Appeal No. UKEATS/0043/05

EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH EH3 7HF

At the Tribunal On 
11 August 2005
Before

HIS HONOUR JUDGE D SEROTA QC

MR J M KEENAN 

MR P H HUNTER

____________________________________________________________________________________

WILLIAM WILSON	APPELLANT

CIRCULAR DISTRIBUTORS LTD	RESPONDENT
____________________________________________________________________________________
Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	Mr W Wilson, In Person
11 Woodside Street
MOTHERWELL
ML1 2HY	
For the Respondent	Mr J Cunningham, Consultant
Of-
Croner Consulting
Rosedene
22 Station Road
KIRKNEWTON
EH27 8BJ	

SUMMARY
CONTRACT OF EMPLOYMENT

Definition of employee

ET misconstrued contract of employment as a contract for services because C only worked when work was available. EAT held that this did not mean there was a lack of mutuality; the C was in any event required to undertake work when offered

.

HIS HONOUR JUDGE SEROTA Q.C.:

1.	We have before us today an appeal by Mr William Wilson from a decision of the Employment Tribunal at Glasgow. Mr David Walker was the Chairman. The decision was registered on 15 September 2004. There was an unsuccessful application for a review. The decision on the review was 27 April 2005. The Employment Tribunal concluded that Mr Wilson was not an employee and therefore he could not present a claim for unfair dismissal. The Notice of Appeal was received by the Employment Appeal Tribunal on 24 May. It is an appeal which could easily refer both to the original decision and the review but it only referred to the original decision. Nonetheless Lady Smith on 9 June considered that the matters raised were sufficient to go for a full hearing, which we have today. The Respondents took the time point and what they said was the Rules provide that an appeal must be lodged within 42 days and the decision, that is the original decision, was registered in September but the Notice of Appeal is the 24 May. Well it seems to us that we are dealing with a party litigant who did not appreciate that the appeal should have been described as an appeal against the review decision. The Notice of Appeal was well in time for an appeal against the review. It discloses, as Lady Smith has obviously considered, a fairly arguable point of law. The Respondent is able to deal with the matters raised in the Notice of Appeal, as is apparent from the skeleton argument and has been very fairly conceded by Mr Cunningham, who appears for the employer.  

2.	The Employment Appeal Tribunal in the recent decision of Khudados v Leggate & Ors [2005] IRLR 540 sets out the principles upon which the Employment Appeal Tribunal acts in allowing amendments. It seems to us having regard to the principles set out in that case, to the complete absence of prejudice, the fact that we have before us a party litigant, the fact the amendment is really one of form rather than substance and the fact that Lady Smith considered this matter was appropriate to go to a full hearing, that in the exercise of our discretion and having regard to the overriding interest and the importance of doing justice between the parties that we should allow the amendment which we do. Accordingly the Notice of Appeal should be treated as though it were a Notice of Appeal against the review decision of 27 April rather than the original decision of 15 September.

3.	Let us say something shortly about the factual background. The Claimant began working for the Respondent in May 200 1 when he was appointed as a Relief Area Manager on the terms that are in the production. The Respondent, as we understand it distributes leaflets and circulars. The Statement of Terms and Conditions of Employment which we have, looks very much to us like a contract of employment. it is indeed entitled 'Statement of Terms and Conditions of Employment for Relief Area Managers' The Agreement sets out "The Terms and Conditions upon which Circular Distributors employs William Wilson". The agreement is expressly said to include the particulars required to be given under the Employment Rights Act 1996. His job title is specified as being Relief Area Manager. He reports to the Regional Manager. The Agreement then says: 
"Full details of your duties and responsibilities can be found in your Job Description. These will be amended regularly according to the needs of the business and do not form part of your ‘contract of employment’".

4.	The job description requires Mr Wilson to carry out the duties of an Area Manager during periods of holiday and sickness absence. We note the use of the word "required". He may also be "required" to carry out the duties of another position at a similar level although he should have no entitlement to such a position.

5.	His place of employment was to be his home address and we quote: 
"which must always be in a location suitable for easy travel within your area. You should consult us before you move house as it may not be possible for us to continue your employment [our emphasis] if your new address does not meet our business needs”.
He is required to provide the use of a car for which he receives a mileage allowance and obviously to have a driving licence and he is required to' have a telephone. His employment was subject to successful completion of a 12 week probation period. The agreement provides that Mr Wilson's remuneration was to be (certainly in 2001) at a rate of £26.20 per day, although we assume that that figure may have varied in the interim. It is provided that "There is no payment when work is not available." When he carries out the role of Area Manager payment will be at the Area Manager rate.

6.	We turn to the rubric Hours of Work and we quote:
"Due to the fluctuating workload of a Relief Area Manager there are no regular or guaranteed hours of work per week. There will be occasions when no work is available."
Now we pause one moment to note that that last part of this provision is ambiguous. It could refer to the possibility that during a week there will be occasions when no work is available, or it could mean that there are simply weeks or periods when no work is available. The Agreement provides that payment will also be made for overtime and makes provision for holiday entitlement and sickness absence. It provides a pension scheme; it provides a grievance procedure and it provides a disciplinary procedure. There is also a provision for termination of employment. The effect of this is that after successful completion of the probation period the Claimant is entitled to notice and is required to give notice. After 5 years' service, the notice from the company will increase by one week for each additional year of service. In cases of gross misconduct the company has the right to dismiss without notice or pay in lieu. There is a provision for retirement; there is a provision for exclusivity of service and confidentiality.

7.	Now we feel bound to say that looking at that Agreement it is difficult to see how it could possibly be said that this does not constitute a contract of employment nonetheless that is what the Employment Tribunal found. It is perhaps important to note that the way in which the relationship between the parties, and we use a neutral term, came to an end, was when for reasons which we do not know and we do not need to enquire into, the Respondent decided that it would simply not make any further work available to the Claimant.  There is a letter from the Claimant of 2 July in which he claims that he had not resigned nor did he intend to do so. He also complained that he had not been told formally whether or not he was being dismissed and if he was being dismissed he would need to be advised formally in writing. Apparently there were further discussions, so we are told, between the parties, that were inconclusive and in the event Mr Wilson presented his complaint in which he asserted he had been constructively dismissed having been given no work or remuneration since 17 June 2003.  

8.	It is of some interest to note that in the original response by the Respondent of 4 September 2003 it is asserted on behalf of the Respondent that the Claimant was employed as a Relief Area Manager; there was not always work available. The Respondent was investigating his claim that he had been dismissed and it denies that he had been dismissed. There is no suggestion in that Notice of Appearance that in fact there was no contract of employment and that Mr Wilson was never an employee so the question of unfair dismissal could not arise. A Questions Order was made by the Employment Tribunal and a number of questions were asked. "Is it the respondent's position" asks the Employment Tribunal "that the applicant resigned?"  The answer was "no". "Was it the respondent's position that he was dismissed?" "No, he was not formally dismissed. It was the respondent's understanding that the employment relationship [our italics] had been terminated by mutual consent, but that relevant terms of settlement remained subject to a negotiated agreement being reached." "Is it correct that no work was available/provided to the applicant after June 2003 and (a) Why did work cease and (b) did other employees carry out work after June 2003?" The response was "Yes, it is correct that no work was provided to the applicant after June 2003. (a) The work itself did not cease." and then we find this "There was no obligation for the respondent to offer the applicant any amount of work/hours under the express terms of his contract. The respondent simply offered no further work to the applicant. (b) Yes, the work was absorbed by other employees, in particular by the applicant's Regional Manager."

9.	Now in its extended reasons the Employment Tribunal produced a judgment which is of 10 paragraphs' length and the substance of the decision scarcely fills one page. The operative part is as follows and in paragraph 7 it is said:
"Notwithstanding the use of the words "employment" and "employee" in the Terms and Conditions it seems clear that the respondents are not under any obligation to offer any work to the applicant.
It therefore appears that there is no mutuality of obligation such as would be required to constitute a contract of employment”.

It is noticeable that the Employment Tribunal never asks itself the question as to whether or not the Claimant was bound to undertake work if it was offered to him. Had the Employment Tribunal asked itself that question it might well, indeed in our opinion, was bound to find on the true construction of the Agreement, that he was required to do the work. That of course is the language of the contract itself.

10.	Mr Wilson sought a review of the decision and he drew attention to the fact that there were many circumstances which pointed strongly to his having been an employee. He had numerous meetings with senior staff and customers, the evidence before the Employment Tribunal showed that the parties considered there to be an employment relationship, he was integrated into the Respondent's organisation, he was paid after deduction of income tax and national insurance and given work for 2-3 days a week increasing to 4 days a week. The Respondent exercised a substantial degree of control over the way he carried out his work. The Employment Tribunal also recorded that he received regular information about the respondent's contracts. He apparently conceded that the Respondent was not obliged to offer him work. We are not sure about that concession and even if that concession was made it seems to us that he is entitled to withdraw that concession because it is at odds in our opinion with the terms of the contract which governs the relationship between the parties. We shall come to that shortly. He referred the Tribunal to Nethermere (St Neots) Ltd v Taverna & Gardiner [1984] IRLR 240 and Clark v Oxfordshire Health Authority [1998] IRLR 125.  He submitted that the Tribunal failed to take into account the actings of the parties.  

11.	The Tribunal agreed that the actings of the parties should be taken into account but it did not consider that the actings were such as to give rise to an employer/employee relationship. It considered the actings were easily contained within the terms of the written agreement, and could not lead to its extension beyond its terms and in particular the very clear provision in the agreement that there would be occasions when no work was available was not something which the actings of the parties could be said to have qualified or overridden.

12.	Now it seems to us and indeed that the Employment Tribunal fell into error. If there is a contract of employment, let it be said so at once, there is not necessarily any obligation on the part of the employer to provide work to the employee. (Reference can be made if anyone is interested to paragraph [562] in Hanley on Industrial Relations). Leave that to one side. The irreducible minimum of a contract of employment is explained by Lord Irvine of Lairg in the decision of the House of Lords in Carmichael & Anor v National Power plc [2000] IRLR 43 at paragraph 18:
"If this appeal turned exclusively -and in my judgment it does not -on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the CEGB to provide casual work, nor on Mrs Leese and Mrs Carmichael to undertake it, was imposed.  There would therefore be an absence of that irreducible minimum obligation necessary to create a contract of service”.  
It is important to note that it is the absence of mutual obligations that is crucial. It is not sufficient for there to be an absence of obligation on the part of the employer to provide work. There has to be an absence of an obligation of the employer to provide work and an absence of obligation on the part of the employee when work is offered to accept that work.  

13.	In our opinion the contract of employment in the present case is a contract of employment properly understood. Everything in that agreement in our opinion, points to there being a contract of employment and indeed it is referred to as such. The only matter upon which the Respondent can rely is the provision that refers to hours of work and the reference in the remuneration clause that there will be no payment when work is not available. Now we have already noted that there is some ambiguity in the hours of work provision. Does the phrase "occasions when no work is available" relate to the hours per week or does it relate to weeks or periods? For the purposes of this judgment we will assume that it relates to the latter (although we have very real doubts if this is so. However, in our opinion it cannot be construed as removing any obligation on the part of the employer to provide work if work is available. Mr Cunningham was driven to submit to us that work was 'available' if it was not only there to be done but also if the Respondent was willing to give that work to the Claimant to do. It seems to us that that is an impossible construction. We consider that what this clause means is that "if there is no work available to be done you will not get paid for doing it, you will not get paid for down-time, you will only get paid for the work that you do". It is quite consistent with there being an obligation to provide work to Mr Wilson if it is available and indeed that is what Mr Wilson said he understood the contract to mean. There was no suggestion so far as we can see in the original appearance by the Respondent that it understood it any differently. In our opinion the proper construction of this clause is that if there is work available it must be offered and when work is offered, we are quite satisfied that the terms of the contract or conditions of employment require Mr Wilson to undertake that work unless obviously there is some very good reason such as that he is too ill to work. Otherwise he is in the language of the agreement "required to carry out the duties of an Area Manager during periods of holiday and sickness absence".  He may also be required to carry out the duties of other persons. 

14.	It follows therefore that the basis of the decision of the Employment Tribunal's decision is unsustainable. This is a case where in our opinion, it is clear that Mr Wilson was employed under a contract of employment. We have considered what course is now appropriate for us to take. We have already indicated that in our opinion, and we so decide, that there was an obligation on the part of the Respondent to offer work when it was available to Mr Wilson.

15.	We have considered very carefully whether on the material before us we could properly find that there had been a constructive dismissal. We feel that we probably could. The evidence seems to point one way but unfortunately the decision of the Employment Tribunal is so brief that we feel unable to come to that conclusion in the absence of any findings of fact made by the Employment Tribunal.

16.	The question as to whether or not there has been an unfair dismissal having regard to the terms of this judgment must be remitted to an Employment Tribunal. We take into account the principles set out by the President in the case of Sinclair Roche and Temperley v Heard [2004] IRLR 763 in determining whether the decision should be remitted to the original Tribunal or to a fresh Tribunal. In our opinion the mistake made by the Employment Tribunal in its original decision and in the review decision, which we are now considering an appeal from, is so fundamental that justice requires that this matter should be heard before a fresh panel.

17.	We would finally add this. We would strongly recommend to the parties in the light of this judgment, that they should seek to compromise their differences and the services of ACAS, which provides a free mediation service are available. I shall ask that it be recorded in the order that we make that the parties are advised specifically of their rights to invoke the assistance of ACAS in arriving at a friendly settlement.