United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MRS TRACEY MOSS (Representative) Citizens Advice Specialist Support The Development Centre Coxwell Avenue Wolverhampton Science Park Wolverhampton WV10 9RT
For the Respondent	MR STUART RITCHIE (of Counsel) Messrs Magrath LLP 66-67 Newman Street London W1T 3EQ


 


SUMMARY

JURISDICTIONAL POINTS: Worker, employee or neither

Hospital bank porter. Whether an employee? Absence of mutuality of obligations. Prater (CA) and N.W. Probation v Edwards (EAT) distinguished. Employment Tribunal entitled to find he was not employed under a succession of short engagements. He could, on the facts, be sent home during a shift if no longer required to work, without pay, for the remainder of the shift.


 


HIS HONOUR JUDGE PETER CLARK

1. The parties to these proceedings before the Reading Employment Tribunal are Mr Little, Claimant and BMI Chiltern Hospital, Respondent. I shall so describe them. This is an appeal by the Claimant against the judgment of Employment Judge Barrowclough, promulgated with reasons on 24 September 2008 following a Pre-Hearing Review (PHR) held on 16 September to determine a single issue, was the Claimant an employee of the Respondent for the purpose of bringing a complaint of unfair dismissal? The Judge held that he was not and consequently his unfair dismissal claim was dismissed.

The Facts

2. The Claimant commenced work for the Respondent as a Bank Theatre Porter at the Chiltern Hospital on 15 October 1992. He worked varying hours, generally between 20-30 hours a week. He did the same work as two full-time theatre porters who worked under written contracts of employment. He did not work for the Respondent after 28 February 2008.
3. The working relationship between the Claimant and the Respondent was regulated by a series of written agreements. On 24 April 1997 the Claimant signed a letter dated 21 March and addressed to Miss Sally Hill, Director of Clinical Services. The material passages are as follows:

"'BANK' THEATRE PORTER DUTIES

This letter acknowledges your written enquiry as to any interest I may have in an offer of permanent employment on an annual hours basis, and confirms that I have declined to take it up. Instead I would prefer to offer you my services as an independent contractor.

I hereby offer you my services as a 'Bank' theatre porter, available to work with your theatre staff on an 'as and when' basis. My fees will be £4.40 per hour (variable and reviewed annually).

I will be an independent contractor and you will pay me monthly, in arrears, with deductions for tax and national insurance (as required by the Inland Revenue).

I understand that I have the right to refuse the offer of work if it is inconvenient to me and that the Hospital reserves the right to cancel advance bookings if circumstances are such that additional help is not required. Whilst I am not required to be available to work, and whilst you are unable to guarantee that you will provide work for me, I do recognise that if I am unable to offer myself for work within four consecutive weeks then my name will be removed from the Bank List. I also acknowledge that if I cancel your booking on four consecutive occasions my name will be removed from the Bank List. I also appreciate that occasions of sickness or holidays cannot be charged for."

Pausing there, it appears that subsequently the Claimant did receive holiday pay as required by the Working Time Regulations 1998.

4. On 25 May 1999 the Claimant indicated that he would not be interested in discussing the possibility of becoming a contracted member of staff at the Chiltern Hospital and on the same day signed a letter dated 11 May addressed to Mr Yates, Executive Director, in the same terms as that of 24 April 1997. Finally, on 8 February 2008 he signed a further letter to Jane Banks of the Respondent dated 8 January in which he said:

"Dear Jane

I am writing to inform you that I wish to continue to offer you my services as a "Bank" worker, and agree to abide by the requirements stated in my original letter. I confirm that I am available to work with your staff on an 'as and when' basis.

I acknowledge that there is no mutuality of obligation, and that each assignment is separate. I am not required to be available to work, and you are unable to guarantee that you will provide work for me."

The Employment Tribunal Judgment

5. The Judge found that the Claimant's contention that he was an employee of the Respondent foundered on the rock of absence of mutuality, to borrow the phrase adopted by the Lord Chancellor in Carmichael v National Power [1999] 1 WLR 2042, 2047G. His essential reasoning is encapsulated at paragraph 7 of the Reasons where he said this:

"With respect to the Claimant the main flaw in that argument is that, as he himself agreed, he didn't have to accept the hours and duties allocated to him, but chose to do so; and that he had a choice of whether or not and when to work for the Respondent. Whilst the exercise of that choice might well not endear him to the Respondent, and might very well have led to an early termination of the working relationship between him and the Respondent (as in fact provided for in some of the letters the Claimant signed), the very existence of such a choice or option is inconsistent with his claimed status as an employee, and in particular with the existence of a mutuality of obligations between the parties, respectively to undertake and to provide work. As a further example of this principle, the Respondent could, and occasionally did, send home "Bank" workers half way through a shift when rostered duties were not in fact required, in which event they would have no entitlement to be paid for the remainder of the shift."

6. At paragraph 8 he dealt with the possibility that the contractual documents were a sham (considered by the Court of Appeal in Consistent Group Ltd v Kalwak [2008] IRLR 505, following Express & Echo v Tanton [1999] IRLR 367) and concluded that, far from being a sham, the written documentation accurately reflected the intentions of the parties, as the Claimant accepted in his evidence, thus anticipating the approach of Smith LJ in the subsequent Court of Appeal decision in Protectacoat Firthglow Ltd v Szilagyi [2009] EWCA 98.

Mutuality of obligations

7. Carmichael decides that a mutual obligation to offer and do the work offered is one of the irreducible minima of a contract of service. However, that case was concerned with whether tour guides engaged on a casual, as and when basis, were employed under a global or overarching contract of employment, as was the earlier case of the Bank nurse, Clark v Oxfordshire Health Authority [1998] IRLR 125 (CA) approved in Carmichael.
8. In the present case the Claimant does not and never has sought to rely on a global contract of employment. He accepts that between engagements there is no mutuality of obligation in the Carmichael sense. Instead, he contends that each separate period of work for the Respondent represented a separate contract and that the mutual obligations during each separate period of work amounted to a contract of employment. Specifically, Mrs Moss relies on the judgment of Elias J in Stephenson v Delphi Systems Ltd [2003] ICR 471 for the proposition that it is sufficient that the individual does work for which the employer is obliged to pay. At paragraph 11 Elias J said:

"11. The significance of mutuality is that it determines whether there is a contract in existence at all. The significance of control is that it determines whether, if there is a contract in place, it can properly be classified as a contract of service, rather than some other kind of contract."

and at paragraph 13:

"13. The question of mutuality of obligation, however, poses no difficulties during the period when the individual is actually working. For the period of such employment a contract must, in our view, clearly exist. For that duration the individual clearly undertakes to work and the employer in turn undertakes to pay for the work done. This is so, even if the contract is terminable on either side at will. Unless and until the power to terminate is exercised, these mutual obligations (to work on the one hand and to be paid on the other) will continue to exist and will provide the fundamental mutual obligations."

9. That degree of mutual obligation at least existed in the present case submits Mrs Moss and thus the Claimant was employed under a contract of service.
10. Stephenson was concerned with the question whether the Claimant, an agency worker, was employed by the end user. The Employment Appeal Tribunal, upholding the Employment Tribunal, found he was not. The end user did not pay his wages and was under no obligation to provide him with work.
11. For the purposes of bringing his claim of ordinary unfair dismissal, for which a period of one year's continuous employment is a pre-requisite (s.108(1) Employment Rights Act 1996 (ERA)) the Claimant relies on the continuity provisions of s.212. Such continuity was put in issue by the Respondent's Form ET3, but that question was not scheduled for determination at the PHR.
12. In further support of the proposition he relied on and relies before me on the Court of Appeal decision in Cornwall County Council v Prater [2006] IRLR 362, followed and applied by HHJ Richardson in this Tribunal in North Wales Probation Area v Edwards (UKEAT/0468/07/RN. 12 December 2007).
13. In Prater the Claimant was engaged by the County Council to teach children at their homes. The Council was under no obligation to provide engagements nor the Claimant to accept them when offered. However, once she had agreed to accept a pupil, she was obliged to fulfil her commitment to that pupil and the County Council was obliged to continue to provide work until the particular engagement ceased.
14. On those facts the Court of Appeal upheld the finding of an employment tribunal that the claimant was employed under a succession of individual teaching engagements exhibiting sufficient mutuality of obligations to found a contract of service over a 10 year period. The gaps between engagements were bridged by the temporary cessation provision in s.212(3)(b) ERA. The position is encapsulated in the judgment of Mummery LJ at paragraph 40(5) where he said:

"The important point is that, once a contract was entered into and while the contract continued, she (the Claimant) was under an obligation to teach the pupil and the Council was under an obligation to pay her for teaching the pupil made available to her by the Council under that Contract. That was all that was legally necessary to support the finding that each individual teaching engagement was a contract of service."

15. A similar result obtained in Edwards. There the Respondent Probation Service operated a system whereby they gave what was called "sessional employment" to relief hostel workers. The issue was whether when the relief workers worked a session were they employees under a contract of employment?
16. In upholding the Employment Judge's decision that Mrs Edwards was an employee when actually working sessions Judge Richardson proceeded on the basis (paras. 35-36) that whereas no binding contract to provide or do the work came into existence when a booking was made with a relief worker because the booking did not guarantee that the work would remain available, it might be withdrawn if a permanent member of staff covered the session, once the relief worker attended for work the Probation Service then took upon itself the obligation to provide work and pay for it.

Discussion

17. Mrs Moss first submits that the Judge failed to appreciate the nature of the Claimant's case. It was not that he was employed under a global contract of service, rather that he was employed under a succession of contracts of service in respect of each period of work undertaken.
18. Whilst I accept that, read as a whole the Judge's reasons do not draw a sharp distinction between the global and separate contract arguments, as Mrs Moss characterizes them, I am not persuaded that he overlooked the basis of the claimant's case. I am told that both Prater and Edwards were cited below.
19. Thus the critical question, as Mrs Moss acknowledges, seems to me to be whether the fact that the Respondent could and did send home bank workers halfway through a shift when rostered duties were not required (Reasons, para. 7) negatived a succession of specific engagement contracts of employment.
20. It is important to recognize that how the arrangement worked in practice is not a substitute for the written agreement between the parties. However, where the operation of the relationship demonstrates that the parties do not realistically intend or envisage that the terms would be carried out as written that may form a foundation for finding that the written words do not truly reflect the intentions of the parties (see Protectacoat para. 57).
21. In the present case the documentary evidence plainly envisaged that there would be no mutuality of obligations. The finding that on occasions bank workers were sent home halfway through a shift without the worker being entitled to payment for the remainder of the shift materially distinguishes in my judgment this case from both Prater and Edwards on its facts, as Mr Ritchie submits. In those cases, once the Claimant accepted a pupil or turned in for a shift the Respondent was obliged to provide work and pay the worker for the whole of the engagement (Prater) or shift (Edwards). That was not the case here. The work could be withdrawn during Mr Little's shift and he was not entitled to payment for the remainder of the shift. As Mrs Moss realistically accepted, there was no obligation on the Respondent to provide the Claimant with work under the contract. In these circumstances I agree with Mr Ritchie that the Judge was entitled to conclude that, as the parties plainly agreed, there was no mutuality of obligation even on the basis of a succession of individual assignments each amounting to separate contracts of service. Although there was a contract in the Stephenson sense, it was in fact and law a contract for freelance services, to adopt the expression used by Park J in Usetech Ltd v Young [2004] STC 1671, para. 60.

Disposal

22. It follows for these reasons that this appeal fails and is dismissed.

Postscript

23. Although this case failed on the employee point, where a claimant relies on a series of short engagement contracts of service it would be sensible to list for hearing at the same time the continuity question under s.212 ERA at a single PHR in the interests of saving both time and costs.