Clark v Oxfordshire Health Authority [1996] UKEAT 1054_95_0403

EAT
Clark v Oxfordshire Health Authority
[1996] UKEAT 1054_95_0403 · 1996-03-04
On 6 July 1995 the Chairman of an Industrial Tribunal, sitting alone, at Reading, decided a number of preliminary issues. This appeal relates to one of these, namely whether Mrs Clark (the Applicant) was an employee of the Oxfordshire Health Authority (the Respondents) within the meaning of the Employment Protection (Consolidation) Act 1978 . The Chairman answered the question in the negative with the result that the Applicant was unable to pursue her claim for unfair dismissal. Extended reasons for the decision were sent to the parties on 21 August 1995. The Applicant is dissatisfied with that decision and therefore appeals to the present Tribunal.The matter came before us on 4 March 1996. During the course of the hearing it became clear that we did not have all the necessary documentation and it was therefore arranged that the Industrial Tribunal would provide this and that the parties would submit further written representations in the light of such documentation. The parties duly did so and we have considered these submissions in addition to the oral argument presented to us.

THE FACTS

The essential facts relating to the issue in question do not appear to have been in dispute. There is no reason to doubt that the parties intended their relationship to be governed by the contract when they entered into it. The only factual findings to which specific reference should be made are that initially the Applicant worked for the Respondents as a Secretary with the Secretarial Bank and then, with effect from 21 January 1991, she joined the Nurse Bank as a Staff Nurse. From then onwards she worked in that capacity, apart from one break in late August to late October 1992, one week in November 1992 and a total of five weeks in 1993. She finally ceased working for the Respondents on 27 January 1994.The crucial document is called "Statement of Employment" and is dated 21 January 1991. The whole of the document needs to be considered but for the purposes of this judgment it is only necessary to highlight some of its contents. The Applicant is described as a Bank Nurse, Grade: Staff Nurse (E), and is responsible to a personnel nurse called Miss D Hill. The Applicant's rate of pay is described as being "on the scale of £10,700 p.a. rising by annual increments to £12,390". Working hours are described as being "up to a maximum of 37 1 / 2 hours per week on a weekly basis.... Employment will be on a day to day basis, consequently there can be no guarantee of work being available to suit individual requirements". There is then a heading Whitley Council Agreement:"Your employment is subject to the terms and conditions of the Nurses and Midwives Council and the General Council of the National Health Service Whitley Councils".In relation to Notice, the contract provides:
"The normal provisions for notice will not generally apply owing to the nature of the working arrangements for this employment referred to above.
However, where appropriate notice provisions will be in accordance with Contract of Employment Act 1972, as amended by the Employment Protection Act 1975."The contract continues with general conditions of service and contains the words:
"1. a) Your employment is subject to the Conditions of Service determined by the Central Council of the Whitley Councils...
b) Your employment is subject to the policies and procedures of the Health Authority...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 is an express grievance procedure "relating to the terms and conditions of your employment". There is a heading "Discipline & Dismissal" which provides:
"5. The discipline and dismissal procedure is held by departmental heads, administrative offices and the personnel department... Responsibility for dismissal is with the appropriate chief officers, sector manager or divisional nursing officer."
There is a clause relating to the duty of confidentiality.There are further provisions which read as follows:"11.1 "Bank nurses" will be subject to the following Nurses and Midwives Staffs Negotiating Council conditions of service insofar as they are casual staff working irregularly at the request of an employing authority...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."There follow relatively detailed provisions concerning rates of pay including, significantly, an entitlement to increments. Towards the end, a clause upon which the Respondents rely states:
"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."
It was common ground between the parties that the Nurse Bank was administered by the Respondents and that this supplied the services of Bank Nurses to a number of hospitals within its region, and further that the Applicant 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 pay when she did not work and no entitlement to holiday pay or sick leave.

THE LAW

The interpretation section of the 1978 Act, Section 153, contains the following definitions:"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."

The Chairman of the Industrial Tribunal referred to the above provisions in his extended reasons and mentioned the two cases of Ironmonger v Movefield Ltd [1968] IRLR 461 and McMeechan v Secretary of State for Employment [1995] ICR 444 . He summarised the effect of the latter case by saying:
".. the EAT stated that the question whether a worker whose services were supplied by an employment agency to a third party client on a temporary basis had a contract of employment with the employment agency was a question of law to be determined on the true construction of all the terms and conditions of the contract in its factual matrix."
In paragraph 10 he then mentioned some of the factors which pointed towards the conclusion and against the conclusion that the Applicant was an employee. In paragraph 11 he stated simply:
"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."
He added that if he were wrong on that, it must be open to doubt whether the Applicant had sufficient continuity of service, but in view of his finding in relation to her employment status he concluded that it was unnecessary for him to reach a decision on that point.The decision in McMeechan by the President of the Employment Appeal Tribunal (Mummery J) is the most recent in a line of authorities dealing with the question as to whether a person is or is not an employee. The learned President set out the terms of the contract in issue, reviewed the authorities, and then at page 450G set out reasons for the decision of the E.A.T. that the decision of the Industrial Tribunal should be reversed and that it should be declared that the Applicant was an employee. He said:
"(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 contact 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 [1984] 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 Pertemps Group Ltd. v. Nixon (unreported), 1 July 1993. 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 and concluded:

"(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."
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 [1983] ICR 728 , to which reference will be made later. The Chairman of the Industrial Tribunal attached importance to the term:
"Bank nurses are not regular employees and have no entitlement to guaranteed or continuous work."
and said that:
"10. ... One of the essential features of a contract of employment is the "mutuality of obligation", ie the obligation on the employing party to offer work and the obligation on the employed party to accept work."
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.We make no personal criticism of the Chairman of the Industrial Tribunal but it is to be noted that having referred to only some of these considerations, he concluded "applying the test propounded in McMeechan " that the Applicant did not have a contract of employment. It is, we think, permissible to have regard not only to the overall intention of the Employment Protection (Consolidation) Act 1978 as amended, but to the changes which have occurred in the nature of employment over the last twenty years or so, involving increased flexibility in working arrangements expected of many employees.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 is now necessary to turn to consider whether the E.A.T. can allow the appeal or whether it is obliged to uphold the decision below on the basis that such decision is either a question of fact or mixed law and fact. It is this aspect which has led to dissent as to the conclusion to be reached. Reliance is placed by the Respondents upon the case of O'Kelly , referred to earlier in this judgment, and to the case of Clifford v Union of Democratic Mineworkers [1991] IRLR 518 . The latter decision of the Court of Appeal represents the high water mark of the Respondents' argument. At paragraph 7

Lord Justice Mann said:

"A question as to whether A is employed by B or by C is apparently a question of law for it is a question as to between whom there is the legal relationship of employer and employee. The resolution of that question is dependent upon the construction of the relevant documents and the finding and evaluation of the relevant facts. Where the only relevant material is documentary in nature then the question is not only apparently, but is also actually, a question of law (compare Davies v Presbyterian Church of Wales [1986] IRLR 194). Where, however, the relevant material is an amalgam of documents and facts then the apparent question of law is often said to be a mixed question of law and fact (for a recent decision see Lee v Chung [1990] IRLR 236 . The present case is one where the relevant material is an amalgam of documents and facts and it can thus be described as a case of mixed law and fact. This description does not, however, in my judgment mask the reality that the answer to the question is determined by the determination and evaluation of the relevant material. This is the task of the Industrial Tribunal and is not for either the Appeal Tribunal or this Court. Neither can interfere with the resolution of an issue of fact unless the resolution contains an explicit or implicit misdirection in law. I appreciate as did Fox LJ in a somewhat similar context (see [1983] IRLR at p.380), that the inability to interfere means accepting that my question as to B or C can possibly be answered as to B or as to C. One body's evaluation may lead to B whilst another body's evaluation of the same material may lead to C. If neither body misdirects itself neither is `wrong' although in theory what is apparently a question of law should admit to only one `correct' answer. In the present case therefore the question is not whether the Industrial Tribunal were `wrong' but whether their conclusion betrays a self-misdirection."
In the present case, it is therefore argued on behalf of the Respondents that the decision of the Industrial Tribunal was based upon a mixture of law and fact and that there is no explicit or implicit mis-direction in law. In the circumstances, it is argued, the E.A.T. cannot interfere. This argument is accepted by the minority (Mr L D Cowan) who feels that the Industrial Tribunal carried out a balancing exercise, that the decision was a reasonable one, and that it would be wrong for the E.A.T. to allow the appeal. The majority (Mr D A C Lambert and myself) are of opinion that the decision below was fundamentally based upon the construction of the contract and not upon any particular facts. We consider that in principle where a document contains the main indicia of a contract of employment, an Industrial Tribunal should deal as specifically as possible with such indicia if it is proposing to reach the conclusion that there was not in fact a contract of employment. In the present case, the Chairman of the Tribunal does not appear to have dealt with factors such as the right to dismiss, and we do not consider that the E.A.T. should be inhibited from giving effect to its conclusion as to the correct interpretation of the relevant contract.

CONCLUSION

For these reasons it is the view of the majority that the appeal should be allowed and (unless the parties can reach agreement) the matter remitted to the Industrial Tribunal to decide the remaining issues on the basis that the Applicant held a contract of employment with the Respondents.It should not be thought that the effect of this decision is that every Bank Nurse throughout the country holds a contract of employment. This will in each instance depend upon the terms of the contract and upon any specific facts which might, for example, show that the agreement has been varied between the parties.In view of the potential importance of the decision and the fact that there is disagreement between the experienced lay Members, we are unanimous in our view that leave to appeal should be granted.