United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR CLIVE SHELDON (of Counsel) Instructed By: Messrs Gotelee & Goldsmith Solicitors 31-41 Elm Street Ipswich IP1 2AY
For the Respondent	MR G.T. HAVELOCK IN PERSON


 


JUDGE WILKIE QC:

1. This is an appeal by Stuncroft Limited against the decision of the majority of the Employment Tribunal sitting at Bury St. Edmunds on 21 June 2000. That decision was a preliminary decision to the effect that the applicant, Mr Havelock, was an employee within the meaning of section 230 of the Employment Rights Act 1996 so as to permit him to proceed to a full hearing by the Tribunal of his claim against Stuncroft Limited for a redundancy payment.
2. The appeal is on two bases. The main basis is that the Tribunal erred as a matter of law in concluding that there was a contract of employment in a situation where the evidence was irrefutably that there was no mutuality of obligation as between Mr Havelock and Stuncroft Limited. Their secondary argument is that insofar as the Tribunal carried out an exercise in considering the various factors pointing to, and away from, there being a contract of employment, their decision was perverse. As matters have transpired we have not found it necessary to ask Mr Sheldon, who appears for the appellant, to advance that secondary argument. We may say without having had the advantage of submissions, as we think he understood, that would have been very much an uphill struggle given the careful and full treatment which the various factors had received from the Tribunal in its decision.
3. However the appeal turns on a single issue which Mr Sheldon has rightly characterised as a knockout blow if he succeeds. It turns on one particular piece of compelling evidence or, at any rate, one compelling admission made by Mr Havelock in a letter of 30 April 2000 sent to the solicitors acting on behalf of the appellant, where he says in terms:

"Whilst I agree that I was not obliged to accept work from Stuncroft Limited, the work was usually offered to me at a very short notice. I would be called for example on a Friday afternoon before 5pm with details of a run leaving on Sunday morning and ferry bookings had already been made. During the seven years I worked for Stuncroft I do not recall an occasion when I refused any work offered and was always flexible and accommodating."

4. The majority of the Employment Tribunal approached the question whether there was a contract of employment by taking into account all the factors and balancing them against one another. The majority found that there was a contract of employment. In paragraph 8 of the decision the Chairman, who was the minority, says that he took a different view on the question of balancing the factors. He says that the lack of mutuality of obligation in particular was a persuasive factor, together with the characterisation of the relationship by both parties as self-employment. He accepted that such characterisation was not a tax avoidance device and had been accepted by the tax and National Insurance authorities as appropriate over some period. He concluded that those factors persuaded him to the opposite conclusion to the majority.
5. The Chairman was relying on the admission in the letter of 30 April that the applicant accepted that he was not obliged to accept that which was given to him.
6. Mr Sheldon has taken us carefully through the recent authorities on the question whether want of mutuality of obligation is fatal to the existence of a contract of employment, that is to say, that there has to be an irreducible minimum of mutual obligation necessary to create a contract of service. He has referred us to the House of Lords decision in Carmichael v National Power plc [2000] IRLR 43, in which the unanimous judgment of the House of Lords was enunciated by the Lord Chancellor at paragraph 18 of that decision, where he says:

"If this appeal turned exclusively-and in my judgment it does not-on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the C.E.G.B. to provide casual work, nor on Mrs Leese and Mrs Carmichael to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service."

The Lord Chancellor then referred to two Court of Appeal decisions (Nethermere (St Neots) Ltd v Gardiner [1984] IRLR 240 and Clark v Oxfordshire Health Authority [1998] IRLR 125).

7. Mr Sheldon has taken us to each of these cases which establish the same point, namely, that there is an irreducible minimum of mutual obligation required for there to be a contract of employment. In addition, he has referred us to a decision of the Court of Appeal, subsequent to the Carmichael case, Stevedoring & Haulage Services Ltd v Fuller [2001] EWCA Civ 651, which is reported in 2001 IRLR 627, in which the point is made with great clarity that where there is no mutual obligation then there is not the irreducible minimum necessary to create a contract of service. The Court of Appeal in that case warns Employment Tribunals against an over-astute exercise in implying such mutual obligations where the express documentation does not permit it, in cases where consistent behaviour on the part of the parties to the arrangement tempts the Tribunal to imply mutual obligations where none exists as a matter of law.
8. It is clear that the Employment Tribunal in this case did not have the advantage of having cited to it any of these authorities nor does it appear, that the case was argued on the basis that want of mutual obligation was a knockout blow. Certainly the majority did not consider the question of the want of mutuality of obligation at all and the minority Chairman, in our judgment mistakenly regarded want of mutuality of obligation as merely a persuasive factor whereas repeatedly the courts at Court of Appeal level and above have said that it is an irreducible minimum and so a determinative issue.
9. In the light of the weight of authority and, we may say with a deal of regret, we feel obliged to conclude that Mr Sheldon's arguments are unanswerable and although Mr Havelock, in his short oral submission to us and in his longer written skeleton has striven manfully to overcome the weight of authority which is against him, we are obliged to conclude that he has not succeeded and therefore we are obliged to uphold this appeal.
10. One matter which we did consider was whether, given that the Tribunal appears not to have considered the issue at all in its conclusive effect on this case, this was a case where we should remit the case to the same Tribunal or a new Tribunal for fresh evidence to be given. However, again with some regret, we feel that that is not open to us in the light of the very clear and unambiguous statement by Mr Havelock in the letter of 30 April which precludes any possibility of getting round the fact that there was no mutuality of obligation as between him and the appellants. It therefore follows that we overturn this Tribunal's decision the effect of which is to dismiss Mr Havelock's claim for a redundancy payment.