Heather Carmichael & Anor v National Power Plc [1996] UKEAT 1160_95_2504

EAT
Heather Carmichael & Anor v National Power Plc
[1996] UKEAT 1160_95_2504 · 1996-04-25

JUDGE HARGROVE Q.C. :

By a reserved decision of 11th September 1995, the Industrial Tribunal held that the appellants were not entitled to a declaration that they should receive a written contract of employment. In essence the question was whether they were or were not employees.From that decision the appellants appealed claiming that the tribunal misdirected itself in law.Helpfully the tribunal sets out the facts at paragraph 5 of the reasons:
"5 The essential facts of these applications we find are these:- (a) Blyth Power Station, formerly operated by the Central Electricity Generating Board (CEGB) and now operated by National Power PLC have a Visitors Centre and to ensure that visitors have an enjoyable time there they use Guides, and have used Guides to show what is that the Power Station does, how it does it, and why it does it. It is a very successful public relations exercise and has been going for a considerable period of time. (b) Visits are arranged in the manner set out in documents 141/143 in the respondent's bundle. When there, the applicants must follow the respondents many requirement in relation to many practical things like First Aid responses during the course of a tour. (c) Both applicants have been involved in giving tours for a considerable period and the applicants are still guiding and meeting the respondent's quality standards to this date. (d) The applicants have been doing this guiding work since Spring 1989; their work hours have been as many as 25 hours per week; the remuneration paid has been taxed at an employed person's rate, similarly National Insurance Contributions has been deducted at an employed persons rate. A uniform has been provided by the respondents to both applicants for them to be seen in the image required by the respondents. During the course of their work the applicant sometimes have been out to schools to give talks, which has required the use of company vehicles. At one stage these two applicants were the only Guides, but numbers have been expanded to a pool of 4 at the present time. Neither has a written contract. (e) The duties that Mrs Carmichael and Mrs Leese applied to perform are set out at document 182, which shows the essential nature of their duties, and the personal requirements made of them, for example, the ability to communicate and deal with visitors, young and old, in the enthusiastic and acceptable way. The tours are approximately 2 hours in duration on a number of days of the week.

(f) It is important to note

"Employment will be on a casual as required basis , and payment will be at the rate of £.... the minimum of Band 1 of the NGIC agreement." (the underlining is the Tribunals)That is the work that the applicants were asked to consider doing when they applied for the details of the guiding work on offer from the CEGB, the predecessors in title of the present respondent. It is to be noted, as agreed fact, that no work means no pay.(g) The very clear position of the respondents is that if the applicants did not wish to work as a Guide then they could not make them work. And likewise the converse is that if there were no tours for them to do and they turned up at the Power Station then work would not be provided for them as a duty, it might be provided for them it if was convenient to the respondents for a particular purpose but on no other basis than that. (h) We find it is quite plain that if each applicant did not give enough availability to the respondents then the respondents would have looked elsewhere and would have recruited other Guides who were more reliable and more dependable to meet the respondent's needs.We find that if a tour was cancelled by a school for example, for whatever reason, and there is no other work requested by the respondents of the guide, by way of administration or helping in other ways, then there was simply nothing for them to do. There was no obligation on the respondent to provide work for them. No mutually of obligation, we find, existed.(i) The applicants were paid at the lowest band of the NGIC agreement. We find nothing in that which in any way indicates or can infer that the applicant thereby became employees of the respondents. They were both paid, in the sense of documented through the computer payroll system of the CEGB/National Power PLC. This does not in any way indicate we find that they had employee status; it was a way of accounting for money that was being paid and therefore tax and other statutory deductions as required by law to be administered, we taken account of. (j) The applicants did receive a bonus and an increase in hourly rate not as of right, but they benefited when others, who were employees, were receiving increases. The same can be said for a share offer that everybody has heard about, where National Power and Powergen were brought to the Stock Market. The fact that the applicants were allowed to subscribe for shares, as if they were employees, is their good fortune, but does not, in our judgement, amount to an indication that they enjoyed employees status. It was, at best, a generous concession. It was not a contractual matter incumbent on the respondents to perform. (k) The applicants we find did not have the normal rules of the employees applied to them in the sense of disciplinary and grievance procedures. They were trained only for their work of guide; they were not put through the normal induction and general training given to employees. But of course, while they were on site doing their guiding they had to comply with the respondent's requirements and Health and Safety requirements as was obvious in all the circumstances. (l) As has been referred to obliquely above, there were occasions, not many be it said over the years, when the applicants were asked to do other work in very specific `one-off' situations. We do not find in that anything which indicates employee status. There were `as and when' situations as foreshadowed by the job description seen in document 182. (m) One self-employed person, Mrs Bulman, an Education Advisor, does provide her services to the respondent. She invoices them for her monthly fees. This is exactly as it should be; she is not employed by the respondents, and her methods of payment for work done are different to the applicants. (n) Mr McCabe suggested to us that there was evidence concerning Mrs Leese when in 1991 as she had been on jury service she thought some payments had been made to her during her absence on public duties. This has not been established by any independent evidence we can rely on, and it does not seem to us, even if there had been payment for two weeks of jury service, that it indicates that the whole of the period of the relationship with the respondent is properly to be labelled "employed"."Having considered the submissions by both parties in detail the tribunal concluded at paragraph 10:
"10 Our unanimous decision is that neither applicant is entitled to the declaration sought. Neither applicant was an employee. They did provide guiding services to the respondent; undoubtedly they did appear in the respondent's livery whilst they are doing it; they do certain administrative work and they are experienced at doing their guiding round the Power Station, but at the end of the day, as at the beginning, we are quite satisfied that the true reality is that they came `as and when' the respondent required them. The respondent was under no obligation to use their services at all, or for a minimum number of times per week/per year or whatever period may be involved. There was no requirement on the applicants to work for the respondent if they do not wish to do so. We are quite satisfied that in these circumstances the only answer must be and is, that the applicants were not employees. If they were not employees they are not entitled to have the declaration that they seek under Part 1 of the 1978 Act. For the above reasons and unanimously this paid of applications is dismissed for the above reasons."
The appellants criticise the Industrial Tribunal on the basis that they fell into error by holding that there had to be mutuality of obligations in that the employee must go to work and the employer must pay for it. It is said that the correct test is that set forth in Nethermere (St Neots) Ltd v Taverna & Gardiner [1984] ICR 612 at 623.
" The obligation required of an employee was concisely stated by Stable J. in a sentence in Chadwick v. Pioneer Private Telephone Co. Ltd. [1941] 1 All 522, 523D:
"A contract of service implies an obligation to serve, and it comprises some degree of control by the master.""
The appellants say that those obligations can be found within the terms of the contract.It is argued that the fact that the work is casual does not prevent it being a contract of service. Reliance is placed upon Lee v Chung [1990] ICR 409 where the Privy Council adopted the approach of Cook J. Market Investigations Ltd v Ministry of Social Security [1969] 2 QB 173 at 184G where the matter was put in this way:
"The fundamental test to be applied is this:
"Is the person who has engaged himself to perform these services performing them as a person in business or on his own account?"
If the answer to that question is "yes," then contract is a contract for services. If the answer is "no," then the contract is a contract of service. No exhaustive list has been complied and perhaps no exhaustive list can be complied of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether a man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task."The criticism is that the tribunal failed to look at the whole picture as was indicated in Hall v Lorimer [1994] ICR 218 . The arguments run that if all these factors had been looked at then the tribunal would have come to the opposite conclusion.There is a further contention based upon policy considerations. Since there are considerable benefits to a person being regarded as employed, the widest interpretation should be given to the concept of employment in order to extend such benefits. A parallel is drawn with those case where that approach has existed in interpreting the safety at work legislation.Our attention has also been drawn to McMeechan v Employment Secretary [1995] ICR 444 at 450, 451 in particular to the reiteration at page 450 that where a contract which is wholly contained in a document or documents the question of whether the contract is one of employment is a question of law to be determined on the true construction of the document in its factual matrix. It has to be said that the facts involved in that case are far removed from those which faced this Industrial Tribunal.The respondents contend that the decision was correct in that it correctly identified three defects in the arrangements between the parties and each individually was fatal to the claim that the appellants were employed.The first is that there was no mutuality of obligation, mutuality being essential for all contracts of employment. Employment is a contract of personal service by which obligations are owed by both parties, namely to serve and pay wages. Even in the case of casual workers it is the existence of mutual obligations which transmutes a casual worker acting as self-employed into an employed person. The respondents point out that this point is accepted in Nethermere (St Neots) Ltd v Taverna and Gardiner and that Court of Appeal has endorsed this approach in McCleod & Others v Hellyer Brothers Ltd [1987] IRLR 232 at 239:"One important point which was not explicitly decided in the Airfix case was whether a contract of employment within the definition contained in Section 153(1) of the 1978 Act (whether it be given extra statutory name "global" or "umbrella" or any other name) can exist in the absence of mutual obligation existing over the duration of the relevant period. Any doubts as to this point were laid to rest with the decision of this court in Nethermere (St Neots) Ltd v Gardiner [1984] IRLR 240 where there was a full analysis and discussion of the Airfix case. Though Kerr LJ. in his final conclusion dissented from the majority on a narrow ground, stemming from the interpretation of two paragraphs of the Industrial Tribunal's decision, all three members of this court were agreed that there must be mutually legally binding obligation on each side to create a contract of service. Dillon LJ. put succinctly thus:
"For my part I will accept that an arrangement under which there was never any obligation on the outworkers to do work or for the company to provide work could not be a contract of service.""
Secondly, it is said that even if a multi-factorial test is applied, the Industrial Tribunal have founds the facts and drawn the necessary inference from them. Since the findings are not challenged on this ground also, the appeal is said to fail.Thirdly, it is said that even if one examines the factual basis of other cases the argument still fails and cases such as O'Kelly v Trust House Forte [1984] 1 QB 90 are referred to.We have reached the view that the appellants are wrong when they claim that the Industrial Tribunal did not pay any or sufficient attention to the terms of the contract. Indeed most of paragraph 5 is based upon that document. The tribunal correctly directed itself as to the law in the second paragraph of paragraph 8 and in the first paragraph of paragraph 9 as follows:
"We are not able to spell out of this the minimum that must be there in any employment relationship, namely the mutuality of obligation, that the applicant must go to work and that the respondent must provide work and pay the applicant for that work or if there is no work to do, still pay nonetheless.
9 We have the benefit of the skeleton legal arguments from both applicants and respondent. We are not being discourteous to Mr Wilkin for not referring to his long and detailed submissions, other than very briefly as we find this case founders on the rock of absence of mutuality."That approach is consistent with the passage we have set out above from McLeod v Hellyer Brothers . Moreover, the tribunal has considered all the factors which arose in and from the contract, and the weight which they have given to any particular fact is a decision which they are entitled to make having regard to all the evidence. In particular, they were entitled to find that there was no element of mutuality.We do not think it helpful to take previously decided cases and extract merely from the facts whether in the instant case these appellants were employed or not. The infinite variety of relationships which can exist between the two concepts of employment and self-employment renders such exercises futile.We can find nothing in the tribunal's identification of the legal principles, or in the application of those principles to the facts they have found which would in any way justify us in overturning what is obviously a most careful decision.