Friday 27 July 2012

Mutuality of Obligation

[Thanks to Neil Addison of Palmyra Chambers for preparing this case summary]

Can a person working under a succession of individual contracts be an employee. Yes, says the EAT in Drake v Ipsos Mori UK Ltd [2012] UKEAT 0604_11_2507, (HHJ David Richardson sitting alone), reversing an ET decision that had held there was no contract because there was no 'mutuality of obligation'.

The Claimant worked on an 'assignment by assignment' basis for the Respondent from 2 February 2005 until 5 November 2010. He claimed that each individual assignment was a contract of employment so giving him sufficient continuity of service to bring a claim for unfair dismissal. The Respondent's case was that even though the Claimant was a worker for the purposes of employment legislation he was not an employee.

The Employment Judge had held that the assignments did not amount to separate contracts of employment because any assignment could be terminated on either side without its being completed there was 'no mutuality of obligation' and hence no contract.

The EAT relying mainly on Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, 515C held that there was a contract in place and sufficient mutuality whilst the Claimant was actually undertaking an assignment for the Respondent. Contrary to the EJ's decision the fact that the assignment could be brought to an end did not mean that there was no contract in existence while the assignment was continuing.

The EAT was clearly also influenced by the fact that the respondents own handbook referred to the assignments as being contracts. The decision therefore is primarily based on its own facts, however the reasoning in it provides an interesting review of the legal requirements for a contract of service as opposed to a contract for services. 

No comments: