United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS SUE BURFORD HR Management Solutions St John's Innovation Centre Cowley Road Cambridge CB4 0WS
For the Respondent	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT


 


JUDGE PETER CLARK:

1. This is an appeal by the respondent before the Stratford Employment Tribunal, Voteforce Associates Ltd, against that tribunal's decision, promulgated with Extended Reasons on 24 August 2000, upholding the applicant, Miss Quinn's complaint that she was entitled to paid leave under the provisions of regulation 13 of the Working Time Regulations 1998 with effect from 10 October 1999.
2. The facts as found by the tribunal were that the applicant provided a service to the respondent as a waitress over the period 17 July 1999 to 28 April 2000. We interpose that she was engaged as a casual for banquets as and when required. The respondent was under no obligation to provide work; she was under no obligation to accept work when it was offered.
3. An important finding, for present purposes, appears at paragraph 3(iii) of the tribunal's reasons:

"There was no consecutive period of 13 weeks during the whole or part of which weeks the applicant provided a service to the respondent."

4. The tribunal further found (paragraph 3(v)):

"The relations of the applicant with the respondent were governed by a contract throughout the whole period 17 July 1999 to the date of presentation of the complaint. Whilst she worked on a casual 'as required' basis and was at liberty to refuse work offered her by the respondent, each period of working was governed by the terms and conditions of that contract. Although the work would not always be in the same function room and the hours would vary according to the nature of the function, the principal terms and conditions including pay remained the same."

5. Regulation 13(1) provides for a worker's entitlement to annual leave. Pausing there, the applicant was a worker within the definition contained in regulation 2(1); she was not employed under a contract of service, but was an individual undertaking to do or perform personally any work or services for another party under a contract, ie she was engaged under a contract for services.
6. However, the entitlement to leave is subject to regulation 13(7), which provides:

"The entitlement conferred by paragraph (1) does not arise until a worker has been continuously employed for 13 weeks."

And by regulation 13(8):

"For the purposes of paragraph (7), a worker has been continuously employed for 13 weeks if his relations with his employer have been governed by a contract during the whole or part of each of those weeks."

7. It was argued on behalf of the respondent below by Ms Burford, by reference to the House of Lords decision in Carmichael v National Power [2000] IRLR 43, that there was here an absence of mutuality of obligation and consequently the applicant did not have the necessary continuity, on the facts, to satisfy the requirement of regulation 13(7).
8. The tribunal rejected that submission. Their reasoning is at paragraphs 9-10:

"9 Whilst we have not found the point an easy one, we consider the answer is to be found in the words of Regulation 13(8). That plainly contemplates that it will not be necessary for a worker to provide a service during each and every week for 13 weeks. That is made clear by a consideration of the provisions relating to the calculation of the week's pay for the purposes of the regulation. For that, one must turn to the provisions of sections 221 to 224 Employment Rights Act 1996. Where, as plainly is the case here, the relevant employment is one with no normal working hours then, by virtue of section 224(3), no account is to be taken of a week in which no remuneration was payable by the employer to the employee and earlier weeks must be brought into account so as to bring the total up to 12.

10 What is required is that the relations between the parties have been governed by a contract throughout a continuous period of 13 weeks. That, we are satisfied, was the position here and it must follow that Miss Quinn acquired her entitlement to annual leave on 10 October 1999 by which date 13 weeks had elapsed."

9. We should say at once, without disrespect to Ms Burford, who has presented her case clearly and succinctly, that we should have benefitted from detailed legal submissions on both sides in determining what we regard as an important and novel point. Miss Quinn has not been able to attend before us and has put in written representations. That said, we are left to arrive at a conclusion based on our own deliberations and researches.
10. We begin with the 1998 regulations, passed to implement EC Directive 93/104.
11. Article 7 of the Directive provides that:

"(1) Member states shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.

(2) The minimum period of paid annual leave may not be replaced by allowance in lieu, except where the employment relationship is terminated."

12. The relevant provision designed to implement Article 7 of the Directive appears in regulation 13 of the 1998 Regulations. The first point, taken by Miss Quinn, is that the qualifying period of continuous service required by regulation 13(7) is unlawful because it did not correctly transpose the leave requirements in Article 7. Support for that submission is derived from the recent European Court of Justice judgment in R v Secretary of State for Trade and Industry ex p. BECTU (The Times. 28 June 2001). In short, the European Court found that there is no warrant in Article 7 for the domestic legislation to unilaterally limit the entitlement to paid annual leave by applying a precondition which prevents certain workers from benefiting from it.
13. We, of course, accept that analysis. We understand that steps are already being taken to amend the regulations. However, the question in this case is whether the ECJ ruling assists Miss Quinn.
14. In our view it does not, based on the Court of Appeal decision in Gibson v East Riding of Yorkshire Council [2000] IRLR 598. There, the question was whether the applicant could rely on Article 7 as having direct effect prior to the regulations coming into force on 1 October 1998. The court held that she could not; Article 7 is insufficiently precise to have direct effect.
15. In these circumstances we are thrown back on the proper construction of regulation 13(7) and (8).
16. As to that, we begin with the tribunal's reasoning. First, we are quite unable to see the relevance of the provisions relating to the calculation of a week's pay, to be found in regulation 16, to the question of continuity. Regulation 16 provides that sections 221-224 of the Employment Rights Act 1996 (ERA) shall apply for the purpose of determining the amount of a week's pay for paid leave, with certain modifications. In particular, the reference in those provisions to section 228 does not apply.
17. That, in itself, gives rise to a potential problem. Section 224 deals with employments with no working hours, as in the present case. In those circumstances the amount of a week's pay is the amount of the, here worker's, average weekly remuneration in the last 12 weeks, disregarding weeks in which no remuneration is payable. In those circumstances remuneration in earlier weeks is brought in so as to bring up to 12 the number of remunerated weeks. But what if the engagement has not run for sufficient time before termination to include 12 remunerated weeks? Section 228 ERA envisages that eventuality by providing that in such circumstances a week's pay is the amount which fairly represents a week's pay, and sets out factors to be taken into account in determining what that figure should be. However, regulation 16 expressly excludes any reference to section 228. How, in these circumstances, a week's pay is to be calculated under regulation 16 is thus opaque.
18. Returning to the present case, we are quite unable to see how the question of how a week's pay is calculated has any bearing on the question of continuity.
19. Indeed, it is perhaps significant that in defining continuous employment for the purposes of regulation 13(7), regulation 13(8) provides a comprehensive definition, not referable to the definition of continuity, with modifications, contained in sections 210-219 ERA. Thus, for example, whereas continuity is preserved during weeks which are not governed by a contract (of employment) in the circumstances set out at section 212(3), no such provision is to be found in regulation 13(8). Far from contemplating, as the tribunal found, that it will not be necessary for a worker to provide a service during each and every week for 13 weeks, it seems to us that in any week during which no services are provided, continuity under regulation 13(7) and (8) will only be preserved where the worker can show that her relations with her employer are governed by an overarching or umbrella contract during relevant weeks when no services are provided.
20. That brings us to what seems to us to be the real question in this appeal. Did the tribunal find that for the whole of the 13 week period expiring on 10 October 1999 the relations between the parties had been governed by a contract (not necessarily of service as opposed to for services, bearing in mind the extended definition of worker) and if so, was that a permissible conclusion on the primary facts as found?
21. In our view the question posed is a novel one. There is a good deal of authority on the question as to whether casuals or homeworkers are employed under a contract of service for the purpose of unfair dismissal and other protection under what is now ERA, where access to the protection depends upon the complainant being an employee within the restricted definition contained in section 230(1) of that Act.
22. Thus, for example, homeworkers in Airfix Footwear v Cope [1978] ICR 1210 (EAT) and Nethermere (St Neots) Ltd v Gardiner [1984] ICR 612 (CA) were held to be employed under a continuous contractual relationship, whereas casual waiting staff, a bank nurse and casual guides were not in, respectively, O'Kelly v Trusthouse Forte [1983] ICR 728 (CA), Clark v Oxfordshire Health Authority [1998] IRLR 125 (CA) and Carmichael.
23. The common thread which runs through those cases is whether the facts show a mutuality of obligation, said to be an irreducible minimum requirement for a contract of service. Why the point is novel in this case is because it is not necessary for Miss Quinn to show that she was employed under a continuous contract of service; it is enough that she is engaged under a continuous contract for services.
24. It is clear, on the facts of this case, that there was no mutuality of obligation; the company was not obliged to provide work for Miss Quinn, she was not obliged to perform the work if it was offered. It follows that there was here no contract of service, applying the above authorities.
25. The question, therefore, facing the tribunal was whether the applicant was engaged under an umbrella contract for services for the necessary continuous period of 13 weeks or whether she was engaged on a series of contracts each time she attended for work.
26. Given that choice the tribunal appear, without giving reasons, to have opted for the former analysis. Is that conclusion sustainable on the facts as found?
27. We bear in mind the limits of our jurisdiction. We can only interfere where an error of law is made out. In this case we have concluded that the tribunal has fallen into error, for the following reasons:

(1) In construing regulation 13(8) they have taken into account an irrelevant consideration, namely the statutory regime imported by regulation 16 for determining what is a week's pay.

(2) They have failed to give any reasons for their finding that relations between the parties were governed by a contract throughout the necessary 13 week period.

(3) Such a finding was an impermissible option, given the findings of primary fact made by the tribunal. Whilst we accept that mutuality of obligations to provide and perform work are not required for a contract for services, it seems to us that there must be some feature or features which can properly lead to the conclusion that there was here an overarching or umbrella contract as opposed to a series of contracts as and when the applicant performed work sessions for the respondent. In our judgment there were none in this case. The applicant was one of a pool of about 30 casual waitresses who could be called up as and when required. They were not obliged to do the work that was offered. There was no written contract between the parties. Although the tribunal, at paragraph 3(v) of their reasons stated that "the principal terms and conditions including pay remained the same", we were told by Ms Burford that there was no evidence that any terms were agreed, save that the waitress was paid £21 for a 3½ hours session. In our judgment it is impossible to draw from these facts any overarching contract; the inevitable conclusion must be that there were here a series of contracts.

28. It follows that there were weeks during which the parties' relations were not governed by a contract which precluded a finding that the applicant had been continuously employed for 13 weeks for the purpose of regulation 13(7). Consequently she was not entitled under the regulations to paid holiday leave.
29. Accordingly this appeal must be allowed and the declaration made by the tribunal set aside.
30. We reach this conclusion without enthusiasm, given that the precondition imposed by regulation 13(7) is in breach of the Directive. We also bear in mind that the effect of this judgment may be seen as an encouragement to employers to break continuity for the purpose of avoiding the paid leave obligation under the regulations, as presently constituted. We emphasise that we do not believe that is what happened in this particular case. However, if an employer can so arrange his affairs, that is not a ground for deciding the case differently. See, on the ordinary continuity provisions under ERA, Booth v USA [1999] IRLR 16. It is for the legislators, not the courts, to correct this state of affairs.