Clark v Oxfordshire Health Authority [1997] Ewca Civ 3035

EWCA-Civ
Clark v Oxfordshire Health Authority
[1997] Ewca Civ 3035 · 1997-12-18
[2]The policy of the Health Service is to encourage you to join a trade union.....[3]Your employment may be subject to a satisfactory medical examination”. There was an express grievance procedure “relating to the terms and conditions of your employment” and there were provisions under the heading “Discipline and Dismissal”. Paragraph 7 provided that any matters of a confidential nature must under no circumstances be divulged to any unauthorised person. The relevant sections of the Whitley Council Conditions of Service contain the following relevant paragraphs:- “11.1 “Bank Nurses” will be subject to the following Nurse and Midwives Staffs Negotiating Council conditions of Service in so far as they are casual staff working irregularly at the request of an employing authority. These Conditions are only applicable to Bank Nurse service on or after 1 May l982. 11.2 A “bank nurse” is a Registered or Enrolled Nurse or Registered Midwife who is registered with a nurse bank administered by an employing health authority and is available to be called to work in a casual capacity to fill a temporary vacancy. Any staff meeting this definition but who are conditioned to work regular hours each week must be regarded as part-time staff and employed under the appropriate conditions of service of the Negotiating Council. 11.3 On commencing employment as a bank nurse: When a nurse first undertakes a period of service as a bank nurse, the employing health authority shall determine the appropriate salary scale......... 11.4 Rates of pay for hours worked: bank nurses should be paid on a sessional basis according to the number of hours worked and on the appropriate salary scale for the post in which they are working as a bank nurse. A bank nurse’s rate of pay shall be calculated pro rata to a 37½ hour week (i.e. for the appropriate grade of full-time staff and applied in accordance with paragraph 10.1). (Paragraph 11.5 provides for entitlement to certain increments) 11.7 Bank nurses should not receive any retainer fee for registering on the bank and cannot be regarded as having entitlement to emergency duty payments under the terms of paragraphs 5.15 to 5.22. 11.8 Bank nurses are not regular employees and have no entitlement to guaranteed or continuous work. It is for the employing authority to determine in any one week whether a nurse shall be called in to work (if available) and the number of hours to be worked each day”. The Chairman of the Industrial Tribunal made a number of further findings of fact as follows:- The Nurse Bank was administered by the Authority and supplied the services of Bank Nurses to a number of hospitals within its area. The applicant worked when required at any one of three hospitals. The applicant had no fixed or regular hours of work. Bank Nurses would be offered work as and when a temporary vacancy occurred and could be asked to fill any vacancy for which they were appropriately qualified and/or experienced. When she worked she was paid according to an hourly rate, her pay being subject to deduction of tax, national insurance and superannuation under PAYE. She had no entitlement to any pay when she did not work, and had no entitlement to holiday pay or sick leave. There was a break from 23rd August l992 to 25th October [l992] during which she provided no services and had four weeks leave. She did not work during the weeks ending 22nd November l992 and 3rd January, 10th January, 17th January, 4th April and 11th April l993. The Industrial Tribunal found as facts that(1) though the applicant said she never refused work, there was no obligation upon her to accept work nor any obligation on the Authority to offer her work;(2) If she was not offered work there was no action she could take to require the Authority to offer her work;(3) She had no entitlement to any pay when she did not work and had no entitlement to holiday pay or sick leave. THE RELEVANT STATUTORY PROVISIONS Section 153(1) of the l978 Act contains a number of definitions relevant for the purpose of determining whether the relationship between the parties was that of employer and employee:- “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether it is oral or in writing; “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment; “employer”, in relation to an employee, means the person by whom the employee is (or, in a case where the employment has ceased, was) employed; “employment”....means employment under a contract of employment. Before turning to the decisions of the two Tribunals in the present case, it will be convenient to refer to certain legal principles which may become relevant when questions of the existence or otherwise of a contract of employment arise. GLOBAL CONTRACTS AND SINGLE ENGAGEMENTS: THE MCMEECHAN DECISIONS. The present case is the most recent of a series of cases, where sporadic and temporary tasks have been performed at the behest of another pursuant to the terms of a general engagement. Such cases may present two problems, namely (a) whether or not each individual engagement has given rise to a contract of employment between the parties within the meaning of Section 153(1) of the l978 Act; (b) whether or not the general engagement constituted a continuing overriding arrangement which governed the whole of their relationship and itself amounted to a contract of employment within such meaning. A contract of the latter nature is frequently referred to as a “global” or “umbrella” contract. In McMeechan v Secretary of State for Employment [l995] I.C.R. 444, an Employment Appeal Tribunal had to consider the case of an applicant who had worked for an employment agency on a series of temporary contracts under conditions of service which stated inter alia that he would provide his services to the agency as a self-employed worker and not under a contract of service; that he was under no obligation to accept any assignment but that if he did so he would comply with conditions as to fidelity, confidentiality and obedience to instructions. He was paid a weekly wage calculated at a specified hourly rate subject to deductions for national insurance and income tax and he provided weekly time sheets. The agency could instruct him to end an assignment with a client at any time and could dismiss him summarily for improper conduct. Following the insolvency of the agency, the applicant applied to the Secretary of State for Employment pursuant to Section 122 of the l978 Act for the payment of money owed to him by the agency in respect of his last assignment. An Industrial Tribunal upheld the decision of the Secretary of State for Employment to refuse him payment on the grounds that he was not an employee within Section 153(1) of the l978 Act. On appeal to the Employment Appeal Tribunal in McMeechan it would appear that the decisions of this Court in Nethermere (St Neots) Ltd v Gardiner [l984] I.C.R. 612 CA (“Nethermere”) and in Hellyer Bros Limited v McLeod [l987] I.C.R. 526, (“Hellyer”) referred to below, were not cited. The Employment Appeal Tribunal allowed the appeal. The President, Mummery J., (at pp.450-451 expressed the reasons for their conclusion as follows:- “(1) The industrial tribunal adopted the wrong approach to the determination of the question for decision. The applicant’s relationship with Noel Employment Ltd was governed by printed conditions of service. Where the relevant contract is, as here, wholly contained in a document or documents, the question whether the contract is one of employment is a question of law to be determined upon the true construction of the document in its factual matrix. (2) Instead of focusing on an analysis and construction of the terms and conditions of the contract, the tribunal found in favour of the Secretary of State on the basis of the decision in Wickens v Champion Employment [l984] I.C.R. 365, where the terms of the written contract were significantly different from the terms and conditions in this contract. It seems to have been assumed by the tribunal, as it has been by some commentators, that the relevant authorities have laid down a general proposition of law that a worker whose services are supplied by an employment business to a third party client on a temporary basis does not have a contract of employment with the employment business or with a business’s client. The cases do not establish that as a proposition of law. The furthest they go is to state the general legal principles applicable to the question whether a contract of employment exists and then proceed to decide the individual case on the basis of the actual terms and conditions. That was the approach of the appeal tribunal in Wickens and in the recent similar case of Pertempts Group Ltd v Nixon (unreported), 1 July l993. It is necessary to consider all the terms and conditions of the contract rather than follow the result of earlier judicial decisions on different contracts”. The President then analysed the individual terms and conditions of the contract mentioning certain factors which pointed towards or against the existence of an employer-employee relationship and concluded (at p.452):
“(5) On the totality of the conditions of service we have come to the conclusion that, though they are described as relating to ‘temporary self-employed workers’, they do in fact create an employment relationship between Noel Employment Ltd., and persons in the position of the applicant.... Ultimate control was exercisable by Noel Employment Ltd., over the services provided and the payments made.”
The Employment Appeal Tribunal in McMeechan thus found in favour of the applicant on the “global contract” issue. In the Court of Appeal in McMeechan [l997] I.C.R 549 it was argued (inter alia) on behalf of the Secretary of State, in reliance on cases such as Nethermere and Hellyer, that the effect of certain conditions was to eliminate altogether any possibility of mutual obligations arising from the general engagement in regard to the provision and execution of work and thus any possibility of the general engagement being treated as a global contract of service: (see at p.562). The Court of Appeal however, allowed the applicant to advance an alternative case by way of a “single engagement” claim, that is to say a claim that the individual assignment worked by him for four days in respect of which he claimed his unpaid remuneration, amounted to a contract of service in its own right. The Court of Appeal held:- (1) despite submissions to the contrary on behalf of the Secretary of State, the specific engagement could as a matter of law be severed from the general engagement and was capable of providing the basis of a contract of service; (2) when all the relevant indications were set against one another, the engagement involved in the single assignment did give rise to a contract of service. The Court accordingly found it unnecessary to answer the issue raised by the Secretary of State’s appeal from the holding of employee status derived from the terms of the general engagement, i.e. the “global” contract found by the Employment Appeal Tribunal. MUTUALITY OF OBLIGATION In my judgment two decisions of this Court are authority, binding on us, for the proposition that no “contract of employment” within the definition contained in section 153(1) of the l978 Act (whether it be given the extra-statutory name “global” or “umbrella” or any other name) can exist in the absence of mutual obligations subsisting over the entire duration of the relevant period. In Nethermere (supra) all three members of the court were agreed that there must be mutual legally binding obligations on each side to create a contract of service. Stephenson L.J., having made certain observations on the obligations required of an employer, summarised those required of an employee (at p.623). “The obligation required of an employee was concisely stated by Stable J. in a sentence in Chadwick v Pioneer Private Telephone Co. Ltd. [l941] 1 All E.R. 522, 523D:
‘A contract of service implies an obligation to serve, and it comprises some degree of control by the master.’
That was expanded by MacKenna J. in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [l968] 2 Q.B. 497, 515:
‘A contract of service exists if these conditions are fulfilled. (i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.’
Of (iii) MacKenna J. proceeded to give some valuable examples, none on all fours with this case.

(i) and (ii) except as to mutual obligations:

‘There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill’
. There must, in my judgment, be an irreducible minimum of obligation on each side to create a contract of service. I doubt if it can be reduced any lower than in the sentences I have just quoted....” Kerr L.J. said at p.629:
“The inescapable requirement concerning the alleged employees however - as Mr Jones expressly conceded before this court - is that they must be subject to an obligation to accept and perform some minimum, or at least reasonable, amount of work, for the alleged employer. If not, then no question of any ‘umbrella’ contract can arise at all, let alone its possible classification as a contract of employment or of service. The issue is therefore whether the tribunal’s findings and conclusions show that they took account of this essential requirement.”
Dillon L.J. said 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”. In Hellyer (supra) this Court followed the principles thus established in Nethermere . It held (at p.552) that, looking at the totality of the facts found or otherwise referred to in the decision of the Industrial Tribunal, “they were such that no person acting judicially and properly instructed as to the law could have inferred that, at times when there was no subsisting crew agreement, the parties were still subject to mutual contractual obligations sufficient to found a global or umbrella contract of employment”. It considered that on the material before the Appeal Tribunal there was “only one decision to which as a matter of law they could properly have come, namely, that on the relevant date none of the first applicants was employed by Hellyers under a contract of employment and that none of them was dismissed.” THE DECISION OF THE INDUSTRIAL TRIBUNAL Having heard evidence from the applicant and the Authority, the Chairman said he was satisfied that the applicant worked on a casual basis for the Nurse Bank operated by the Authority, that she was not an “employee” within Section 153 of the Act and that she could not therefore pursue a claim for a claim for unfair dismissal. In his “Summary Reasons” he summarised his reasons for this conclusion succinctly as follows:
“She worked as and when she was asked to do so. There was no continuity of employment. She received no remuneration when she did not work and there were lengthy periods when, for one reason or another, including her own choice, she did not work for the respondent. Such remuneration as she did receive was paid subject to deductions of tax and national insurance under PAYE. The applicant had no entitlement to sickness or holiday pay and could decide for herself when she wanted to take holidays, having only to inform the respondent that she would not be available. It was put to the applicant that she was free to decline work if offered to her, but she said she never did so. Nevertheless it was the respondent’s case that she was free to do so and I accept their evidence on the point. She had signed a contract with the respondent headed “Contract of Employment”, but which makes it clear at Clause 11.8 that she had no entitlement to guaranteed or continuous work.”
In his Extended Reasons the Chairman mentioned the decision in Ironmonger v Movefield Ltd [l988] 1RLR 461, and the decision of the Employment Appeal Tribunal in McMeechan. In paragraphs 10, 11 and 12 he said as follows:
“10. In this case there are undoubtedly factors which point towards the conclusion that the applicant was an employee. She received a document headed “Statement of Employment” and this also included the phrase that her employment was subject to the terms and conditions etc., of the National Health Service Whitley Councils. It further provided that normal provisions for notice would not generally apply owing to the nature of the working arrangements “for this employment referred to above”
. The terms and conditions contained or referred to grievance and disciplinary procedures which are features consistent with a contract of employment. The applicant received payment of her remuneration under deduction of tax and national insurance by PAYE, again a feature consistent with a contract of employment. On the other hand the definition of a bank nurse contained in the Whitley Council Conditions clearly refers to working in a casual capacity and makes it clear that a bank nurse has no entitlement to guaranteed or continuous work. One of the essential features of a contract of employment is the “mutuality of obligation”, i.e. the obligation on the employing party to offer work and the obligation on the employed party to accept work. Although the applicant told me that she never refused work since she was dependent on the income she derived from it, I am satisfied that it was open to her to refuse work if she wished to do so and indeed there was one period in l992 when she did no work because she chose to be on holiday. That was part of a longer period during which she did no work but I am not clear whether that was because of her choice or whether there was no work to be offered to her. In their evidence, the respondents stated that no services were provided by the applicant during that period of time, she was difficult to contact so as to ascertain her availability. Whether they had work that they would have offered her during that period is not entirely clear to me. Again, the applicant had no entitlement to sickness or holiday pay. Such entitlement if it existed, would be consistent with but not conclusive of the relationship of employer/employee.[11]Applying the test propounded in McMeechan, I have come to the conclusion that, on balance, the applicant did not have a contract of employment with the respondents and that, as such, she has no standing to pursue a claim for unfair dismissal.[12]Even if I were wrong on that, it must be open to doubt whether the applicant had sufficient continuity of service in view of the gaps in her work record, including the long gap in the autumn of l992. In view of my finding in relation to her employment status it is unnecessary for me to reach a decision on that point”. Like the Employment Appeal Tribunal in McMeechan, the Chairman did not direct his attention to the question whether at the relevant date there existed a specific engagement which amounted to a contract of service and could provide the basis for a claim for unfair dismissal. THE DECISION OF THE EMPLOYMENT APPEAL TRIBUNAL The Employment Appeal Tribunal in the course of their decision said as follows:
“As it is essential to consider the terms and effect of the contract in question, reference to the facts in other cases is only of limited value. Nevertheless, the facts here appear to be stronger in favour of the Applicant’s contention than in some of the cases cited to us, including McMeechan and the earlier case of O’Kelly and Others v Trusthouse Forte Plc [l983] ICR 728”
. Having referred to the importance attached by the Chairman of the Industrial Tribunal to the lack of mutuality of obligation between the Authority and the applicant, the Employment Appeal Tribunal, which did not refer to Nethermere or Hellyer. continued as follows:
“This is a significant factor but must be seen in the context of the other terms and conditions of the contract. The word “employment” is repeatedly used. The provisions relating to pay, including annual increments, point towards the existence of a contract of employment. In addition, there is a superannuation scheme. There is a grievance procedure which the Applicant could take advantage of even if she were not working in any particular week or weeks. Not only is there a disciplinary procedure, but there is specific provision concerning dismissal. The concept of dismissal is of importance, since this is one of the most significant acts which an employer can carry out. Other terms, whilst not decisive, continue to point towards a contract of employment, such as encouragement to join a trade union, professional association or staff organisation, the possible need for a satisfactory medical examination, and a continuing duty of confidentiality............. There is a division of opinion between the members of the present tribunal, a matter to which further reference will be made shortly. It is, however, the majority view that properly construed, the contract between the Applicant and the Respondents was a contract of employment and not otherwise”. [It may be that “majority” here is a slip for unanimous]. It was, however, argued on behalf of the Authority that the decision of the Industrial Tribunal was based upon a mixture of fact and law, that there was no explicit or implicit misdirection in law and in the circumstances the Employment Appeal Tribunal could not interfere. This argument was accepted by the minority, but rejected by the majority who were of opinion that the decision below was “fundamentally based upon the construction of the contract and not upon any particular facts”
. The majority considered that the Tribunal should not be inhibited from giving effect to its conclusion as to the correct interpretation of what they referred to as “the relevant contract”. Briefly for these reasons, the Employment Appeal Tribunal allowed the appeal and made the order summarised at the beginning of this judgment. The Tribunal, which did not have the advantage of seeing the judgment of the Court of Appeal decision in McMeechan, given at a subsequent date, apparently reached its decision on the basis of the existence of a “global” contract and did not direct its attention to the question referred to at the end of the immediately preceding section of this judgment. PRINCIPLES GOVERNING APPEALS FROM AN INDUSTRIAL TRIBUNAL At first impression one might suppose that the question whether one person is “employed” by another under a “contract of employment” within the meaning of Section 153(1) of the l978 Act would in any case be regarded by the Court as a bare question of law, since it raises the question whether there exists between the two parties the legal relationship of employer and employee. And indeed exceptionally, if the existence or otherwise of the relationship is dependent solely upon the true construction of a written document or documents, the question is treated by the court as being one of law, so that an appellate tribunal or court is free to reach its own conclusion on the question without any restriction arising from the decision of the tribunal below: Davies v Presbyterian Church of Wales [l986] I.C.R 280) But in the more ordinary case, where the determination of the question depends not only on reference to written documents but also on an investigation and evaluation of the factual circumstances in which the work is performed, a quite different situation arises: (see Lee Ting Sang v Chung Chi-Keung [l990] I.C.R. 409 at p.414; Clifford v Union of Democratic Mineworkers [l991] IRLR 518 at p. 520 per Mann L.J). In such a case, as these two authorities show, the responsibility of determining and evaluating all the relevant admissible evidence (both documentary and otherwise) is that of the tribunal at first instance; an appellate tribunal is entitled to interfere with the decision of that tribunal, that a contract of employment does or does not exist, only if it is satisfied that in its opinion no reasonable tribunal, properly directing itself on the relevant questions of law, could have reached the conclusion under appeal, within the principles of Edwards v Bairstow [l956] A.C.14. An illuminating summary of the legal position in this context is also to be found in the judgment of Sir John Donaldson in O’Kelly v Trusthouse Forte Plc [l983] 1 W.L.R. 728 at pp.760-761. THE ISSUES ON THIS APPEAL Mr McMullen Q.C. for the applicant has submitted that the majority of the Employment Appeal Tribunal correctly identified the issue in the present case as a question of law arising from the construction of documents and that therefore, in accordance with the principles of Davies , that Tribunal was free to reach its own conclusion on that question, unrestricted by the decision of the Industrial Tribunal. He submitted that the majority’s conclusion could properly be and was reached essentially without reference to the further findings of fact made by the Industrial Tribunal. He pointed to the many factors in the documents, identified in the decisions of the two Tribunals below, which pointed towards or were consistent with the existence of some contract of employment, most particularly the repeated references to “employment”. He submitted that while the obligations to offer work and accept it were not present in the continuing relationship during the relevant period, nevertheless there existed a residue of employment terms which could only be regarded as evidencing a continuing relationship of employer-employee. In this context he drew particular attention to the provisions for (a) grievance procedure, (b) disciplinary procedure; (c) dismissal; (d) membership of the NHS superannuation scheme; (e) encouragement to be a member of a trade union; (f) submission to medical examination; (g) the continuing duty of confidentiality and (h) the provisions for increments. Mr McMullen submitted that, even if contrary to his main submission the decision of the Industrial Tribunal was one of mixed fact and law, falling within the principles of Edwards v Bairstow , its decision was one which could and should be overruled as being perverse. Mr Elias Q.C. for the Authority submitted that the decision of the Industrial Tribunal was plainly reached not merely by reference to written documents but also by reference to findings of fact, reached after the hearing of oral evidence from both sides, on a number of highly pertinent facts - most particularly as to the lack of mutuality of obligation in the continuing arrangements between the parties outside any single engagements. In these circumstances he submitted the test to be applied was that of Edwards v Bairstow and the Employment Appeal Tribunal was entitled to interfere with the decision of the Industrial Tribunal only if that Tribunal had misdirected itself in law or reached a decision which no tribunal, properly directing itself, could have reached. So far from this being the situation in the present case, the Industrial Tribunal, (while not directing its mind to the “single engagement” point) reached the only conclusion that as a matter of law was open to it in relation to the “global” contract point - namely, that because of the absence of mutuality of obligation, no global contract of employment existed. Accordingly it was in truth immaterial whether the test to be applied was the Davies test or the Edwards v Bairstow test; the result would inevitably be the same on either footing. I have little hesitation in accepting in their entirety the submissions of the Authority summarised in the immediately preceding paragraph. Mr McMullen accepted in principle that there has to be some mutuality of obligation to found a contract of employment. He submitted, in effect, however that in the modern labour market the court should set the “irreducible minimum” of mutual obligation required to found a global contract at a low level and that there was a sufficient structure of mutuality in the present case. He referred us to an unreported decision of the Employment Appeal Tribunal in City and East London FHS Authority v Duncan (delivered on 24th September l996), in which it was said:
“It is not a prerequisite of a contract of service that there must be a mutual obligation to provide and perform work. It is an important, but not conclusive factor”
. Mr McMullen relied on the obligation of confidentiality which would have bound the applicant even during periods when she was not occupied on a single engagement. 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 the one party to accept and do work if offered and 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. In the present case I can find no such mutuality subsisting during the periods when the applicant was not occupied in a “single engagement”. Any obligation of confidentiality binding her during such periods would have stemmed merely from previous single engagements. Apart from this, no continuing obligation whatever would have fallen on the Authority during such periods. It follows that in my judgment this appeal will have to be allowed because the Employment Appeal Tribunal was not entitled to reach the conclusion that the applicant was at the material time employed by the Authority under a global contract of employment and that conclusion was on any footing erroneous as a matter of law. This, however, is not quite the end of the matter. It is now common ground that the Chairman of the Industrial Tribunal, in the course of his careful decisions, did not direct his attention to a number of further disputed issues which are or may be relevant to the applicant’s claims for unfair dismissal, and in particular whether 1) there was a dismissal; 2) if so on what date the dismissal took place; 3) at the relevant time there existed a specific engagement which amounted to a contract of service and could provide the basis for a claim for unfair dismissal. Mr Elias recognised the possibility, if not the probability, that the Statement of Employment and accompanying documents could properly be regarded as setting out the terms and conditions which would govern the relationship of the Authority and the applicant on each occasion when she accepted an engagement as a Bank Nurse. He conceded that in all the circumstances remission of the matter to the Industrial Tribunal will be inevitable. CONCLUSION In the result, for the reasons given, I would allow this appeal and declare that no global contract of employment between the Authority and the applicant was in existence at any time between January l991 and 27th January l994. I would remit the matter to the Industrial Tribunal to consider all other issues relevant to the applicant’s contention that she was unfairly dismissed. LORD JUSTICE SCHIEMANN: I agree. LORD JUSTICE BELDAM: I also agree.

ORDER

Appeal allowed with costs. © 1997 Crown Copyright

Cited in 3 later judgments