The range of pay arrangements available to firms employing ‘salaried hours’ workers...
No mutuality of obligation defeats 'employee' claim
Hafal Ltd v Lane-Angell
Where there was no obligation to provide or accept work, and the other features of the relationship were not inconsistent with this, there was no contract of employment.
Hafal Ltd provided support to those with mental health problems which often involved visiting police stations. In 2012, Ms Lane-Angell (LA) began working for Hafal as an unpaid volunteer.
Her letter of appointment stated the following: ‘This role is unpaid and has no guaranteed hours, engagement is on a “bank basis”, i.e. your details will be placed on Hafal's database and we will use your services as and when they are required if you are available’. In 2013 she was appointed to a more substantial - and paid - role (Appropriate Adult) but still on a bank basis, albeit now with various ‘terms and conditions’ in her appointment letter (e.g. rates for call outs, holiday entitlement and subsistence/mileage rates).
In 2015 Hafal required LA (and others performing a similar role) to commit to a minimum availability of ten shifts per month (so it could ensure adequate cover). Hafal also operated a poorly applied and managed three-strike rule; if someone missed three calls outs, they’d be removed from the rota. In January 2016 Hafal told LA that she’d no longer be offered any more work. LA took this as a dismissal. Hafal denied there had been a dismissal - on the basis that LA had never been ‘employed’. A tribunal held that LA was an employee. Hafal appealed.
The EAT allowed the appeal.
Whether LA worked under a contract of employment was not solely dependent on the terms of her appointment letter. The tribunal also had to look at the intention of the parties by assessing the facts and the circumstances surrounding the relationship. The trouble was that the tribunal had spent too much time looking at the facts surrounding the relationship between Hafal and LA and not enough time on the terms of her engagement. The letter of appointment was unambiguous. Apart from there being no guaranteed hours, which indicates that Hafal wasn’t obliged to offer any minimum quantity of work, there was also the reference to LA providing services ‘if you are available’. Had Hafal wanted LA to be available whenever it required her it would not have used ‘if’. LA could indicate that she wasn’t available and was not therefore obliged to work when requested to do so. The terms of the letter indicated that there was no mutuality of obligation.
The EAT then went on to look at whether the way in which Hafal obtained work from LA indicated that there was mutuality of obligation despite what was said in the appointment letter. The EAT held that it did not. Neither the expectation that LA would provide work, nor the three-strikes rule 'created an irreducible minimum degree of obligation’. The EAT reminded us that ‘expectation’ is not the same as ‘obligation’. The tribunal took what appeared to be an obligation whilst on the rota and applied it to the whole relationship to find that there was an overarching or umbrella contract of employment. That was incorrect said the EAT even if it was wrong on that, such an overarching obligation only began in 2015 and she had not been ‘employed’ long enough to bring an unfair dismissal claim.
The EAT said that this was not a ‘sham’ claim where the reality was entirely different from the terms of the contract, especially as LA herself accepted that she worked on a bank basis and this is how she put her claim.
Link to judgment: http://www.bailii.org/uk/cases/UKEAT/2018/0107_17_0806.html
Gig economy cases have dominated the employment law headlines in recent months. These centre around people classed as self-employed by an employer who are claiming, at the very least, ‘worker’ status. This wasn’t how LA framed her case and as Hafal paid her holiday, then it is assumed they accepted she was a worker. She brought an unfair dismissal claim and the first thing the tribunal had to so was to assess her legal status, as only employees can bring a claim of unfair dismissal. The decision is a useful reminder that if the terms of engagement are clear (and not a sham, which they clearly weren’t in this case) and the way in which the parties conduct themselves does not contradict the terms of appointment, then it is perfectly possible to structure an agreement so as not to confer ‘employee’ status on an individual.