Establishing Employment Status - The Importance of Having Unambiguous Terms of Employment

Hafal Ltd v Lane-Angell

Miss Lane-Angell worked for Hafal Ltd as an 'Appropriate Adult' (AA) - assisting vulnerable adults who were held in police custody.

Miss Lane-Angell's letter of appointment stated: "This post has no guaranteed hours and engagement is on a 'bank basis' ie 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." The letter also stated: "There are no guaranteed hours within the service and paid Appropriate Adults do not qualify for paid sick leave or company pension provisions."

AAs would confirm their availability in advance, and would then be placed on a rota. Once on the rota, they might be called out, subject to demand. If they were called out, they were expected to work.

Following concerns about the availability being offered by AAs, Hafal introduced a requirement from 1 May 2015 onwards that all paid AAs were required to give a minimum availability of 10 shifts per month. It also operated a rule that if an AA did not respond to a call-out request on 3 occasions they may be taken off the rota (the 3 strikes rule).

In January 2016, Ms Lane-Angell was informed that she would not be offered any further AA work, after she had failed to respond to a number of call-outs.

Ms Lane-Angell took this as her dismissal, and brought a claim in the employment tribunal (ET) for unfair dismissal. In order to do this, she needed to establish that the nature of her engagement created a contract of employment with Hafal Ltd.

ET Decision                        

At first instance, the ET found that an employment relationship existed between Hafal Ltd and Ms Lane-Angell. This decision was based largely on its finding that when work was offered to Miss Lane-Angell, there was an obligation on her to accept that work, otherwise there would be sanctions. There was therefore an 'overarching contract' between the parties which had the necessary elements of mutuality of obligation - ie an obligation on one party to provide work and pay for it and an obligation on the other to accept and perform the work.

The ET noted that a lack of mutuality of obligation can only defeat employment status if it applies to both sides.

EAT Decision

The EAT disagreed with the ET. It made the following findings:

• The ET's decision had focused only on the facts surrounding the parties' relationship and paid little or no regard to the terms of appointment.
• As the terms of appointment were unambiguous, the ET had erred by failing to refer to them. It also concluded that the terms of appointment indicated that there was no mutuality of obligation between the parties. It then went on to consider the parties' relationship in practice.
• The EAT found that there was no obligation on Miss Lane-Angell to provide any minimum number of dates of availability prior to 1 May 2015. It noted that "an expectation that the Claimant would provide work is not the same as an obligation to do so." The EAT noted that the fact that Hafal considered it necessary to introduce a minimum availability requirement from 1 May 2015 suggested that no such minimum availability requirement applied before then.
• The EAT also noted that the three strikes rule was very clearly only applicable to those who had expressed their availability and had been placed on the rota. This could not therefore support a finding that there was any degree of obligation between periods when the Claimant was on the rota.

The EAT therefore held that as the ET's findings only supported mutual obligations during the periods when Miss Lane-Angell was on the rota, there could be no overarching contract of employment for the duration of the relationship.

Best Practice

This case is a helpful reminder that the first point of reference in determining employment status will always be the express contractual terms. These will then be examined in the context of the parties' relationship in practice. It is therefore important for employers to ensure not only that the terms of any contractual documentation are unambiguous, but also that they reflect the employment relationship in practice. A key factor in these cases will always be whether there was mutuality of obligation between the parties.

For more information please contact Eleanor Boyd in our Employment Law team on 020 7665 0940.