Status of Casual Employees - House of Lords decision

Employment Law (UK) List - http://www.danielbarnett.co.uk

Yesterday, the House of Lords gave its decision in Carmichael and anr. v National Power plc on the employment status of casual employees.

The full speeches are available at http://www.parliament.the-stationery-office.co.uk/pa/ld199900/ldjudgmt/jd991118/car.htm . Thanks to Paisner & Co. (who acted for the successful employer) for notifying me of this decision.


The Facts

Two employees brought proceedings in the industrial tribunal for written particulars of their terms of employment (under, as it is now, ERA 1996 s1). The employer claimed that they were both casual workers and did not work under a contract of employment.

They had both started working for National Power in late 1989 as guides, showing visitors around the building. In 1990, they worked for about 3.75 hours per week, rising to as many as 25 hours per week in 1995.

The letter inviting applications for the job stated:

"Employment will be on a casual as required basis and payment will be at the rate of 365.56p per hour"

The letters of offer, after interview, stated:
"I am pleased to note that you are agreeable to be employed by the C.E.G.B....on a casual as required basis...

"When your services are required you will be paid at the rate of...

"Please find enclosed a pre-typed reply letter which should be returned to me confirming your acceptance of this offer..."

The pre-typed reply letter stated:

"I am pleased to accept your offer of employment as a station guide on a casual as required basis."

The Issue

Were the employees employed under a contract of employment, so as to entitle them to a written statement of terms and conditions?


The Decision

The House of Lords unanimously held that they were not employed under a contract of employment, and therefore not entitled to a written statement of terms and conditions of employment.

The important factors were:
• lack of mutuality - on a proper construction of the letters, the employees were under no obligation to accept work, and the employer under no obligation to provide it .
• the documents provided no provisions governing when, how or with what frequency work would be offered; it had no provisions for notice of termination of employment; the sickness, holiday and pension arrangements for regular staff did not apply, nor did the disciplinary and grievance procedure.
• on a large number of occasions (eg 17 occasions in 1994 for Mrs Carmichael) the employees were not available for work and were not subjected to any disciplinary action - thus the inference is that when work arose, they were free to accept it or reject it.
• the fact that the employees were paid under PAYE was not sufficient to offset the lack of mutual obligation which is necessary for a contract of employment.
In addition, the House (Lord Hoffman) commented on the proper approach to construcing contracts of employment, namely:
• where the contract is contained in writing alone, construction is a matter of law and it is appropriate for appellate courts to interfere.
• where the contract is evidenced in writing but supplemented by verbal agreements or by conduct, it is legitimate to look at the parties' subsequent conduct to infer what the parties themselves believed their obligations to be (which is strong evidence of what their obligations actually were). An appellate court should not normally interfere in an employment tribunal's findings of fact in this regard.

Comment

Although this case is ostensibly limited to a claim for a written statement of employment particulars, the implications for casual workers will apply across the whole employment spectrum where a casual worker seeks to rely on employment rights granted by a contract of employment.

Note that in some areas, the lack of mutuality will not be fatal - thus for unfair dismissal rights, provided the employee can prove a series of short-term contracts over a period of at least one year, the fact that there may have been various temporary cessations of work will not interfere with continuity of employment.

Employers should be advised, when employing casual workers, to ensure that all documentation emphasises the lack of mutual obligation. They should also ensure that they do nothing to change this lack of mutual obligation during the course of employment (such as disciplining a worker for failure to attend work).