United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR S SWEENEY (of Counsel) Instructed By: Mr Christopher Bradley Solicitor Legal Services Department South Tyneside Metropolitan Borough Council Town Hall & Civic Offices Westoe Road South Shields Tyne & Wear NE33 2RL
For the Respondent	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE RESPONDENT


 


JUDGE J BURKE QC:

The Appeal

1. In July 2000 Mr Toulson began to work for South Tyneside Metropolitan Borough Council ("the Council") as a pool lifeguard at Hebburn Pool, South Tyneside. The Council employed two groups of employees who worked at the pool, full-time employees and part-time employees, who worked regular agreed hours pursuant to contracts of employment. To cover for absences arising through holidays, sickness or otherwise the Council would engage other workers on a casual basis; they would be called upon to come into work at the pool as required. When they worked, they undertook the same duties as the permanent employees; but, according to the Tribunal's findings, they did not have to answer the Council's calls to work and could decline to go to the pool if they so wished; and the Council was under no obligation to offer them work. Mr Toulson was one of these casual workers. He received neither paid holidays nor holiday pay.
2. On 14 May 2001, after some correspondence with the Council which failed to achieve a resolution of his complaints, Mr Toulson presented an Originating Application to the Employment Tribunal claiming that he was entitled to holiday pay and paid training time; it was clear from the correspondence that he based his claims (a) on Regulation 13 of the Working Time Regulations 1998 ("the 1998 Regulations") and (b) on Regulation 5 of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 ("the 2000 Regulations").
3. The Employment Tribunal, sitting at Newcastle upon Tyne and chaired by Mr Hargrove, in a decision sent to the parties with extended reasons on 14 September 2001, decided that Mr Toulson was entitled to paid holiday, pursuant to Regulation 13(1) of the 1998 Regulations and awarded him £192.12 compensation; but they dismissed his claim based on the 2000 Regulations. The Council appeal against the first finding in Mr Toulson's favour. Mr Toulson does not cross-appeal against the Tribunal's decision on the non-application of the 2000 Regulations and we need say no more about that aspect of his claim.
4. Mr Toulson, who represented himself at the Tribunal hearing, did not attend the hearing of the appeal and was unrepresented. He wrote to the Employment Appeal Tribunal on 6 October 2002 indicating that he is now in employment and could not afford to attend. He enclosed with his letter a brief skeleton argument which we have considered with care. We should record that Mr Sweeney, appearing on behalf of the Council, took pains at each stage of his argument to put forward the opposing submissions which Mr Toulson might have advanced had he attended the appeal. We are grateful to Mr Sweeney for the fair minded and balanced way in which he presented the arguments.

The 1998 Regulations and Directive 93/104

5. Contractually Mr Toulson was not entitled to holidays or holiday pay. However he relied upon Regulation 13(1) of the 1998 Regulations, in their original form which, before subsequent amendment to which we will refer later, provided:-

"Subject to paragraphs (5) and (7), a worker is entitled in each leave year to a period of leave determined in accordance with paragraph (2)."

Paragraph 2 provided, so far as material:

"The period of leave to which a worker is entitled under paragraph (1) is -

…

(c) in any leave year beginning after 23^rd November 1999, four weeks."

6. Alternatively the Tribunal considered Article 7 of Council Directive 93/104/EC of 23 November 1993 ("the Working Time Directive") as having direct effect as between the Council and himself, the Council being an emanation of the State. Article 7 of the Working Time Directive provides:-

"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 an allowance in lieu, except where the employment relationship is terminated."

7. The Council relied upon Regulation 13(7) and (8) of the 1998 Regulations which provided at the material time:-

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

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

8. As a result of the decision of the European Court of Justice in R v Secretary of State for Trade and Industry ex-parte BECTU [2001] IRLR 559, which declared that Regulation 13(7) and (8) constituted an impermissible limitation upon the right created by Regulation 13(1) and in order, in the United Kingdom, to comply with the obligations upon Member States set out in Article 7 of the Working Time Directive, Regulation 13(7) and (8) were repealed by the Working Time (Amendment) Regulations 2001 with effect from 25 October 2001 and replaced by new Regulation 15(A) which established a monthly accrual regime of holiday entitlement during the first year of employment; the new Regulation 15A expressly does not apply in the case of a worker whose contract began on or before 25 October 2001. The same amending Regulations amended Regulation 13(1) and deleted Regulation 13(2) so as, thenceforth, to eliminate the transitional provisions previously in Regulation 13(2) and by Regulation 13(1), as amended, to provide that, subject to paragraph (5), a worker should be entitled to four weeks' annual leave in each leave year.
9. It is clear from these provisions that, at the relevant time for the purposes of Mr Toulson's claim and at the date of the institution of that claim, Regulation 13 of the 1998 Regulations applied as unamended, albeit that, in that form, it contained in Regulation 13(7) and (8) limitations upon eligibility for holiday entitlement which had the effect that the duty imposed upon the United Kingdom by Article 7 of the Working Time Directive was not properly discharged.

The issues before the Tribunal

10. There were four relevant issues addressed by the Tribunal in their Decision, namely:-

(1) Was Mr Toulson a worker as defined by the 1998 Regulations?

(2) If so, did Mr Toulson qualify for the holiday entitlement provided by Regulation 13(1) on the basis that his relations with the Council had been governed by a contract during the whole or part of each of thirteen continuous weeks?

(3) If not, could Mr Toulson rely upon Article 7 as having direct effect so as to provide him with the claimed holiday entitlement by an alternative route?

(4) Was Mr Toulson's claim out of time in any event?

11. As to the first of these issues, the Council conceded that Mr Toulson was a worker. As to the fourth, the Tribunal decided that Mr Toulson's claim was based upon a continuing refusal of holiday entitlement up to the date of his Originating Application and that his claim, in respect of the three-month period prior to that date, was not out of time. The Council have not sought to appeal against that decision. Accordingly only the second and third of the four issues are relevant to this appeal.

Article 7 of the Working Time Directive

12. The Tribunal found that, whether or not Mr Toulson established an entitlement under Regulation 13(1) of the 1998 Regulations, he succeeded in his claim on the basis that Article 7 of the Working Time Directive applied directly so as to provide Mr Toulson with an entitlement against the Council as an emanation of the State. The Tribunal did not refer in terms in their decision to Article 7; but it can safely be assumed that they had Article 7 in mind, firstly because it is, of course, the only relevant source of potential entitlement to holiday in the Working Time Directive and, secondly, because they had been referred to and cite in their extended reasons the decision of the European Court of Justice in ex-parte BECTU (supra) to which Article 7 is central.
13. However, the Tribunal's decision does not contain any reference either to the principles for determining whether an Article in a Directive is capable of being enforced directly in the Courts of the United Kingdom (save for the uncontentious requirement, in this case, that the party alleged to be obliged to comply with such an Article must be an emanation of the State) nor does it make any reference to the decision of the Court of Appeal in Gibson v East Riding of Yorkshire Council [2000] IRLR 598 in which those principles were expressly applied to Article 7 of the Directive. The absence of any such reference may be explained by the fact, put before us on instructions by Mr Sweeney, that no reference was made to direct reliance upon Article 7 in particular or the Directive in general at the hearing before the Tribunal. However the Council have not sought in their Notice of Appeal to attack the Tribunal's conclusion in respect of the direct application of the Directive on procedural as opposed to substantive grounds.
14. In Gibson the complainant's claim to holiday entitlement was made in respect of a period after the Directive came into effect but before the 1998 Regulations came into effect; thus her claim, if it was to succeed, could only do so under Article 7. At paragraph 11 of his judgment, Mummery LJ, with whom Brooke and Pill LJJ agreed, set out the relevant principles as follows:-

"(1) A provision of a Directive may have direct effect in Member States if it is unconditional and sufficiently precise. This is a matter of interpretation of the relevant provision in the context of the whole directive, having regard, in particular, to its purpose. It is necessary to examine the nature, general scheme and wording of the provision in question.

(2) A provision of a directive is sufficiently precise, even if it would require the Court of Justice to answer a difficult question on its interpretation.

(3) In the employment field a provision in a directive is sufficiently precise if it identifies (a) the beneficiaries of the right; (b) the persons under a duty to give effect to the right; and (c) the nature and extent, or content, of the right.

(4) The fact that the directive permits precise derogations from its terms by Member States does not of itself render the directive conditional. A provision is unconditional if there is no need for further action by Community institutions or by Member States in order to define its content.

(5) The fact that some articles of a directive may lack sufficient precision and be incapable of having direct effect does not prevent others which are sufficiently precise from having direct effect standing on their own."

He then proceeded, at paragraphs 28 to 33 of his judgment, to express his conclusion that Article 7 is not sufficiently precise for a national court to enforce at the instance of an individual. The principal reason for this conclusion was that the Directive does not specify the amount of working time for which a worker must have worked before becoming entitled under Article 7 to annual holiday. At paragraph 33 Mummery LJ said:

"The realistic recognition of the appeal tribunal that there are gaps to be filled is significant on the issue of the direct effect of Article 7. The very existence of gaps in Article 7, even as viewed in the 'wider context' set out above, is a strong indication that the terms of the Article are insufficiently precise to have direct effect in the courts and tribunals of Member States. The right which Mrs Gibson wishes to assert against the Council is quite simply not sufficiently defined in Article 7 to be directly enforceable by an individual in national courts and tribunals. Further definition is necessary in implementing measures either by the Community or by the Member State. Without further definition of the conditions for entitlement to the right how could the tribunal even begin to determine a claim under Article 7 by a worker, who had worked only for a week or for a month, that he was entitled to four weeks annual leave? … The judicial interpretation of Article 7 and of the other provisions of the Directive does not yield the answer to basic questions of entitlement."

15. In his skeleton argument Mr Toulson submitted that the decision of the European Court of Justice in ex-parte BECTU had established that Article 7 is precise; he suggested that, because the decisions of the European Court of Justice are not necessarily binding on the Employment Appeal Tribunal (as he put it) but the Employment Appeal Tribunal is bound by the Court of Appeal's decision in Gibson, we should simply refer this issue to the Court of Appeal.
16. The question referred by the Queen's Bench Division to the European Court of Justice in ex-parte BECTU was whether the United Kingdom, as a Member State, was permitted, on the basis of the words in Article 7:

"… in accordance with the conditions of entitlement to, and granting of, such leave laid down by national legislation and/or practice"

to restrict the right to leave the provision of which was required by Article 7 as the United Kingdom had done in Regulation 13(7) and (8) of the 1998 Regulations. The Court's answer to that question was that the United Kingdom was not so permitted. The Court said, at paragraph 34 of its judgment:-

"Article 7(1) of Directive 93/104 imposes a clear and precise obligation on Member States to achieve a specific result by virtue of which they are to 'take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks'."

The Court continued, at paragraphs 41, 42, 48 and 52:

"41 Now it is clear that Article 7 is not one of the provisions from which Directive 93/104 expressly allows derogations

42 Directive 93/104, in Article 18(1)(b)(ii), provides only that Member States are to have the option, as regards the application of Article 7, of making use of a transitional period of not more than three years from 23 November 1996. … As stated in paragraph 17 of this judgment, the United Kingdom availed itself of that option.

…

48 Legislation of a Member State, such as that at issue in the main proceedings, which imposes a precondition for entitlement to paid annual leave which has the effect of preventing certain workers from any such entitlement not only negates an individual right expressly granted by Directive 93/104 but is also contrary to its objective.

…

52 Consequently, Directive 93/104 must be interpreted as precluding Member States from unilaterally limiting the entitlement to paid annual leave conferred on all workers by applying a precondition for such entitlement which has the effect of preventing certain workers from benefiting from it."

17. The judgment went on, however, to make it clear, in paragraphs 53 to 61, that, while a precondition to entitlement which excluded from certain workers the very existence of the entitlement to holiday expressly to be provided to all workers was not permissible, it was permissible for Member States to make arrangements for the implementation and application of that entitlement or to regulate the manner in which annual leave might be taken during the early weeks of employment.
18. The European Court of Justice was, of course, not expressly considering in ex-parte BECTU whether Article 7 could be directly enforced in the UK as between an individual and an emanation of the State. When in paragraph 34 of its judgment it described Article 7 as imposing a clear and precise obligation on Member States to achieve a specific result, it was not addressing the difficulties in the direct application of Article 7 identified by the Court of Appeal in Gibson; it was referring to the results to be achieved by Member States i.e. the provision of four weeks annual leave, which result Mummery LJ, at paragraph 29 in Gibson, accepted was precisely defined at least in terms of the length of the period.
19. Neither in the judgment of the European Court of Justice, nor in the opinion of the Advocate General in that case, is there any suggestion as to how Article 7 is to be applied in the case of a short-term worker. While the Advocate General, at paragraph 30 of his Opinion, referred to the entitlement as an automatic and unconditional right granted to every worker and the Court in its judgment stated that the right could not be subject to derogation, it appears from both the opinion and the judgment that, to quote paragraph 34 of the opinion:-

"… the reference is intended to allow the Member States to provide a legislative framework governing the organisational and procedural aspects of the taking of leave … these are precisely measures intended to determine the 'conditions for entitlement to, and granting of' leave and as such are allowed by the Directive. …"

20. Thus the decision of the European Court of Justice leaves it open to Member States to take steps to make regulations in domestic law to establish precision in areas which are otherwise left imprecise by Article 7 such as the area specifically identified in Gibson. In our judgment the decision in ex-parte BECTU does not have the effect, for which Mr Toulson contends, of removing or declaring to be non-existent in Article 7 the lack of precision which lies at the heart of the decision in Gibson. The European Court of Justice recognised that Article 7 is not a complete code in itself. Consequently we are bound by the Court of Appeal's decision in Gibson to decide that Article 7 was not at the material time capable of being directly enforced by Mr Toulson against the Council.
21. In domestic law that imprecision now has been removed, at least in part by the provisions of the 1998 Regulations, both before and after the amendments made as a result of ex-parte BECTU; but the existence of those domestic provisions does not assist Mr Toulson to arrive at his destination by the Article 7 route.
22. We are strengthened in this analysis of the effect of ex-parte BECTU by the knowledge that another division of the Employment Appeal Tribunal, chaired by His Honour Judge Peter Clark, came to the same conclusion in Voteforce Associates Ltd v Quinn (30 July 2001, EAT/1186/00). In the course of the employer's appeal in that case the question as to whether the decision in ex-parte BECTU alleviated the difficulties placed in the path of those who sought to rely directly upon Article 7 arose – albeit not in the same context as in the present case because the employers were not, so far as can be discerned, an emanation of the State. The Employment Appeal Tribunal said, at paragraphs 12 to 15 of the judgment in that case:-

"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 [ex parte. BECTU] 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]. 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)."

23. We should add that if we were of the view that the European Court of Justice's decision in ex-parte BECTU did have the effect of nullifying the ratio of Gibson we would so have decided; we could not simply refer the point to the Court of Appeal despite Mr Toulson's request that we should do so. However our conclusion is that the decision in ex-parte BECTU does not have that effect and that the Tribunal were wrong in law to conclude that Mr Toulson could succeed on the basis of the Working Time Directive.

Regulation of 13 of the 1998 Regulations

24. As was the Employment Appeal Tribunal in Voteforce, we are thrown back on the proper construction of Regulation 13 of the 1998 Regulations.
25. The Tribunal did not decide that the effect of ex-parte BECTU was to enable Mr Toulson to succeed in establishing his claim to holiday entitlement under Regulation 13(1) of the 1998 Regulations on the basis that Regulation 13(7) and (8) should be ignored. Instead and as an alternative to their conclusion as to the direct effect of Article 7 of the Directive, the Tribunal said, at paragraph 4:-

"… even assuming that the threshold provisions remained valid, this particular individual applicant's relations with his employer had been governed by a contract during a period of more than 13 weeks."

26. Mr Sweeney, properly putting before us approaches to the construction of Regulation 13 which might have been open to Mr Toulson, suggested that we would be right or at least entitled to apply a purposive construction to Regulation 13 which is intended to provide annual leave to workers and is described in ex-parte BECTU as "a particularly important principle of Community social law". However, he was unable to propose any purposive construction of Regulation 13 which would avoid the need, for workers claiming entitlement, in a case arising between the coming into effect of the 1998 Regulations on 1 October 1998 and the coming into effect of the amendments which repealed Regulation 13(7) and (8) on 25 October 2001, to bring themselves within Regulation 13(7) and (8), other than by treating Regulation 13(7) and (8) as if they did not exist. We have no doubt that, however purposive it is necessary or right to be in construction of domestic regulations which are intended to transpose into domestic law provisions of Community legislation or directives, we could not approach this case by that route. The fact that Regulation 13(7) and (8) constitute an impermissible restriction upon the granting of the entitlement to holiday which Member States were obliged by Article 7 of the Directive to grant does not enable us to disregard those provisions which were, until repealed, statutory provisions in force in UK domestic law and had effect as such in this case.
27. It is in our judgment inescapable that, in order to succeed, Mr Toulson had to bring himself within Regulation 13(7) and (8). The Tribunal found that he did. Whether they were correct to do so is the central question in this appeal.
28. The Tribunal do not set out any reasons why they concluded that Mr Toulson's relations with the Council had been governed by a contract or contracts for a period of more than 13 weeks; nor do they identify whether they were basing their conclusion on one contract or on a series of contracts. In their findings of fact, at paragraph 2, they refer to an agreed schedule placed before them by the parties. That schedule sets out the hours worked by Mr Toulson in each week from 23 July 2000 to 29 July 2001; it shows that there is no single period of 13 weeks in which Mr Toulson worked in each week. The schedule covers 54 weeks; Mr Toulson worked in all but 16 of those weeks; the longest period without a week in which Mr Toulson did not work at all for the Council is one of nine weeks; there are two such periods. Accordingly if and insofar as the Tribunal reached their conclusion on this issue on the basis that there was a series of contracts between Mr Toulson and the Council, arising each time he was offered and accepted work, which in each of thirteen successive weeks governed their relationship during the whole or part of each such week, that conclusion was demonstrably in error and cannot stand.
29. Alternatively the Tribunal may have concluded that there was an overarching or umbrella contract between Mr Toulson and the Council which governed the relationship between them throughout the relevant period. Although Mr Sweeney argued that the Tribunal had not taken that course and indeed suggested that such a course had not been put before the Tribunal, it is, we believe, more likely that this was their true view, for three reasons. The first is that they are unlikely to have failed to notice the absence of a series of thirteen weeks in each of which Mr Toulson worked for the Council; the second is that the Tribunal in the passage which we have quoted from paragraph 4 of their decision refer to "a contract" rather than "contracts" or "a series of contracts". The third is that, before Mr Toulson began to work for the Council, he signed two documents, one headed "Register of Casual Employees" and signed by Mr Toulson on 20 July 2000 and the other headed "Register of Casual Workers" and signed by Mr Toulson on 27 July 2000. Both documents, in similar but not identical terms, set out that Mr Toulson would be included in the Council's register for casual workers, that he would be called to or offered work as and when required to cover for holidays and absences of permanent staff and would be paid weekly at the rate of pay for the post / position he was covering. The first document provided that:-

"The minimum notice to which you are entitled to terminate your employment will be one hour."

The second document said:-

"The Leisure Contractor is not obliged to provide you with work and you may refuse the offer of work without this affecting the offer of casual work in the future."

Both documents make it clear that there was no contractual sick pay or holiday entitlement. The Tribunal, as we have set out earlier in the judgment, found as a fact that Mr Toulson was not obliged to accept any invitation to work nor were the Council obliged to offer him work. However in paragraph 2 they refer to the various provisions of these document as "the terms of the agreement"; and this is an indication that they were considering an umbrella agreement rather than a series of agreements on the occasion of each spell of work in their conclusions, as set out in paragraph 4 of their decision, which we have quoted above.

30. Mr Sweeney submitted that, if the Tribunal were to be taken to have founded their decision on an umbrella agreement between Mr Toulson and the Council on the terms set out in the documents and summarised in paragraph 2 of their decision, the Tribunal was in error; such an agreement would have to be either a contract of service or a contract for services; but because there was no obligation upon the Council to offer any work to Mr Toulson and no obligation upon Mr Toulson to accept such work if offered, the arrangements between the parties lacked the essential mutuality of obligation required if they were to amount to a contract either of service or for services. They were nothing more than arrangements between the parties as to the terms which would apply on each individual occasion when the Council offered work which Mr Toulson accepted and, by accepting created an individual contract in respect of that work.
31. In Voteforce (see paragraph 22 above) the Applicant was a casual worker who was engaged as a waitress for banquets as and when required; the Respondent was under no obligation to provide work and she was under no obligation to accept it if offered. There was no consecutive period of thirteen weeks during the whole or part of which she provided a service to the Respondent. Her claim nevertheless succeeded; but the EAT allowed the employer's appeal and set aside the declaration which the Tribunal had made. At paragraph 19 of the judgment the EAT said:-

"19 … 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."

The Employment Appeal Tribunal then considered whether there was, on the facts such an umbrella contract. The judgment continued:-

"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.

…

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:

…

(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. …"

32. It is important in Mr Toulson's interest to point out the facts in Voteforce were not precisely the same as in the present case; in particular there were not in that case the documents to which we have referred, at paragraph 22 of this judgment, which existed in the present case;
33. We agree with the conclusion of the EAT in Voteforce that the contract referred to in Regulation 13(8) must be a contract of service or a contract for services; the contract must be one which is such as to render the individual who worked under it a worker as defined by Regulation 2(1); see in particular the words in the definition of "worker" in that Regulation:

"Any reference to a worker's contract shall be construed accordingly."

34. As Mr Sweeney drew to our attention, the EAT appears in Voteforce to have accepted that mutuality of obligations to provide and perform work was not needed for a contract for services as opposed to a contract of service; but a different division of the EAT, in Byrne Brothers (Formwork) Ltd v Baird & Others (18 September 2001, EAT/542/01), reached a different conclusion. The issue in Byrne Brothers was whether the Applicants were workers as defined by Regulation 2(1); in order to fall within that definition, they needed, in the absence of a contract of employment, to show that they had entered into or worked under:

"(b) any other contract, … whereby the individual undertakes to do or perform personally any work or services for another party to the contract … "

The Applicants had each signed a standard form document entitled "Subcontractors Agreement". That document identified each Applicant as a subcontractor and identified the site and the service to be rendered e.g. carpentry. It provided, insofar as material:-

"1. The Contractor will from time to time offer the Sub-contractor assignments on a self-employed basis under the terms of this Agreement.

…

10. The Sub-contractor accepts that the Contractor will incur no liability should it fail to offer an assignment to the Sub-contractor.

11. The Sub-contractor has the right to refuse to accept an assignment and shall incur no liability to the Contractor.

12. The Sub-contractor acknowledges that he is entering into a contract for services with the Contractor and acknowledges and declares that this Agreement shall not constitute a contract of employment."

The Tribunal found that, although each Applicant worked for the Respondent on a day-to-day basis he did so under an agreement which excluded the possibility of mutuality of obligation other than they were obliged personally to perform work or services for the Respondent and were workers. The Employment Appeal Tribunal, chaired by Mr Recorder Underhill QC, dismissed the appeal against that decision. One of the points argued by the employers was that the lack of mutuality of obligation led to the conclusion that there could not be an umbrella contract. In fact the Applicants had worked continually for the Respondent for a period in excess of thirteen weeks; it therefore did not matter whether they were working under a single umbrella contract or a series of successive individual contracts which, of course, included mutuality of obligation. However the EAT said at paragraph 25 of the judgment:-

"25 We accept that mutuality of obligation is a necessary element in a "limb (b) contract" [i.e., we interpose, a contract for services] as well as in a contract of employment. The basis of the requirement of mutuality is not peculiar to contracts of employment: it arises as part of the general law of contract. … "

35. In strictness that passage was obiter dicta; but had the EAT taken the same view as that expressed in Voteforce on this issue, the Applicants would have succeeded without any need to rely upon successive individual contracts; the EAT's conclusions as to the need for mutuality of obligation in a contract for services was not an extraneous aside. It could equally be said that the passage in Voteforce expressing the opposite conclusions in relation to a contract for services was also, in strictness, unnecessary to the decision, because the Applicant failed to establish that there was an umbrella contract at all.
36. We should add that the decision in Byrne Brothers makes no reference to that in Voteforce in which judgment had been delivered six weeks earlier. It is highly unlikely that the division of the EAT which decided Byrne Brothers knew of the decision of a different division in Voteforce.
37. In Hellyer Brothers Ltd v McLeod and Others [1987] ICR 526, a decision of the Court of Appeal on two appeals from the EAT, trawlermen who had worked under a series of short-term "crew agreements", in some cases for many years, claimed redundancy payments when the trawler owners decided to wind up their fishing business and took their entire fleet out of service. At the time of that decision the trawlermen were not currently employed under a subsisting crew agreement; in order to establish their claims they had to assert the existence of an umbrella contract of employment which, they argued, was to be inferred from the circumstances and which gave rise to continuing mutual obligations sufficient to support the existence of such a contract. Their appeals to the Court of Appeal against the decisions of the Employment Appeal Tribunal rejecting their claims were dismissed.
38. In the course of the judgment of the Court upon the first appeal, delivered by Slade LJ, the Court of Appeal said, at pages 540/1:-

"The concept of a global contract of employment, though very familiar to practitioners in this field, is not easy to define with precision. It may become relevant in cases where the evidence discloses what on the face of them was a series of contracts for service or services entered between the same parties and covering a substantial period of time. On the particular facts of such a case it may be open to the industrial tribunal properly to infer from the parties' conduct (notwithstanding the absence of any evidence as to the express agreement of this nature) the existence of a continuing overriding arrangement which governed the whole of their relationship and itself amounted to a contract of employment. Such a contract is frequently referred to as a 'global' or 'umbrella' contract.

…

One important point which was not explicitly decided in the Airfix case was whether a contract of employment within the definition contained in section 153(1) of the Act of 1978 (whether it be given the extra statutory name 'global' or 'umbrella' or any other name) can exist in the absence of mutual obligation subsisting over the entire duration of the relevant period. Any doubts as to this point were raised to rest by the decision of this court in Nethermere (St. Neots) Ltd v Gardiner [1984] ICR 612, where there was full analysis and discussion of the Airfix case. … Dillon LJ put it succinctly, at p.634:

'For my part I would accept that an arrangement under which there was never any obligation on the outworkers to do work or on the company to provide work could not be a contract of service'."

39. The Court of Appeal proceeded to conclude, at page 552, in relation to the first appeal, that it could not be inferred that, at times when there was no subsisting crew agreement, the parties were still subject to mutual contractual obligations sufficient to found an umbrella contract of employment.
40. We were not referred by Mr Sweeney to the judgment of the Court upon the second appeal, delivered by Ralph Gibson LJ; in that judgment the Court of Appeal said at page 560 that the findings of fact showed clearly that there was no mutuality of obligation which could have supported a finding of an umbrella contract of employment.
41. As is apparent from our summary of the Court of Appeal's conclusions and the passages we have quoted, this was not a case in which a contract for services or contracts for services were in issue (because, of course, to obtain redundancy payments the trawlermen had to establish contracts of service). Nevertheless the decision underlines the essential need for mutuality of obligation to the existence of an umbrella contract of service; and in principle it is difficult to see why the need for or importance of such mutuality should be any the less in the case of an umbrella contract for services.
42. The most telling decision to which we were taken is, in our judgment, that of the House of Lords in Carmichael v National Power Plc [2000] IRLR 43. In that case the Applicants worked as guides in two power stations on a "casual as required basis". They claimed in the Employment Tribunal to be entitled to written particulars of the terms of their employment under what is now Section 1 of the Employment Rights Act 1996. Their claims were founded on the contention that they were subject to an umbrella contract of employment. The Tribunal rejected their claim; they found that, when work was available, the guides were free to accept it or not as they chose. The EAT dismissed their appeals; their further appeals to the Court of Appeal were successful; but the House of Lords restored the decision of the Tribunal. In his speech, with which the other members of the House of Lords agreed, Lord Irvine LC said, at pages 44 and 45:-

"9 The industrial tribunal held that their case 'founders on the rock of absence of mutuality', that is that, when not working as guides, they were in no contractual relationship of any kind with the CEGB.

10 The tribunal made this finding on the basis of (a) the language of the March 1989 documentation; (b) the way in which it had been operated; and (c) the evidence of the parties as to how it had been understood. For reasons I will amplify later, this was in my judgment the correct approach. In substance, it held that the documents did no more than provide a framework for a series of successive ad hoc contracts of service or for services which the parties might subsequently make; and that when they were not working as guides they were not in any contractual relationship with the CEGB. The parties incurred no obligations to provide or accept work, but at best assumed moral obligations of loyalty in a context where both recognised that the best interests of each lay in being accommodating to the other.

…

18 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 CEGB 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 … "

43. Lord Irvine concluded, at paragraph 20:-

"20 … The industrial tribunal correctly concluded that their case 'founders on the rock of absence of mutuality'. I repeat that no issue arises as to their status when actually working as guides."

Lord Hoffmann, at paragraph 36, said:-

"36 Once it is accepted that the tribunal's finding as to the lack of mutuality of obligation between the respondents and the CEGB cannot be disturbed, it follows that the engagement of the respondents as guides in 1989 cannot have constituted in itself a contract of employment. It laid down the terms upon which it was expected that they would from time to time work for the CEGB and it may well be that, when performing that work, they were being employed. But that would not be enough for the respondents. They could succeed only if the 1989 engagement created an employment relationship which subsisted when they were not working. On the findings of the tribunal, it did not in itself give rise to any legal obligations at all and the respondents' claim must therefore fail."

44. While the guides were arguing for an umbrella contract of employment, the passages we have quoted and, in particular, paragraph 10 of the speech of the Lord Chancellor, indicate that the principle on which their Lordships' decision was based applies equally to a contract of service and to a contract for services; and we have been unable to discern any practical or juridical basis on which that principle, which on the highest authority applies in the case of the former, should not apply in the case of the latter. In our judgment mutuality of obligation to provide and to perform work is an essential element of a contract for services as it is of a contract of service; in the absence of such mutuality, a claim based on an umbrella contract, whether a contract of service or for services, must founder. Of course there will be such mutuality in the case of each individual contract which results from an offer of work which is accepted by the worker; but where the worker is free to choose whether to accept work if offered and cannot call on any obligation upon the employer to provide work, the claim to an umbrella contract must, in our judgment, fail.
45. We have carefully considered whether such mutuality, albeit in the absence of an obligation to provide or to undertake work, could nonetheless be found from the terms of the documents signed by Mr Toulson – for instance from the statements in both that if work was provided, Mr Toulson would be paid at the rate appropriate to the position he was covering in that work; but in our judgment such provisions in the document cannot be seen as more than a statement of the terms which would apply between the parties to each individual contract for work offered and accepted.
46. Accordingly for the reasons we have set out, if the Tribunal in paragraph 4 of their decision concluded in Mr Toulson's favour on the basis of an umbrella contract which governed the relationship between Mr Toulson and the Council for a continuous period of at least thirteen weeks, thus overcoming the otherwise insuperable difficulty in Mr Toulson's path to success arising from the fact that he had not ever worked under individual contracts between himself and the Council over such a continuous period, the Tribunal in our judgment erred in law. Mr Toulson's claim could not succeed on the basis of individual contracts or on the basis of an umbrella contract.
47. The appeal is therefore allowed; there is no reason for any remission to the Tribunal; while the basis of the Tribunal's conclusion in Mr Toulson's favour on Regulation 13(1) is not clear, he had to succeed either on successive individual contracts or on an umbrella contract; and in law he could not succeed on either. On the primary facts the Tribunal should have concluded that Mr Toulson's claim failed; and we therefore order that his claim is dismissed.

Leave to Appeal

48. We believe it to be only fair to treat Mr Toulson's invitation to us to refer this appeal directly to the Court of Appeal, a course which in law we are unable to take, as an application for leave to appeal from our decision. There is in this case what may well be regarded as an important point of principle, namely whether in the absence of mutuality of obligation central to the decision of the House of Lords in Carmichael applies in the case of a contract for services rather than a contract for service. There are, however, factors which indicate that there should not be leave to appeal; they are:-

(1) the law in relation to direct reliance upon Article 7 of the Working Time Directive is clearly set out in Gibson and does not need to be reconsidered;

(2) the need to establish an umbrella contract in a claim such as the present, in order to avoid the effect of Regulation 13(7) and (8) where there has not been a sufficiently continuous series of individual contracts, has been removed by the repeal, from October 2001, of those Regulations; it is unlikely that there are now any or more than a few outstanding claims based on Regulation 13(1) arising in respect of a period prior to that repeal;

(3) the amount at stake in this case, £192 odd, is so small that a further appeal is not to be encouraged;

49. On balance we take the view that the reasons for refusing leave to appeal are manifestly stronger; and we do not give leave to appeal in this case.