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	United Kingdom Employment Appeal Tribunal
You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Postworth Ltd (t/a Skyblue) v Ashworth [2008] UKEAT 0183_08_1906 (19 June 2008) URL: http://www.bailii.org/uk/cases/UKEAT/2008/0183_08_1906.html Cite as: [2008] UKEAT 0183_08_1906, [2008] UKEAT 183_8_1906

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APPEARANCES

 

For the Appellant	MR JOHN BOWERS QC (One of Her Majesty's Counsel) Instructed by: Messrs Clarks Legal LLP Solicitors 2 Caspian Point Caspian Way CARDIFF South Glamorgan CF10 4DQ
For the Respondent	MR ADAM OHRINGER (of Counsel) Instructed by: Messrs Thompsons Solicitors The St Nicholas Building St Nicholas Street NEWCASTLE-UPON-TYNE Tyne & Wear NE1 1TH

SUMMARY

JURISDICTIONAL POINTS

Worker, employee or neither

Agency relationships

The Employment Tribunal found at a preliminary hearing that the claimant was an employee. The EAT held that the employment judge had misdirected herself and failed to explain adequately the basis of certain key elements in the decision.


 


THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1. This is an appeal against the decision of the employment judge who, at a hearing of a preliminary issue, held that Mr Ashworth was an employee of the agency who provided his services to a third party, and was therefore entitled to pursue a claim for unfair dismissal against them, subject to the issue of continuity being determined in Mr Ashworth's favour.
2. The Tribunal had to deal with the status of Mr Ashworth with respect to two periods. The first was from 2002 until early 2007, and the second from April 2007 until his dismissal some time in June, some two months later. The employers accept that the Tribunal was entitled to find that he was an employee with respect to the second period during which he was working directly for the agency itself. The appeal is directed at the Tribunal's conclusion that he was also an employee in the first period when his services were being provided to a third party client. His claim before the Tribunal was for unfair dismissal and it was necessary for him to establish his status as an employee in the earlier period in order to have the requisite continuity of employment.
3. There were gaps between engagements even in the year immediately preceding his dismissal, and so even if he was an employee at the earlier stage, he will only have the necessary continuity of employment if he was either employed under an umbrella or global contract with the agency, or if each engagement constituted a separate contract and he could "bridge" the gaps between them by bringing himself within the terms of section 212 of the Employment Rights Act 1996.
4. The relevant evidence can be very briefly stated. The employee entered into a contract with Postworth Ltd, which traded as Skyblue, and is a division of Carillion plc. They operated as an employment agency and provided the services of Mr Ashworth to Carillion plc, their holding company.
5. It was not disputed that initially the claimant was employed under a document which was headed 'Temporary Workers/Terms and Conditions of Engagement'. He signed that document on 25 February 2005 and, as the Tribunal found, he also signed a further document containing essentially similar terms on 27 March 2005. There was no explanation as to why he signed or was required to sign two contracts so close together.
6. The employers also asserted that the claimant signed similar contracts in July 2006 and January 2007 and copies were provided to the Tribunal. However, the claimant denied that he had seen these documents and the Tribunal was not prepared to treat them as copies of genuine documents.
7. The document the claimant did sign asserted that he was a temporary worker, that he was not employed under a contract of employment with Skyblue, that no contract existed between Skyblue and the worker between assignments, and it also stated in terms that the worker was not entitled to be offered any work by Skyblue nor was he obliged to accept any assignment offered.
8. The evidence of the claimant was that he worked continuously for Carillion plc and only for that company from 2002 until early 2007, save for two short periods when there was a break. These were in the periods from February to September 2003 and September to December 2006. The latter break fell in the twelve month period prior to the termination of the relationship with the agency. Mr Ashworth said in evidence that he was not forced to take assignments but he rarely turned down work.
9. The employment judge did not accept that the written documents properly reflected the nature of the relationship. Indeed she concluded that they had fallen into disuse at least by early 2006 and in any event they were never intended to reflect the whole of the parties' mutual obligations. It was envisaged that the documents would be re-executed at least every twelve months and it was not. She does appear to have accepted that for the period when the contracts were in force, there was no employment contract in place, although she does not say why. If the reason was simply that this is what the contract said, that would be an error because it is well established that the parties cannot by agreement determine their own status. At best their own perception in only one of the factors to be considered, although it may be decisive in marginal cases: see Massey v Crown Life Insurance Co [1978] ICR 590 (CA).
10. The employment judge held that after the contract came to an end the relationship between the parties had to be inferred from conduct and oral terms. She found that the relationship could not properly be described as temporary, and that at least from the point at which the written contracts ceased to be relevant in early 2006, there was mutuality of obligation between the parties. She said this:

"From [early 2006] on, I find that there was mutuality of obligation. The respondent offered work on a regular basis and the claimant accepted that work."

Later she added:

"I am satisfied that at least from the expiry of the last contract, the claimant was an employee of the respondent. He worked where he was sent, he accepted engagements he was offered- and they were offered to him, and was required to conduct the jobs personally….I have not considered the question of continuity of service. This will be for another tribunal."

11. I note, and both counsel accept, that it is not clear whether the finding is that there was in the period prior to April 2007 a single contract in place or whether the finding is that each engagement constituted a separate contract. I would have thought that the former is the more natural meaning, save for two features.
12. The first is the observation by the employment judge that she was not dealing with the question of continuity. If there were an umbrella or global contract in place then it is difficult to see how continuity becomes an issue; it seems to me that there must be continuity if there is a global contract.
13. The second feature is that she does not engage with the question whether there was an obligation on the employee to accept an engagement or on the agency to provide engagements if they were available. She simply recounts that engagements were in fact offered and accepted. That would of course establish mutuality of obligation with respect to each engagement itself, but is not of itself sufficient to establish a global contract.

The grounds of appeal.

14. Mr Bowers QC, counsel for the employers, submits that there are two basic errors in the Tribunal's approach. The first is that even if the written documents no longer directly dictated the terms of the relationship, the Tribunal was obliged to say how the contract which was, on the Tribunal's analysis, to be inferred from conduct and oral terms differed from the earlier contract. There was no reason to suppose that it had. Even if the Tribunal could properly find that the written contract had fallen into disuse (and Mr Bowers submits that this was difficult to understand since it was not for a fixed period) nonetheless after that point the relationship continued in precisely the same way as before, and precisely the same documentation was given to Mr Ashworth for each engagement. There was, therefore, no proper basis for suggesting that the relationship had changed in any significant way, and the Tribunal does not identify any change. Nor has it pointed to any subsequent oral terms.
15. The second error was in the Tribunal's approach to the issue of mutual obligations, at least on the premise that it was intending to find that there was a global or continuing contract. In order for there to be a mutuality of obligations it is not enough that the claimant in fact accepts engagements offered; it is necessary that he should be under some obligation to the employers to do so. The claimant's own evidence was that he could choose whether or not to accept the work and occasionally - albeit on his own evidence only very rarely - he chose not to accept it. This evidence is incompatible with any legal obligation to work and in the absence of any such obligation to work or be offered work, there cannot be an umbrella or global contract: see Carmichael v National Power [1999] ICR 1226 (HL) per Lord Irvine of Lairg at page 1230G.
16. There is also a third point identified in the notice of appeal but not developed in argument in any detail, which is that the Tribunal do not appear to have considered the issue of control with respect to the earlier period.
17. Mr Ohringer, counsel for the claimant, submits that the Tribunal was entitled to reach the conclusion that it did. It was Skyblue's own evidence that the written terms needed to be re-executed every twelve months and this had not been done. Accordingly the Tribunal was entitled to find that the written contracts fell into disuse. Thereafter the Tribunal plainly found that the relationship had evolved, as the change in April 2007 shows. In the circumstances the Tribunal was entitled to conclude that mutuality of obligation and control existed, and that is all that is necessary to establish a contract of employment; see Ready Mixed Concrete (South East Ltd. v Minister of Pensions and National Insurance [1968] 2QB 497.
18. Mr Ohringer accepts that it is not clear whether the Tribunal has concluded whether there was a global contract or merely a series of contracts with each engagement; and he also recognises that with respect to the earlier period, the Tribunal has not in terms identified the factors which caused it to conclude that there was sufficient control. However, the employment judge expressly referred to the issue of control with respect to the second period and must be taken to have had it firmly in mind with respect to the earlier period also. He also reminds me of the well established principle that the EAT can interfere with the decision of the Employment Tribunal only if there is an error of law or the decision is perverse.

Conclusion.

19. In my judgment this appeal must succeed, on each of the grounds relied upon by Mr Bowers. First, once the Tribunal had accepted that there was no contract of employment in place when the written document governed the relationship, it was in my view obliged to say what had changed once that written contract ceased to have effect. The Tribunal does not identify any material way in which the nature of the relationship altered thereafter.
20. It is true that there was no longer a relevant express term stating that there was no contract of employment in place, but as I have indicated, that would not have been determinative of the employment status in any event. The Tribunal did identify a relevant change in April 2007, and to that extent the relationship clearly did evolve. However, there is on the face of it no material change in the way the relationship was structured from early 2006 to April 2007. In any event, if there was, the Tribunal has not identified it.
21. Whether the finding on mutual obligations is sustainable depends on what the Tribunal was deciding. If it was concluding that each engagement constituted a separate contract, then plainly there was mutuality of obligations consistent with that. Mr Ashworth was undertaking to work by accepting the engagement and the agency was undertaking to pay him. However, if the finding was intended to be that there is a global contract, then that can only be on the premise that there was some obligation to offer and accept work, and in my judgment it is not possible to spell out any such obligation in the light of Mr Ashworth's own evidence to the Tribunal.
22. I accept, as Mr Ohringer submits, that a right to refuse work is not necessarily inconsistent with an obligation to accept it in some circumstances and it is enough that there is some obligation to accept work: see the observations of Langstaff J, giving the judgment of the EAT in Cotswold Developments v Williams [2006] IRLR 181 para.55. However, in my judgment it is not possible to spell out from the evidence of Mr Ashworth that there was ever any obligation to accept an engagement, even though in practice he only rarely refused work offered. In the light of that evidence I do not consider it possible to infer any mutuality of obligations in the period between engagements and accordingly if the Tribunal was intending to find that there was an umbrella contract, in my judgment it erred in law.
23. In reaching this conclusion I have had in mind the recent decision of the EAT in St Ives Plymouth Limited v Haggerty UKEAT/0107/08 (Elias P) in which the EAT accepted, following Nethermere (St Neots Ltd) v Gardiner [1984] ICR 612 and Airfix Footwear Ltd v Cope [1978] ICR 1210, that there may exceptionally be circumstances where the pattern of work is such that it may be possible to infer an obligation to work simply from the continual repetition of work being offered and accepted. But I do not see how any such inference can be drawn in circumstances where both parties, including the employee himself, considers that he has the freedom whether to accept an assignment or not.
24. Finally, I also accept that there is no adequate analysis of the control issue. The only control identified appears to be that Mr Ashworth was obliged to go where he was sent. But that of itself could not be sufficient to amount to control or else every agency worker would automatically be an employee. Indeed, in a Court of Appeal decision involving the same employer, Bunce v Postworth Ltd t/a Skyblue [2005] IRLR 557 the Court held, in similar circumstances to this, that there was insufficient control and emphasised that the question is who in reality has day to day control: see the judgment of Keene LJ, para. 29. I recognise that these cases are to some extent fact sensitive, but if there was sufficient control in this case, then the Tribunal had to spell out what it was and how it was exercised.

Disposal.

25. For these various reasons, I am satisfied that the Tribunal did not approach this question in the right way and the matter will have to be remitted for a re-hearing before a fresh tribunal. However, it is in my view important that the question of the employee status is not looked at independently of the question whether the requisite continuity has been established. It is highly artificial to separate out those two issues, particularly since the employment status at the time of dismissal itself has been determined, and that finding has not been challenged. That is not an issue which is now open for reconsideration at the re-hearing.