United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR D N JONES (of Counsel) Messrs Rodney Sheirs Solicitor 32-34 Rose Hill Chesterfield Derby S40 1LR
For the Respondent	MR D JOHNSON (Representative) UCATT 64-66 Crossgate Road Leeds LS15 7NN


 


JUDGE PETER CLARK: This is an appeal by the Company, Cobex Ltd, against a decision of the Leeds Industrial Tribunal sitting on 8 November 1996, that the Respondent, Mr Doyle, was its employee between June 1992 and August 1996 ("the relevant period") within the meaning of section 230 of the Employment Rights Act 1996. Having decided that preliminary issue the Tribunal went on to find that the Appellant had dismissed the Respondent unfairly and in breach of contract. Extended reasons for that liability decision ("the reasons") are dated 6 December 1996. Subsequently, at a remedies hearing held on 10 January 1997, the Tribunal awarded compensation for both unfair dismissal and wrongful dismissal, and dismissed a further claim of unlawful deduction from wages. Summary reasons for that remedies decision are dated 10 February 1997.

The Respondent first worked for the Appellant in 1985 as a labourer under a contract of employment. Thereafter he worked as a heavy machinery driver, and although not evidenced by a contract in writing it was agreed between the parties that he should adopt self-employed status for Inland Revenue purposes. He was issued with a 714 Inland Revenue certificate and paid tax on a self-employed basis. The Tribunal accepted his evidence that without adopting such status he could not have obtained work with the Appellant.

The Tribunal correctly directed itself that the label which the parties attached to their relationship was not necessarily conclusive. See Ferguson v Dawson [1976] 1WLR 1213 and most recently McMeechan v Secretary of State for Employment [1997] IRLR 353.

The Tribunal made findings of fact as to the relevant factors pointing towards and against a contract of service. Those factors may be summarised as follows:

Findings of fact indicative of a contract of employment:

(i) The Respondent did not work for any other party during the relevant period

(ii) The Respondent required permission from the Appellant to take time off during the working day

(iii) The Respondent had to give one month's notice of intention to take holidays

(iv) The Respondent could not substitute another in his place for providing the work

(v) The Appellant provided the earth moving equipment used by the Respondent and a limited amount of other equipment such as gloves and a grease gun

(vi) The Appellant maintained the equipment

(vii) The Respondent was supervised by the Appellant and given instructions on site.

The following findings of fact were indicative of a contract for services:

(i) Both parties regarded the Respondent as self-employed

(ii) The Inland Revenue regarded the Respondent as self-employed

(iii) The Respondent was not paid for holidays or sickness absence and was paid at an hourly rate

(iv) The Respondent provided his own workwear and personal protective or safety equipment.

Mr Jones on behalf of the Appellant does not submit that the factors pointing towards a contract for services so far outweighed those pointing to a contract of service, that, applying the various legal tests of personal service, control, organisation, economic reality and the multiple test, the Tribunal reached a perverse conclusion in finding that overall the Respondent was employed under a contract of service.

The sole point taken by Mr Jones in this appeal concerns the principle of mutuality of obligations.

Mutuality of obligations

Mr Jones has taken us carefully through the judgments in the relevant cases dealing with this topic.

Three of those cases concern what may be described as "casual workers" or "outworkers". The first in time is Airfix Footwear Ltd v Cope [1978] ICR 1210, a decision of the Employment Appeal Tribunal (Slynn J presiding). There, the Applicant was engaged by the Company to assemble shoe parts at her home. For a period of some seven years she regularly carried out such work. The materials used in the assembly were provided by the Company to her home in quantities varying according to demand. She was paid on a piece-work basis. The Industrial Tribunal found that she was employed under a continuing contract of service throughout the relevant period.

The EAT, whilst recognising that where there is no obligation on a Company to provide work or on the worker to perform it if offered, it may well be that there would be no contract of employment, upheld the Tribunal decision on the facts. There was an overriding contract of employment.

In O'Kelly v Trusthouse Forte Plc [1983] ICR 728 the Court of Appeal upheld an Industrial Tribunal decision, by a majority, that the essential ingredient of mutuality of obligation to provide and perform work was missing from the relationship between a hotel and its regular catering staff, and that such relationship was not governed by a contract of employment.

In Nethermere v Gardiner [1984] ICR 612, the Court of Appeal upheld an Industrial Tribunal decision that home-workers engaged in manufacturing boys trousers for the Company were employed under contracts of service on the basis of "overall" or "umbrella" contracts obliging the Company to provide and pay for work and the Applicants to continue to accept and perform the work provided. The decision in Airfix was expressly approved by the Court in Nethermere.

Finally, in Hellyer Bros v McLeod [1987] ICR 526 the Court of Appeal was concerned with two appeals in which the Applicants were trawlermen who had sailed exclusively for one company for many years, but with short periods ashore in between voyages. The question, so the Court of Appeal held, following O'Kelly, was whether between crew agreements, when the trawlermen were ashore, there existed an obligation on them to serve the Company. There was not, and accordingly no "umbrella" contract was established. Of significance to the instant case we note that an application on the part of the Applicants to amend their pleading before the Employment Appeal Tribunal to rely upon the continuity provisions, then contained in paragraph 9 of Schedule 13 to the Employment Protection (Consolidation) Act 1978 (now Section 212(3) ERA 1996), in cases of absence from work through temporary cessation of work or by arrangement or custom was refused both by the EAT and Court of Appeal on the ground that the point had not been taken before the Industrial Tribunal. Accordingly, no finding was made in these cases as to whether the Applicants were employed under a series of contracts of employment joined for continuity purposes by one or other of those provisions.

The Appeal

Mr Jones relies upon the following finding of fact contained in paragraph 9 of the reasons:

"If the respondent's contract on a site came to an end, and if there was no work to offer the applicant, he expected to be laid off without pay until a fresh offer of work might be made. If such an offer was made, the applicant was not bound to accept it and there was no general or unlimited right on the part of the respondent to move the applicant from site to site."

That, he submits, is a clear finding of fact that at the end of each contract there was no obligation on the Appellant to offer work at another site, nor upon the Respondent to accept such an offer if made. Such lack of mutual obligations fell below the "irreducible minimum" for a contract of employment identified by Stephenson LJ in Nethermere at page 623F. Accordingly, the Tribunal fell into error in concluding that there was here a contract of service during the relevant period.

Conclusion

We reject that submission. In our judgment the facts of this case fall to be distinguished from those of the "casual" or "outworker" cases. When the Respondent was engaged on work at a site he was required to work regular hours on site each day in return for an hourly rate of pay. He needed permission to take time off during the working day, and had to give notice of his intention to take holidays. He was required to attend for work in person; he could not send a substitute. All those were features quite inconsistent with a lack of mutuality.

The lack of mutuality of obligations only arose at the end of each contract. However, unlike the trawlermen in Hellyer, there was in fact no break between contracts. On the Tribunal's finding he moved seamlessly from one site to another during the revelant period. Thus the problem of breaks in service which arose in the Hellyer case, and as to which no continuity argument was permitted on appeal, did not occur in the present case. As this Tribunal found in paragraph 14 of the reasons:

"The relationship was characterised by longevity and continuity. It was one of dependence."

In these circumstances we think that the true analysis of the Tribunal's reasoning is that there was here a series of three contracts of service, each following directly and uninterruptedly upon the other, in circumstances where there was no break in continuity. Accordingly, the Tribunal was entitled to conclude that the Respondent was an employee of the Appellant throughout the relevant period, and thus had sufficient continuous service to found his complaint of unfair dismissal.

For these reasons we shall dismiss this appeal.

Note from Peter Clark 16/9/97

to

Sam Springer

Rosemary Vickers.

You may recall that in discussion following the oral argument in this case I thought that we had to allow this appeal and remit it for rehearing on the "mutuality of obligation" question.

Having further considered the authorities it seems to me that they can properly be distinguished, and the Tribunal decision may be upheld on the basis of a succession of uninterrupted contracts of employment. I also think that this will achieve the correct result!

I hope that you will both agree with my approach, but do please let me have your comments.