Employment law bulletin July 2018

Tuesday 31st July, 2018

No umbrella contract of employment despite employee’s regular service

In Hafal Ltd v Lane-Angell it was considered by the Employment Appeal Tribunal (“EAT”) whether an individual who was employed on a ‘bank basis’ with no guaranteed hours was an employee.

Background

The Respondent provided support for those with mental health problems. In 2012, the Claimant began working for the Respondent as an unpaid volunteer. In 2013 the Claimant was appointed to a more substantial, paid role, but still on a “bank basis”. In 2015 the Respondent required the Claimant to commit to a minimum availability of ten shifts per month. The Respondent also operated a three-strike rule; if someone missed three call outs, they would be removed from the rota. In January 2016 the Respondent told the Claimant that she would no longer be offered any more work. The Claimant took this as dismissal and claimed unfair dismissal for which she had to establish that she was an employee. The Respondent argued that there could be no dismissal as the Claimant had never been “employed”. The original Employment Tribunal held that the Claimant was an employee  on the grounds of a ‘mutuality of obligation’ between the parties, largely on the basis that when work was offered to the Claimant, she had to accept it or there were potential sanctions. Therefore, there was an ‘umbrella’ contract which existed between the Claimant and the Respondent.

The Respondent appealed.

EAT decision

The EAT allowed the Respondent’s appeal.

Whether the Claimant worked under a contract of employment was not solely dependent on the terms of her appointment letter. The tribunal also had to take the intention of the parties into account. However, it was found that the tribunal had focused too much on the latter and not enough on the terms of the engagement. The letter of appointment was unambiguous. There were no guaranteed hours and there was also reference to the Claimant providing services “if” available. The Claimant could indicate that she wasn’t available and was not therefore obliged to work when requested to do so. The terms of the letter indicated that there was no mutuality of obligation.

Even if the EAT disregarded what was said in the appointment letter the EAT still failed to find any mutuality of obligation in either the expectation that the Claimant would provide services or the three strike rule.

Conclusion

The EAT reminded us that “expectation” is not the same as “obligation” and that the first point of reference when determining employment status will always be the express contractual terms. Therefore, employers should ensure not only that the terms of any contractual documentation are unambiguous, but also that they reflect the employment relationship in practice, as a key factor in these cases will always be whether there was mutuality of obligation between the parties.

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