EAT may choose to conclude that the principles in Uber do apply. If it does, the EAT judge could ignore the actual contract with K&K Ltd and instead treat it as a device to deny Appiah’s employment rights.

There is therefore a risk that by trying to head off the £37,000 payout ordered by the ET, an appeal by Tripod -- if lost -- could result in a further order for payment.

And this order could be part of setting a precedent (which the existing ET decision is not), that we believe would likely have wide, disastrous consequences for the UK contracting industry.

Final thought: an amber light for common sense?

On the other prong, if Tripod wins at the EAT, there may be clarity around the issue. 

Further synonymous with its name, the Tripod case is right now a very adaptable piece of case law, with more than just the individual parties who will attend the EAT set to hope it doesn’t end up collapsing around their interests. But for the sake of sense, we all potentially have an interest in this forthcoming appeal, unless, of course, your name is Michelle Appiah.