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||Neutral Citation Number:  EWCA Civ 651
||Case No: A1/2000/0453
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
||Royal Courts of Justice
Strand, London, WC2A 2LL
||Wednesday 9th May 2001
B e f o r e :
LORD JUSTICE SCHIEMANN
LORD JUSTICE ROBERT WALKER
LORD JUSTICE TUCKEY
|| STEVEDORING & HAULAGE SERVICES LIMITED
||- and -
||MR. A.M. FULLER & OTHERS
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr. Anthony Higgins (instructed by Messrs Morlings for the Appellant)
Mr. Thomas Linden (instructed by Messrs Pattinson and Brewer for the Respondent)
HTML VERSION OF JUDGMENT
Crown Copyright ©
LORD JUSTICE TUCKEY:
This is the judgment of the court.
- This is another case raising the question whether casual workers are employees other than when they are actually working. The eight Respondents in this case worked as casual dockers for the Appellants at Tower Wharf in Northfleet, Kent from January 1996. After three years they applied to an employment tribunal to be provided with written statements of the particulars of their employment. Section 1 of the Employment Rights Act 1996 requires such statements to be provided to "employees". Section 230 of the Act defines an employee as "an individual who has entered into, or works under a contract of employment". A contract of employment is defined as "a contract of service, whether express or implied and (if it is express) whether oral or in writing".
- The ET found that the Respondents were employees. They were not simply working under a series of individual engagements, but under an "overarching" contract of employment. The EAT dismissed the Appellants' appeal.
- The facts found by the ET are as follows. The Respondents had been permanently employed by the Appellants as dockers since 1989. In 1995, so as to reduce their operational costs, the Appellants offered and the Respondents accepted generous voluntary redundancy terms. The Appellants however foresaw the need to employ casual labour and on 2nd January 1996 wrote to each of the Respondents saying :
Following the decision to considerably reduce the number of permanently employed terminal operatives at Tower Wharf you were informed that there would be the requirement for casual employees on days and at times to be specified. We are delighted therefore that at the time you took voluntary redundancy, you informed us of your willingness to be considered for casual employment, but there is a requirement for us to point out the following :
The services you are to provide the company are on an ad hoc and casual basis. This means that while the company will try to give you as much notice as possible when offering work, there is no obligation on the part of the company to provide such work nor for you to accept any work so offered.
You are not an employee of the company and not entitled to any fringe benefits such as sick pay, holiday or pension rights.
You will be paid only for the hours actually worked (and the rates were then set out) with an eight hour minimum payment per working period unless otherwise agreed by you. From your payment there will be deductions of income tax and national insurance contributions under the PAYE scheme, in the same way as if you were an employee, but this is for administrative convenience only........
It is important that you understand and accept the conditions under which casual employment is being offered and we therefore require from you your acknowledgement on the copy of this letter before such employment can begin :
which said :
I understand and acknowledge the conditions under which I will be employed by the company on an ad hoc and casual basis, including the deduction of income tax and national insurance contributions.
- The Respondents signed and returned copies of this letter as requested together with another document headed "Temporary Terminal Operatives' Terms and Conditions of Engagement", which is in much the same terms as the letter but added :
You are not an employee of the company; your services being utilised only when mutually agreed, with no obligation by either party other than to honour a specific pre-agreed period of engagement.
Identical documents in all important respects were issued by the Appellants and signed by the Respondents when the rates of pay were increased in January 1997 and June 1998.
- From January 1996 each of the Respondents worked for the Appellants as the ET put it "on many more days than not". They did not work for any other employer. They were engaged directly by the Appellants and were offered work before other casual labour which was engaged through an agency. A rota system ensured that those who said they were available for work but were not offered it were rewarded and that those who were offered work for which they were not available were penalised. The Appellants provided training and (in the third year) protective clothing for the Respondents who worked under their control and direction.
- It is clear from the ET's reasoning that they were well aware that before they could find there was an overarching or global contract they had to find "an irreducible minimum of obligation on each side" necessary to create a contract of service. There could be no such mutuality if the position was simply that the Appellants were under no obligation to offer work and the Respondents were under no obligation to accept it. (See Clark -v- Oxfordshire Health Authority  IRLR 126 at paras. 22 and 41).
- The ET found that there was such an agreement which contained the express terms upon which casual work had been offered and accepted in the documents to which we have referred. Those documents, as they found, "expressly negative mutuality of obligation". But the ET went on to find that the agreement also contained implied terms :
........ from the ways in which the parties have in reality conducted themselves since the inception of the agreements ........ that the (Appellants) will (i) offer the (Respondents) a reasonable amount of work as and when the work is available, and (ii) that they will offer the (Respondents) that work in priority to other casual workers ........ In return the (Respondents) impliedly agree to make themselves available for work on at least a reasonable number of occasions when the work is offered to them.
Thus the ET were able to conclude "once we have implied the terms which we have set out" they provide "an irreducible minimum of obligation on each side".
- The EAT dismissed the appeal because no error of law by the ET had been shown. The implied terms reflected the reality of the agreement between the parties and it was open to the ET to imply them to give business efficacy to it. It was permissible to ET to conclude that those terms were not inconsistent with the express terms.
- In considering whether the decisions of the ET and the EAT can be sustained, we bear in mind that whether there is a contract and, if so, what its terms are are questions of fact or mixed questions of law and fact. Appeals from the ET lie only on questions of law and so their findings of fact can only be challenged for perversity. Moreover, in this field the search for an agreement or its terms should not be confined to a consideration or construction of the documents unless it is clear that the parties intended them to be the exclusive record of their agreement, if any. The parties' intention may be inferred from other sources, including subsequent conduct. We think this point is self-evident, but it is made clearly in the opinions of Lords Irvine and Hoffmann in Carmichael -v- National Power  1 WLR 2042. In that case the House restored an ET's decision that casually employed tour guides, when not working as guides, were in no contractual relationship of any kind because there were no mutual obligations to offer and perform work. The documents in that case did no more than provide a framework for a series of successive ad hoc contracts of service or for services which the parties might subsequently make........ The parties incurred no obligations to provide or accept work but at best to assume moral obligations of loyalty in a context where both recognised that the best interests of each lay in being accommodating to the other. (p.2045G -H)
- With these preliminary observations in mind we turn to consider the ET's decision. They found that the documents containing the terms upon which casual work was offered and accepted "expressly negative mutuality of obligation". Such a finding was, we think, inescapable. Casual work was to be done "on an ad hoc and temporary basis" "with no obligation on the part of the company to provide such work nor for you to accept any work so offered". If this finding stood alone the ET should have concluded that there was no global or overarching agreement. Like the documents in Carmichael they provided no more than a framework or facility for a series of successive ad hoc contracts. At best the parties assumed moral obligations of loyalty where both recognised that their mutual economic interests lay in being accommodating to one another. But the ET did not consider the matter in this way. They concluded that there was an agreement (which on this analysis there was not) and then sought to supplement it by implying terms so as to water down the effect of the documents containing the express terms and give it sufficient mutuality to pass the test. We do not think this approach can be justified. If there was no contract, there was no contract and one could not be created by the implication of terms in this way.
- If there was a contract we cannot see any way in which the ET's implied terms could be incorporated into it. The implied terms flatly contradict the express terms contained in the documents: a positive implied obligation to offer and accept a reasonable amount of casual work (whatever that means) cannot be reconciled with express terms that neither party is obliged to offer or accept any casual work. None of the conventional routes for the implication of contractual terms will work. Neither business efficacy nor necessity require the implication of implied terms which are entirely inconsistent with a supposed contract's express terms.
- The case was not considered by the ET or the EAT on the basis of variation. Nor do we think it could have been on the facts as found by the ET which were to the effect that the conduct of the parties remained the same throughout. One can conceive of cases where such a variation might be inferred from conduct, if, for example, the relationship between the parties obviously changed so that they would no longer be regarded as working under the original framework or facility. But that was not the case here. Nothing changed and in successive years the parties agreed the framework in almost identical terms.
- In his attractive and well thought out submissions Mr. Linden, for the Respondents, sought to uphold the ET's decision by reminding us of a number of the principles which we have accepted earlier in this judgment. But the success of all his arguments depended, we think, upon whether the ET's implied terms were inconsistent with the express terms contained in the documents, or, at least, whether it was a permissible view that there was no inconsistency. He argued that the implied terms refined rather than contradicted the express terms because the latter could be read to mean no more than that on a particular day the Appellants were not required to offer and the Respondents were not required to accept work, but in the longer term the implied mutual obligations of reasonableness applied. We do not agree. This, as we have already said, flatly contradicts what the documents say.
- Mr. Linden also attempted to derive support for a submission that there was a continuity of relationship between the Appellants and Respondents from various aspects of how the arrangement worked in practice. He relied on the rota, the provision of training and protective clothing and the regularity with which some (but not all) of the Respondents did casual work. But on analysis each of these features can be explained by the fact that the Respondents were performing a series of successive ad hoc contracts of service or services. We do not see anything which is inconsistent with the framework set out in the documents to which all parties subscribed.
- For these reasons, we do not think the ET's decision and the EAT's support of it can be sustained. The ET's error was an error of law, but their decision does not necessarily have to be characterised as perverse. Rather, it seems to us that there was an error of legal approach or direction. But if necessary we would hold that the finding that there was an overarching contract of employment and/or that it contained the implied terms was perverse.
- For these reasons we would allow this appeal and quash the ET's order that the Respondents are entitled to be provided with a statement of the terms and conditions of their employment.
- Mr. Linden said that if we allowed the appeal in this way we should remit the case to the ET for a further hearing to determine the question of variation to which we have referred. For the reasons we have already given we do not think that any such determination would affect the result. Finally, Mr. Linden asked for the case to be remitted for the ET to consider whether the successive and ad hoc engagements were themselves contracts of employment to which section 1 of the 1996 Act applied. He was unable to advance any practical reason for doing this and as the Respondents chose not to advance their case on this basis in the first place, we do not think we should prolong these proceedings by allowing them to do so now. If there is any purpose in doing so, further proceedings specifically putting the case in this way can still be started.
1. Appeal allowed
2. Employment Tribunal order granted
3. Respondents to pay applicants costs, summarily assessed in the sum of £6,588.70
4. Permission to appeal to the House of Lords refused.
(Order does not form part of approved Judgment)
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