Appeal No. UKEAT/0123/12/BA
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX
At
the Tribunal
On
20 July 2012
Judgment handed down on 6 August 2012
Before
HIS HONOUR JUDGE DAVID RICHARDSON
(SITTING ALONE)
PULSE
HEALTHCARE LTD APPELLANT
CAREWATCH
CARE SERVICES LTD & 6 OTHERS RESPONDENTS
Transcript of Proceedings
JUDGMENT
AMENDED
HIS
HONOUR JUDGE DAVID RICHARDSON
1.
This is an appeal by Carewatch Care Services Limited (“Carewatch”) and
Pulse Healthcare Limited (“Pulse”) against a judgment of the Employment
Tribunal sitting in Newcastle (Employment Judge Shepherd sitting alone) dated
29 July 2011. The Employment Judge found that five individual Claimants – Mrs
Short, Ms Tweedy, Ms James, Ms Slone and Ms Kelly (“the Claimants”) were
employees of Carewatch within the meaning of section 230 of the Employment
Rights Act 1996.
2.
Underlying that judgment is a dispute between Carewatch and Pulse as to
whether the employment of the Claimants transferred from Carewatch to Pulse in
December 2010 by virtue of the Transfer of Undertakings (Protection of
Employment) Regulations 2006 (“TUPE”).
3.
The local primary care trust (“the PCT”) supported a 24 hour critical
care package for a lady called VF who had severe physical disabilities. Until
1 December 2010 there was a contract between Carewatch and the PCT for
provision of that package. The PCT terminated that contract and with effect
from 2 December 2010 entered into a contract with Pulse to provide the
package. The Claimants’ case, until recently largely supported by Carewatch,
is that they were employed by Carewatch in providing VF’s package; and that
their employment transferred to Pulse pursuant to TUPE.
4.
Pulse took issue with the Claimants’ case on three grounds. (1) The
Claimants were not employees of Carewatch, since there was no mutuality of
obligation; (2) Alternatively, the Claimants did not have sufficient continuity
of employment to claim unfair dismissal. (3) Even if they were employees,
their employment did not transfer to Pulse under TUPE.
5.
A pre-hearing review was convened to determine the first and second
issues. The third issue was not the subject of the pre-hearing review and
remains to be determined.
The background facts
6.
VF was in need of the highest level of care in the community. She
required care around the clock. The package devised for her called for no
less than 15 persons, working on shifts, to look after her.
7.
Carewatch became involved in 2003 as a result of a TUPE transfer from an
earlier provider. By this time three of the Claimants – Mrs Short, Ms James
and Ms Tweedy – were already part of the team of carers. There seems to have
been no specific evidence before the Tribunal as to the terms on which they worked
prior to the TUPE transfer in 2003.
8.
Minutes of a meeting dated 23 April 2003 (between VF’s parents,
Carewatch and the PCT) show the importance of providing continuity of care to
VF. VF’s mother asked Carewatch’s manager whether she would be able to keep
her present carers. The manager replied that this would be entirely
appropriate as they had built up a trusting relationship and were trained to
the standards necessary. It was agreed that it was imperative to identify a
team of carers which would remain constant. Assurances were given about the
training of new staff.
9.
At this time Mrs Short, Ms James and Ms Tweedy were given what was
called an “offer of employment” by Carewatch. It was said that there would be
a formal “Contract for the Provision of Care Services” for them. No document
with this title was produced to the Tribunal.
10.
However the Claimants – with the exception of Ms Kelly – all signed a
document entitled “Zero Hours Contract Agreement”. Ms James and Ms Tweedy
signed it on 25 November 2004; and Mrs Short on 6 December 2004. In their
cases the document was signed long after they began work for Carewatch. In Ms
Slone’s case it was signed about the time she began work, in December 2006; and
in Ms Kelly’s case in November 2007. The document runs to nine pages. It will
suffice to summarise the main points in it.
11.
There are repeated references within the document to “employment”.
There is a sub-title - “Principle [sic] Statement of Terms and Conditions of
Employment”. The document says that it sets out particulars of the terms and
conditions of employment “as required by section 1 of the Employment Rights Act
1996”. It deals with commencement of employment (said to be May 2003 in two
cases; left blank in the third). It says that continuous employment will be
treated for all purposes as commencing on the date given. It refers to the
“duties which the job normally entails” and says that “employees may from time
to time be required to undertake additional or other duties ..” There are provisions
about payment, deduction from “salary”, uniforms, annual leave, sickness,
termination on notice, and pension all of which are couched in terms
appropriate to a contract of employment.
12.
Under the heading “Place of Work”, clause 3 provided:
“Carewatch is responsible for providing services at various
locations for varying periods of time. Accordingly you will have no fixed
place of work and will be expected to perform duties at any location that is
within reasonable travelling distance of your home.”
13.
In a schedule to the document, there was a heading “place of work”.
Against the names of Ms James and Ms Tweedy appeared the words “no fixed
location”. Against the name of Mrs Short appeared the words “VF home”.
14.
Under the heading “Hours of Work” clause 6 provided:
“Carewatch recognises that Employees must work the hours
necessary to fulfil a contract. The Employee will work such hours and at such
times as are agreed between him/her and Carewatch. The Employer is not under
an obligation to offer the Employee any work and has specifically reserved the
right to reduce the Employee’s working hours whenever necessary.”
15.
In the schedule to the document against the heading “Hours of
Employment” appear the words “Zero hours”.
16.
Finally, under the heading “Mutuality of Obligation” clause 8 provided:
“Whilst zero hours contracts need flexibility on both sides,
they do not exclude Employees from working for another employer whilst
unassigned to Carewatch.”
17.
It was the case for the Claimants that they worked an agreed number of
hours each week under their contract with Carewatch. Ms Short said that she
worked 36 hours per week – three nights regularly, taking time off only for
holidays or sickness. Ms Kelly said that she worked 24 hours per week – indeed
that she required and was offered 24 hours per week. The Employment Judge
accepted that evidence, noting that the agreed hours she worked were not
reflected in the written contract. There was one point at which Ms Kelly was
suspended from work: she was paid in full during the period of suspension.
18.
Carewatch produced some evidence of the hours worked by the Claimants in
the year 2009-2010. This evidence indeed bears out the regular hours which
they worked in respect of VF.
19.
Carewatch’s operations manager, Mrs Kilcoyne, gave evidence. She had
not been involved at the time when the Claimants were first employed, but she
said that in her view the Claimants were employees and she confirmed that they
were specifically employed on the VF package.
The Employment Judge’s reasons
20.
The Employment Judge heard oral evidence from Mrs Short and Ms Kelly.
The other Claimants were present (Mr Duggan tells me that in the course of a
relatively informal and discursive hearing they offered vocal support, but said
they did not wish to give formal evidence because they could not add anything).
21.
After making findings of fact upon which I have drawn, and summarising
some legal considerations, the Employment Judge said that the “written contract
of employment did not reflect the true position”; he said that in reality the
Claimants worked fixed hours on a regular basis over a number of years. He
said that Ms Kelly’s payment during suspension “reflected the reality of the
situation that [Carewatch] had an obligation to pay an employee suspended from
their regular work”.
22.
He continued;
“9. Most of the factors point to the claimants in this case
being employees under section 230(1). The only issue pursued on behalf of the
second respondent is that of a lack of mutuality of obligation. I am satisfied
there was sufficient mutuality of obligation for the claimants to be
employees. Once the rota was prepared they were required to work and the
employer was required to provide that work. They were subject to control and
discipline; they had to provide personal services; they were provided with
uniforms and equipment; they were paid on a PAYE basis; they had all worked
regularly over a number of years and had only taken time off for holidays,
sickness and when suspended for which they received payment; it was not
established that there were gaps in the continuity of employment. The
claimants required regular work and this was provided by the first respondent.
10. I am satisfied that the documents did not
reflect the true agreement between the parties and that four essential
contractual terms were agreed: (1) that the claimants would perform the
services for the first respondent (2) that the claimants would be paid for that
work; (3) that the claimants were obliged to carry out the work offered to them
and the first respondent undertook to offer work and (4) that the claimants
must personally do the work and could not provide a substitute to do so. Those
were the true terms of the contract.”
Statutory provisions
23.
Section 230(1)-(2) of the Employment Rights Act 1996 provides:
“(1) In this Act “employee” means an individual who has entered
into or works under (or, where the employment has ceased, worked under) a
contract of employment.
(2) In this Act “contract of employment” means a contract of
service or apprenticeship, whether express or implied, and (if it is express)
whether oral or in writing.”
Submissions
24.
On behalf of Pulse, Mr Duggan in his submissions carefully and correctly
distinguished between two possibilities: (1) a global or “umbrella” contract of
employment, by which he meant a contract of employment covering the whole of
the work which a Claimant did for Carewatch; and (2) a succession of individual
contracts covering individual shifts or individual periods of rostered work.
25.
Mr Duggan submitted that the Employment Judge did not find, and was not
entitled to find, that the Claimants were employed under a global or umbrella
contract. Such a contract required mutual obligations subsisting over the
entire duration of the relevant period. He submitted that, in the light of the
“Zero Hours Contract Agreements” it was impossible to make such a finding. He
further submitted that when cross examined Mrs Short and Ms Kelly admitted that
there was no mutuality of obligation. He took me to passages in the cross
examination of the Claimants (as recorded in the Employment Judge’s notes) in
support of that submission.
26.
Mr Duggan further submitted that, if there was a succession of
individual contracts covering individual shifts or individual periods of
rostered work, then there was a real issue as to whether the Claimants had
established continuity of service. He took me to schedules which his
instructing solicitor had prepared from data provided by Carewatch. He
accepted that in general terms the schedules showed that the Claimants had
indeed worked regular shifts as they said: but he pointed out that there were
apparent breaks in continuity. He submitted that the Employment Judge had not
dealt with this point properly: the reasons were not Meek compliant
(see Meek v City of Birmingham District Council [1987] IRLR 250.
27.
Mr Wastall on behalf of Carewatch on appeal supports Mr Duggan’s
submissions as regards the existence of a global or “umbrella” contract. He
submits that there was no such contract. He submits that there was no
obligation to offer work; and if work was offered it was only when the roster
was agreed by the employee that there was any obligation to work. He submits
that the reasons were not Meek compliant because there was no
sufficient analysis of the obligations of the parties, and a failure to address
the answers of Ms Short and Ms Kelly in cross examination.
28.
Counsel took me to familiar authorities on the question of mutuality:
these included Autoclenz v Belcher [2011] ICR 1157 (Supreme Court); Carmichael v National Power plc [2000] IRLR 43 (House of
Lords); Nethermere (St Neots) Ltd v Gardiner [1984] IRLR 240, McMeechan
v Secretary of State for Employment [1997] ICR 549, Clark v
Oxfordshire Health Authority [1998] IRLR 125 and Cornwall County
Council v Prater [2006] IRLR 362 (Court of Appeal).
29.
Mrs Short represented all the Claimants below. She has not attended
today, but she has put forward a succinct skeleton argument. She submits that
the care package on which the Claimants worked was a 24 hour critical care
package with a lot of specialised medical procedures that they were
specifically trained for, so there had to be mutual obligations between
employer and employees to comply with the care package and ensure the shifts
were covered. The rotas showed what days/nights each member of staff worked
and also showed what cover was to be worked if staff were on holiday or were
sick. Even though the contracts were headed zero hours they all worked set
hours each month with no change in the hours worked apart from covering
holidays/sickness.
Discussion and conclusions
30.
There is, as counsel have correctly submitted, a fundamental distinction
to be drawn between a global or “umbrella” contract of employment on the one
hand, and a series of individual contracts of employment covering individual
assignments, shifts or rosters. If the Claimants were employed under ordinary,
global, contracts of employment, no real problem of continuity of employment
arose.
31.
In my judgment the Employment Judge plainly found that the Claimants
were employed by Carewatch under global contracts of employment. He accepted
their case that they were employed to work a certain number of hours each week
in relation to the critical care package for VF. This is what he meant when he
said that “the Claimants were obliged to carry out the work offered to them and
[Carewatch] undertook to offer that work”.
32.
As regards Ms Kelly, in my judgment the position could not have been
clearer, once the Employment Judge accepted her evidence. She said she was
offered 24 hours per week and would not have accepted the job if she had not
been given this offer. This being so, there was a contract of employment
whereby Carewatch was obliged to offer her 24 hours work per week and she was
obliged to work it.
33.
As regards Mrs Short, the position was essentially the same. She said
in evidence “as far as I was concerned the contract was on the hours we did”.
In her case it was 36 hours per week. There was accordingly a contract of
employment whereby Carewatch was obliged to offer her 36 hours work per week
and she was obliged to accept it.
34.
To my mind any other conclusion, given the circumstances of this case,
would have been unrealistic. Carewatch was providing a critical care package
of the most challenging kind. The minutes in 2003, to which I have already
referred, demonstrate the importance of maintaining an established team of
carers. This is entirely consistent with the Claimants’ case. It is fanciful
to suppose that Carewatch relied on ad hoc arrangements in the provision of
such a package. The records produced – showing the working of regular hours –
also supported the Claimants’ position. So did the payment of Ms Kelly during
suspension; and the evidence of Ms Kilcoyne to which I have referred.
35.
The Employment Judge was, to my mind, entirely justified in saying that
the written contracts – the “Zero Hours Contract Agreement” – did not reflect
the true agreement between the parties. His judgment was given shortly before
the Supreme Court in Autoclenz v Belcher handed down its
decision; but his approach accords with what it laid down. Lord Clarke, giving
a judgment with which all members of the Court agreed, approved (see paragraph
29) the approach of Elias J in Consistent Group Ltd v Kalwak [2007] IRLR 560:
“57. The concern to which tribunals must be alive is that armies
of lawyers will simply place substitution clauses, or clauses denying any
obligation to accept or provide work in employment contracts, as a matter of
form, even where such terms do not begin to reflect the real relationship.
Peter Gibson LJ was alive to the problem. He said this (p 697):
‘Of course, it is important that the industrial tribunal
should be alert in this area of the law to look at the reality of any
obligations. If the obligation is a sham, it will want to say so.’
58. In other words, if the reality of the situation is that
no-one seriously expects that a worker will seek to provide a substitute, or
refuse the work offered, the fact that the contract expressly provides for
these unrealistic possibilities will not alter the true nature of the
relationship. But if these clauses genuinely reflect what might realistically
be expected to occur, the fact that the rights conferred have not in fact been
exercised will not render the right meaningless.”
36.
I turn to consider the submission that a contrary conclusion is
compelled by answers given in cross examination. In my judgment the Employment
Judge was not required by any answer given in cross examination to reach a
different conclusion.
37.
It was, of course, only to be expected that counsel – in particular
counsel for Pulse – would tax the witnesses with the Zero Hours Contract
Agreement. The witnesses were not lawyers; they might well agree, confronted
with the words drafted by Carewatch’s lawyers, that they did not have to work.
But the Employment Judge was fully entitled to conclude, in accordance with
their evidence about agreed hours, that the true contract was otherwise.
38.
Mr Wastall placed particular reliance on a passage in his cross
examination of Mrs Short. She agreed with him that rosters were put up on a
monthly basis. He put it to her that “if there was a problem the worker could
say they did not want to do that?” She answered “yes”. Mr Wastall submits that
this demonstrates that there was no mutual obligation. I disagree. It is very
common for employees under ordinary – global – contracts of employment to work
rostered hours. When a new roster comes out, if there is a problem the
employee can raise an objection to doing the hours. The employer will then
decide whether to give the worker an instruction that the worker must do so:
and disobedience to the instruction, if it is reasonable, will be a breach of
contract. The mere fact that an employee can object to rostered hours if there
is a problem does not mean there is no mutuality of employment.
39.
For these reasons I conclude that the Employment Judge reached the
correct decision; and I reject the arguments of Carewatch and Pulse based on a
supposed lack of mutuality.
40.
Once granted that the Claimants were employed under global contracts of
employment, no problem of continuity arose. There was no reason to suppose
that any of the Claimants had breaks in their continuity of service. If the
Employment Judge had found that the Claimants were employed under successive
individual contracts of employment for short periods, he would have been
required to give fuller reasons on the question of continuity. Given that they
were employed under global contracts he was entitled to deal with it, as he
did, in half a sentence.
41.
For these reasons I consider that the appeals should be dismissed. I
record that counsel today thought that it would be sensible and convenient to
deal with all issues concerning liability at the next hearing (ie, not merely
the application of TUPE); and that they considered that 2 days would be an
appropriate time estimate. I see no reason to doubt that they are correct.
The Employment Judge gave directions at the end of the hearing: a new time
table will be required, since the parties have treated the directions as in
abeyance while the appeal was heard.
