United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr George Thomson, Representative 43 Macdonald Place BURNTISLAND KY3 9JT
For the Respondent	Mr N MacDonald, Solicitor Of- Fife Council Law & Administration Service Litigation & Advice Team Town House KIRKCALDY KY1 1XW

SUMMARY
UNFAIR DISMISSAL

Constructive dismissal

CONTRACT OF EMPLOYMENT

Definition of employee

The claimant claimed that she had been unfairly (constructively) dismissed. She worked for the respondents as a social care worker, as a member of their 'bank staff'. The Tribunal held that she had not been employed at the relevant time since there was an absence of mutuality of obligation. On appeal to the Employment Appeal Tribunal, the claimant argued that the fact that she had been paid Statutory Sick Pay and that an officer of the respondents had completed a form when she left which designed her as an employee showed that she had in fact been employed. The appeal was dismissed, the Employment Appeal Tribunal holding that these factors were not sufficient to demonstrate the requisite mutuality of obligation as between employer and employee.


 


THE HONOURABLE LADY SMITH:

Preliminaries

1. This case concerns a claim to the Employment Tribunal for compensation for unfair dismissal.
2. The judgment represents the views of all three members who have pre-read the relevant papers.
3. We will refer to parties as Claimant and Respondents.

Introduction

4. This is an appeal by the Claimant in those proceedings against a decision of an Employment Tribunal sitting at Edinburgh, Chairman Mr D I K MacLeod, registered with Extended Reasons on 3 June 2004.
5. The Claimant was represented by Mr G Thomson, representative, there and here, and the Respondents were represented by Mr N MacDonald solicitor, again both there and here.
6. The Claimant claimed compensation for unfair (constructive) dismissal. An issue arose as to whether or not she was an employee of the Respondents and the matter went before the Tribunal by way of preliminary hearing for the determination of that issue.

The Employment Tribunal's Decision

7. The Tribunal decided that the Claimant was not an employee of the Respondents and that they, accordingly, had no jurisdiction to entertain her complaint. They considered that, in the whole circumstances, there was an absence of mutuality of obligation between the Claimant and Respondents. When the Claimant was working as a member of the bank staff, as was the case at the time their relationship terminated, the Respondents were not obliged to provide the Claimant with work and the Claimant was not obliged to accept any of the work offered to her. Mutuality of obligation was, on the Tribunal's assessment of the relevant law, specifically the case of Carmichael & Another v National Power plc [2000] IRLR 43, essential if it was to be established that a contract of service existed.

The Appeal

8. The Claimant appeals against that decision, contending that the Tribunal erred in law, that they should have found that she was an employee and that this Tribunal should, accordingly, refer the complaint back to the Employment Tribunal for a full hearing of the Claimant's case.

Employment Appeal Tribunal Directions

9. Directions sending this appeal to a full hearing were given in chambers by the Hon. Lord Johnston.

The Legislation

10. The legislative provisions referred to before the Tribunal and before us were, firstly, sections 151 and 163 of the Social Security Contributions and Benefits Act 1992 the provisions of which include:

"151.-(1) Where an employee has a day of incapacity for work in relation to his contract of service with an employer, that employer shall, if the conditions set out in sections 152 to 154 below are satisfied, be liable to make him, in accordance with the following provisions of this Part of this Act, a payment (to be known as " statutory sick pay") in respect of that day….……………………

163.-(1) In this Part of this Act –

"contract of service" (except in paragraph (a) of the definition below of "employee") includes any arrangement providing for terms of appointment of an employee;

"employee" means a person who is –

(a) gainfully employed in Great Britain either under a contract of service or in an office ……..; and

(b) over the age of 16………………"

and, secondly, section 230 of the Employment Rights Act 1996 which defines an "employee" as being an individual who had entered into or works under a contract of employment. The Tribunal took account of these statutory references. Further, it directed itself by reference to what we hold to be the leading authority on the question of whether or not an individual is employed, namely Carmichael & Another v National Power plc. They were also referred to the cases of Franks v Reuters Ltd [2003] ICR 1166, Dacas v Brook Street Bureau(UK) Ltd [2004] IRLR 358, and Clark v Oxfordshire Health Authority [1998] IRLR 125.

The Facts

11. The Respondents are a local authority which, through their social work department, seeks to provide supported accommodation in the community for people with learning difficulties. They run thirteen houses where such services are provided and each house is supported by a Social Care Worker. In 1999, the Claimant applied for a post as a Relief Social Care Worker, known as bank staff. She was successful in her application. Bank staff had no guarantee of hours to be worked and no obligation to work any hours. Bank staff including the Claimant would be offered work by the respondent as and when they had a requirement for a relief worker and they were free to accept or not, as they chose. As from June 2000, the system was that a duty roster would be made up for each house one month ahead. It would be intimated to the Claimant and she thereby ascertained the hours, dates and places that she was being asked to work.
12. In June 2000, the Claimant was offered and accepted a temporary part-time contract with the Respondents, as a Social Care Worker, to cover for a member of staff who was on long term sickness absence. The arrangements whereby the Claimant was paid by the Respondents changed when that contract came into operation. Instead of the Claimant requiring to complete and submit claim forms in respect of hours worked, the system used by bank staff, she was paid in accordance with a return of hours submitted by the Unit Manager. The contract was for 19½ hours per week but she worked extra hours at times so as regularly to work for more than 100 hours per month. The additional hours required to be claimed for on a separate 'Extra Hours Claim Form'. That contract continued until 18 February 2002 and on its termination the Claimant became a member of the bank staff again. Thereafter, to secure payment, she had to complete a form entitled "Relief Staff Claim Form", a form used by bank staff.
13. After February 2002, the Claimant continued to do similar work for similar hours, all as explained by the Tribunal. It was her practice to work as many hours as possible for financial reasons so she would normally accept all hours offered, although there was at least one occasion when she declined to do so. In June 2003, she tendered her resignation.
14. The Claimant was offered the chance to join the Respondents' pension scheme but did not take up the offer.
15. The Claimant was off work prior to her resignation and during that period she was paid statutory sick pay by the Respondents.
16. The Claimant was able to use the Respondents' Grievance Procedure and would, if necessary, have been subject to their Disciplinary Procedure.
17. The crucial fact, so far as the Employment Tribunal were concerned, was that the Claimant's position changed in February 2002 as was evident from the documentation. It made it clear, they said, that at that point, the Claimant reverted to the status of bank staff and mutuality of obligation ceased, once more, to exist.

The Claimant's case:

18. It was submitted on behalf of the Claimant that the Tribunal erred in respect that, having found that the Respondents paid her statutory sick pay, they should have inferred that there was a relationship of mutual obligation between the parties and concluded that the Claimant was an employee. Further, they should have drawn the same inference from the fact that when the relationship between the parties terminated, the Respondents' Mrs McArthur completed a 'Leaving Notification Form' (7/43) in which the Claimant was referred to as an employee. In these circumstances, the test in Carmichael was, it was submitted, met and it was shown that a global contract had been created. Reference was also made to the cases of Clark and Franks.

The Respondents' case:

19. It was submitted on behalf of the Respondents that the finding regarding the payment of statutory sick pay was but one adminicle of evidence and even if it was to be taken as indicative of an acknowledgement of obligation on the part of the Respondents, it did not show that there was mutuality of obligation as between the parties. The position remained that there was no finding of any obligation or duty on the part of the Claimant and the overall assessment by the Tribunal, on the evidence, remained that there the requisite mutuality was not established. The form that had been completed showing the Claimant as an employee did not make any difference.

Conclusions:

20. We are not persuaded that the Employment Tribunal erred. They properly considered the whole history of the Claimant having carried out work for the Respondents, including all the features specified in the Notice of Appeal.
21. We fully accept that it could be inferred from the payment by the Respondents of statutory sick pay, that they at least accepted that they had some measure of obligation towards the Claimant. However, importantly, the Employment Tribunal properly followed the principles that can be found clearly set out in the case of Carmichael where, in commenting under reference to the particular facts of that case, at p.1230, the Lord Chancellor said:

"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 (Nethermere (St Neots) Ltd. v Gardiner [1984] ICR 612, 623C-G per Stephenson LJ and Clark v Oxfordshire Health Authority [1998] IRLR 125, 128 per Sir Christopher Slade, at para 22)."

and at p. 1235, Lord Hoffman said :

"Once it is accepted that the tribunal's findings as to the lack of mutuality of obligation between the applicants and the C.E.G.B. cannot be disturbed, it follows that the engagement of the applicants 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 C.E.G.B. and it may well be that, when performing that work, they were being employed. But that would not be enough for the applicants. 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 applicants' claim must therefore fail."

22. The emphasis is on mutuality. Mutuality of obligation must be present before the relationship can, as a matter of law be characterised as one of employer and employee. To put it another way, there requires to be some measure of commitment on both sides. One sided commitment or obligation is not enough. Hence the analysis that was set out by Sir Christopher Slade in Clark where, at para. 41, he states:

"On the findings of the industrial tribunal, the authority was at no relevant time under any obligation to offer the applicant work nor was she under any obligation to accept it. I would, for my part, accept that the mutual obligations required to found a global contract of employment need not necessarily and in every case consist of obligations to provide and perform work. To take one obvious example, an obligation by one party to accept and do work if offered and (our emphasis) an obligation on the other party to pay a retainer during such periods as work was not offered would in my opinion, be likely to suffice. In my judgment, however, as I have already indicated, the authorities require us to hold that some mutuality of obligation is required to found a global contract of employment."

23. It is noteworthy that Sir Christopher Slade's alternative example still involves obligation on both sides of the relationship. He does not, for instance, suggest that it would be enough if one party was required to accept employment if it was offered. That is an approach with which we agree.
24. The Tribunal applied these principles to the facts of the present case and found, appropriately on those facts in our view, that the requisite legal obligation or mutuality of contract did not exist as between the parties at the time the Claimant ceased carrying out work for the Respondents. In common with the Tribunal, we consider that the fact that, as from February 2002, she reverted to the position whereby she was a member of bank staff who could not be required to work by the respondent and could not require that the Respondents give her work in circumstances where there was no other evidence of mutual obligation, was fatal to her contentions. We are not persuaded that the payment of statutory sick pay or the completion of the form referred to provided evidence of the requisite mutuality of obligation. Whatever they ` demonstrated about the Respondents' approach, they were not indicative of there being any measure of obligation on the part of the Claimant at all.
25. We shall, accordingly, dismiss the appeal.