Airfix Footwear LTD v. Cope [1978] ICR 1210 - Case Study Example

 Employment Law Tess has been employed at Dolby for two and a half years, under the contract of an agency, which in turn has a contract with the end user, she is considered to be employed by neither the agency nor the hospital. If we can establish that she is an employee and not just an agency worker, then she can file a claim. How can we reclassify her status? “Mutuality of obligation is one of the determining factors in establishing employment status, but one sided obligation is not sufficient, The emphasis is on mutuality of obligation, a one- sided obligation is not sufficient to establish an individuals status as an employee”. (Landwell) As the statement explicitly states, the relationship must come with mutual obligations each party must make significant and relevant contributions to its force and affect. At this juncture it is apparent that mutuality of obligation stands alone. In other words, it has not yet evolved to include; implied contracts or control. Initially we will view a case where the appellant worker under an employment contract has filed a claim of unfair dismissal, which was subsequently denied by the IT. We will examine the case of Airfix Footwear LTD v. Cope [1978] ICR 1210, to determine why the request was denied; “whether Mrs. Cope was engaged under a “contract of employment” and therefore entitled to claim unfair dismissal under the Trade Union and Labor relations Act 1974. In arriving at its decision the Industrial Tribunal considered that it was necessary to look at all the factors present and decide whether overall they supported a contract of service. It was irrelevant in this particular case whether the individual daily contracts were separate employments or not. The IT concluded that no individual contracts existed between the worker and the company. The company only delivers work sporadically from time to time, and from time-to-time the worker chooses to do it, so that there is a pattern of an occasional week done 2 a few times a year, then it might well be that there comes into existence on each of these occasions a separate contract of service, or contract for services, but the overriding arrangement is not itself a contract of employment, either of services or for services. But these matters must depend upon the facts of each particular case. This case confirms the view that an “umbrella” contract can exist if a practice of dealing has been built up over the years with expectations and obligations on each side. It was only in respect of the overall contract that the question of mutuality of obligation came into effect, and in this particular case it was considered that this obligation was so overpowering that it meant that no individual contracts had existed. However, it is often difficult to establish the necessary ongoing mutuality of obligation to change a series of short-term contracts into a single “umbrella” contract. (Airfix) In this case the IT denied the worker’s claim because the worker is not obligated to accept the work and the provider is not under any obligation to consistently provide the work to the worker. In order for the ‘worker’ to be classified as an ‘employee’, the case must be able to pass the test for employee status. In this case the company does not have or is not in a position to exercise any control over the worker. “The more control the supervisor or employer can exercise, the more likely the worker will be deemed an employee. The converse holds true as well—the less control the employer can exercise, the more likely the worker will be considered an independent contractor”. (Pierce) The company has no established schedule as to when they will deliver jobs to the worker, and the worker whenever she chooses, may decide not to accept the work which is delivered. Thus, the relationship does not have even a semblance of mutuality of obligation. Therefore the individual retains her classification of ‘Worker’, and cannot file a claim for unfair dismissal. 3 Temporary workers engaged through employment agencies have for a number of years been a popular choice for UK businesses. The benefits to businesses of engaging a flexible labour resource has been tangible. The resource can, in theory, be turned on and off at will, without the problems associated with headcount, the need for redundancy procedures or risk of unfair dismissal. In short, temporary agency workers have proved a cost-efficient resource to end user businesses. For an employment contract to exist, as a minimum the following ingredients must be met; first a contract between the parties, second, an element of control over the worker and third, a mutuality of obligation between the worker and the employer. Up until 2004, most cases considered by the courts found that whilst there may be sufficient control exercised by the hiring end user over the worker and mutuality of obligation, there was no actual contract between the worker and the end user. In contrast the courts found that whilst there was a contract between the agency and the worker, there was insufficient mutuality of obligation or control by the agency over the worker for it to be an employment contract. The consequence was the worker was not employed by either the agency or the hiring end user. (Masters) It soon became obvious to the court that the base was not broad enough, using merely mutuality of obligation as the test. It broadened its scope of the test by including the concept of control of the worker. The common law control factors include the following: The extent of control which it is agreed that the employer may exercise over the details of the work; Whether or not the worker is engaged in a distinct business or occupation. The kind of 4 occupation, and whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; The skill required in the particular occupation; Whether the employer or worker supplies the instrumentalities, tools and workplace; The length of time for which the worker is employed; The method of payment, whether by the time worked or by the job; Whether or not the work is part of the regular business of the employer; Whether or not the parties believe they are creating any employer-employee relationship; and Whether or not the worker does business with others. (Classification) And the third concept is the presence of implied contracts. This concept is elucidated in Brookstreet Bureau UK LTD v. Dacas, we see that the Court of Appeals held: “Ms. Dacas, an agency worker, was not an employee of the agency business that supplied her and expressed the view that, in certain circumstances, an implied contract of employment could arise between an agency worker and the client or the agency. Often there will be two contracts; one between the agency and the worker and another between the agency and the client. Usually those contract state that the worker will not be an employee of the client’s. The Court of Appeals stated tribunals/courts should look beyond the written terms of the contract and consider whether there is an implied contract of employment between the worker and the client. (Brookstreet) However, in the Dacas case, the issue of Ms. Dacas’ employment with the agency was not the central issue. Nonetheless, the Court of Appeals went further to express 5 that she was employed by the client. This client/employee relationship not being the central issue though the judges expressed their perception of the relationship, it was not binding on the lower courts/tribunals. This case challenged the common and legal perception that, in the absence of a contract between the two, an agency worker cannot be employed by the hiring end user. In this case it was accepted that, following a careful factual assessment of the relationship between the parties, an implied contract can exist between the agency worker and the end user. It remained to be seen whether the courts/tribunals would follow the Court of Appeals reasoning. Then in the case of Cable & Wireless plc v. Muscat, 2005, the EAT had to its first challenge to the CA ruling in Dacas. The EAT had to decide whether a tribunal was wrong to have followed the Court of Appeals’ comments in Dacas regarding the implication of a contract of employment between the worker and the client. Muscat had been employed by EI. LTD as a telecommunications specialist, firstly personally and later through his own service company. EI was taken over by Cable & Wireless. This was a transfer of undertaking under the Transfer of Undertakings (Protection of Employment) Regulations 1981. C& W asked Mr. Muscat to start providing his services through an agency. There was a contract between Muscat’s service company and the agency and another contract between the agency and C & W. C & W later asked the agency to terminate its contracts with Mr. Muscat’s service company and Mr. Muscat claimed unfair dismissal against C & W. The tribunal followed the guidance in Dacas and found there was an implied contract of employment between Mr. Muscat and C & W. C & W appealed on the basis that the comments in Dacas were not binding and that Dacas had been wrongly decided. The EAT decided that the comments were binding and the tribunal and the EAT had to follow them. The EAT stated 6 that the tribunal was right to conclude Mr. Muscat was employed by C & W. (Cable) In this case we see the emergence of new law and the absolute acceptance by the Court and tribunals of the test to be applied in discerning the difference between ‘workers’ under contract by agencies and workers employed by agencies who have implied contracts with end users, thus becoming ‘employees’ of the end users. The findings were expanded to include the power of control or direction over the worker to be the workers’ employer. It also spoke to the extent of equality when it was acknowledged that it was not credible that a worker was not employed by neither the client nor the agency. Additionally, that once the worker had been working for the same client for one year or more it had to be inferred that a contract of employment had been created. (Cable) Additionally in Royal National Lifeboat Institution v. Bushaway, 2005; Ms. Bushaway had been working for RNLI as an agency worker in a temporary position until that post became permanent and she was appointed as a permanent member of the staff. She later resigned and filed a claim for unfair dismissal the tribunal had to decide whether Ms. Bushaway had been employed by RNLI before she became a permanent employee. There was a contract between RNLI and the agency and a contract between Ms. Bushaway and the agency. The tribunal concluded that they not only had to look at the written contracts, but also at the parties conduct and how the arrangements operated in practice. RNLI exercised sufficient control over Ms. Bushaway (she worked regular hours, days a week under a line manager with whom (she had to negotiate requests for time off) for there to be an employment contract between the two. RNLI appealed and the EAT found that the tribunal was entitled to look beyond the written contracts and conclude Ms. Bushaway 7 was RNLI’s employee. (Royal) This was a case which contained all of the traditional components mutuality of obligation, implied contracts, influence over the worker and conduct The law was now solidified and provided a working tool whereby courts and tribunals could provide more equality and redress for employees. The consequences of this Decisions are considerable. It now seems probable that if an agency worker is retained for 12 months or more by the same end user, they will qualify for the right not to be unfairly dismissed by the end user (and acquire other employment rights).(RNLI) Moreover, that if they are dismissed either summarily, wrongfully or unfairly and their work condition adheres to the employment test, then the can seek legal remedies. This clearly negates one of the tangible reasons why the engagement of agency workers has been so popular in recent years. (Masters) This case contained all of the components which comprise the tests for employees. It is considered to be the premier case in determining the status of an individual and their relationship to their employer. The Employment tribunals has recently provided further assistance to agency workers. In the case of Astbury v. Gist Limited 2005, it recommended that employment tribunals automatically add the employment agency or the user as a party to the proceedings against one of them. (Astbury) This enables the tribunal to a fuller view of the true employment relationship and end users, that the agency worker will not be left without a practical remedy if they initially issue proceedings against the wrong party. This was a good procedural as well as legal move. In the event of a complainant naming the wrong defendant is their complaint, it will save time and administrative cost in the short and long term It is my position that if we base a case on the findings in Dacas and Cable & Wireless 8 we will find that Tess has been employed by the hospital for more than two and a half years so there is an implied contract. Further, when we view the case of RNLI as it relates to Tess we find again an implied contract. Also, Tess worked for the hospital full time and she was required to negotiate with her supervisor for her work schedules and time off. Additionally, it was the head nurse who made the determination on Tess’ duty station. Clearly this exhibits that the hospital exercised considerable controls over her. When we take into consideration the test for employee status, then Tess would qualify as an employee of the hospital, and possess the right to file a claim with the tribunal. I will advise her to file a claim against her summary dismissal (which was unfair dismissal) and a claim for disability discrimination. I would like to draw the distinctions between the various types of dismissals to assure that I have advised her properly. Summarily or instantly dismissed, is the dismissal of an employee on the spot and without notice. Normally an employee will be entitled to the notice period provided by his/her contract or to the relevant minimum statutory notice period if greater. Only in exceptional circumstances, notably where an employee has conducted himself in a way which is so bad that it could be categorized as “gross misconduct”, will dismissal without notice be justified. In this circumstance the employer should adhere to the modified (two-step) dismissal procedure after dismissing. Step 1. The employer must set down in writing the nature of the alleged misconduct that has led to the dismissal, the evidence for this decision, and the right to appeal against the decision, and send a copy of this to the employee. Step 2. If the employee wishes to appeal, he/she must inform the employer, the employer must invite the employee to attend a hearing to appeal against the employers decision, and the final decision must be 9 communicated to the employee. (Eas.16) If instant or summary dismissal is justified there is a specific exemption from any requirement to give notice (ERA 1996 s.86 (6)) The question of whether termination without notice is justified depends on the circumstances of the individual case and in the event of a dispute can be finally determined only by the courts of employment tribunals. (DTI) When we view B. S. C. Sports and Social Club v. Morgan [1987] I.R.L.R. 391 EAT; we find the EAT held that the IT erred in deciding that the dismissal was unfair merely because it was summary, once it had decided that the employers had reasonable grounds to dismiss the worker, the finding was that the summary dismissal was justified. (B.S.C.) If the dismissal is justified it will not be wrongful dismissal. It may still be unfair dismissal and normally will be if the employer has failed to consult/discuss. (Eplaw) We find an example in Polkey v.A.E. Dayton Services LTD HL [1988 ICR 142. The case itself firmly establishes the absolute right of an employee, save in exceptional circumstances, to be consulted before being dismissed notwithstanding that consultation would make no difference to the decision to dismiss him. By extension the rule in Polkey means that compensation for unfair dismissal should not be reduced if the dismissal was unfair on procedural grounds. (ie because the employer adopted faulty dismissal procedures) but the employment tribunal is satisfied that the employee’s conduct was such that he or she would have been dismissed anyway if the proper procedures had been followed. (Polkey) Unfair dismissal is a statutory ‘invention’ governed by an act of Parliament and dealt with by employment tribunals not by the courts. Unfair dismissal can, and frequently does, occur without there being any breach of contract/ wrongful dismissal. It is a relatively new concept, having been in existence in Great Britain since the passing of the Industrial Relations Act 1971. Frequently “unfair dismissal” 10 will also be wrongful dismissal (and vice-versa) but not always. The only remedy for unfair dismissal is to present a complaint to an employment tribunal. (ERA 1996 s.205) In that Tess was dismissed on the spot, the hospital’s defence will in all likelihood be that she exhibited gross misconduct. Had the patient died, she could have been brought up on involuntary manslaughter charges, rendering her culpable under the concept of gross negligence. Gross misconduct is described as, conduct so bad that it destroys the employee/employer relationship, and merits summary or instant dismissal without notice or pay in lieu of notice. (Snell) Given the nature of Tess’ dismissal, it was the duty of the hospital to follow a modified two step procedure; In that Tess was dismissed instantly, points to the fact that the hospital did not completely adhere to step 1 of the modified procedure. An investigation which was comprehensive would have revealed that Tess was merely following the instructions of the consultant. An investigation of all parties present, including the junior doctor, would have revealed that the consultant was in fact the culprit. This procedure was not absolutely adhered too, and the impact could result in a finding in Tess’ favor. The hospital has the burden of proving that the dismissal was fair and justified. In that Tess has been dismissed, what affect will her dismissal have on her perfect work record? Will this incident affect her employment continuity? Under the Fixed Term Employees Prevention of Less Favourable Treatment Regulations 2002, Tess has up to three months to file her unfair dismissal and disability discrimination claim. During this period her time off of the job is covered by the Employment Rights Act 1996 as per subsection (2) (a), making a claim in accordance with a dismissal procedures agreement designated by an order under section 110, (b) the presentation by her of a relevant complaint of dismissal; in section 3, 12 I will advise Tess not to file a claim with acas, primarily because of the inclusion of the disability discrimination claim. (Her disability discrimination claim can be successful because she requested to be transferred from the intensive care unit because she felt that the unit contributed to her stress build up, The hospital owed her a duty of care which it did not provide.) Acas only mediates complaints on unfair dismissal, and if the unfair claim were successful, she would still have to file the disability discrimination claim with the employment tribunal. It was common knowledge that Tess suffered with depression; her normal work week had been reduced to four days and she had approached her head nurse for a transfer out of the intensive care unit because she felt it aggravated her condition. The head nurse refused to grant her a transfer giving the reason of being under staffed. In accordance with the Disability Discrimination Act 1995 the employer must make reasonable adjustments to working conditions and environment to help overcome practical effects of disability. (DDA 1995 s.6) In Smiths Detection-Waford Limited (‘SLTD’) v. Berriman (‘B’), we can view the ET position on the employers duty of care; knowing that an employee is disabled does not mean that an employer is under duty to make reasonable adjustments. The duty will arise when it becomes clear that the arrangements already in place put the employee at a substantial disadvantage. The ET held the ‘SLTD’ was under a duty to make reasonable adjustments simply because it knew that the employee was disabled and it failed to do so. On this basis the ET concluded that ‘B’ had been treated less favourably by reason of his disability and that SLTD could not justify this. The EAT allowed SLTD’s appeal. It did not agree that an employer is under a duty to make reasonable adjustments just because it knows that an 13 employee is disabled. The EAT said that an employer needs to look at the arrangements already in place to assess whether they place the disabled employee at a substantial disadvantage. If they do, the duty to consider making reasonable adjustments will arise. In assessing whether any adjustments are reasonable the employer needs to consider an employees medical prognosis and not just implement what the employer himself believes is reasonable. It is only where no such adjustments can be made that an employer should consider terminating employment. To avoid liability for disability discrimination the termination must be justified on reasonable grounds. On the facts of this case the EAT considered that the strong medical evidence indicating B would be unfit to return to work in the foreseeable future was sufficient to justify his dismissal. (SLTD) Albeit, the employee was dismissed the EAT specifically stated that the employer does in fact have a duty of care for disabled employees. It is on an individual basis that these assessments must be made to accommodate those who are mentally, physically or vertically challenged, but they must be made by the employer and made objectively. Clearly the head nurse refused to make the adjustments which placed Tess at a disadvantage at her assigned job station. I would advise Tess that she has a firm basis to be successful with her disability discrimination claim against the hospital. Additionally, I will advise Tess to file a claim of unfair dismissal and for reinstatement of her position with Dolby. It is clear in my minds eye and from a legal Stand point that once the tribunal is appraised of the circumstances surrounding her summary dismissal, wherein they (the tribunal) will be compelled to weigh the ethical issues involved, they will rule on her behalf. To further solidify her chances and appropriateness for reinstatement we will point out the following cases: In Oakley v. Labour 14 party [1988] I.R.L.R. 34, where. the Court of Appeal held; “The IT had appropriately held that: Ms. Oakley had been unfairly dismissed, and had not erred in taking into account the non- selection for the new post, although they had arrived at the correct result for the wrong reasons. Although section 57 (3) applied only to the manner of the dismissal, and not the later non-selection, the later evidence of the non-selection was also relevant, because it suggested that the reorganization was a sham; the restructuring was a pretest, as was the interview for the new post, as the employer had already made up its mind to get rid of Ms. Oakley. Thus, the Court of Appeal applied s.57 (3) to the original dismissal, since the latter evidence was relevant to the employer’s state of mind at the time of the original dismissal. (Oakley) A further test of appropriateness of dismissal is found in Norton Tool v. Tewson [1972] ICR 501, which is considered to be the leading authority on unfair dismissal. Wherein the circumstances under which an employee is dismissed are elucidated as follows; (1) An employee is dismissed by his employer if. (a) the contract under which he is employed is terminated by the employer (whether with or without notice) (b) he is employed under a contract for a fixed term and that term expires without being renewed under the same contract or (c) the employee terminates the contract under which he is employed (with or without notice) in circumstances which he is entitled to terminate it without notice by reason of the employer’s conduct. It goes on to point out that complaints to employment tribunals in respect of a breach, 15 among other sections, of section 47B, are governed by section 48 of the act, and breach of section 49 of the Act prescribes the remedies (where there is a finding of section 47B) Section 49 (2) reads as follows: The amount of the compensation awarded shall be such as the tribunal considers just and equitable in all circumstances having regard to- (a) the infringement to which complainant relates, and (b) any loss which is attractable to the act, or failure to act, which infringed the complainant’s right. (Norton) on appropriateness see also (Alidair v. Taylor [1978] I.C.R. 445 [1978] I, R.L.R. 82; Trust House Forte LTD. V. Aguilar [1976 I.R.L.R. 251 and B. L. (UK) v. Swift [1981] I.R.L.R. 439.As we can readily discern, there are elements of each case cited which relate directly to. Tess’ case. In Dacas; (1) An implied contract does exist between the employer and worker when there has been continuous service of more than one year. (1a) Tess has been employed for more than two and a half years. In Muscat; (1) Implied contract. And in Ms. Bushaway; (1) the court decided to look beyond the written words of the contract and take a look at the conduct of the parties; the client exercised considerable control over Mrs. Bushaway (she worked regular hours, 5 days a week, she worked under a line manager with whom she had to negotiate requests for time off). (1a) Tess was required to request shift changes and time off, with her head nurse, thereby the conduct reflects control by the client In view of the various central points in each of the cases above, along with the rulings of the Court of Appeals and the tribunals in each case, it is clear that Tess’ claims will have a positive result. Additionally, can she realistically look forward to be reinstated to her job at the hospital? We find in Bateman v. British Leyland [1974] I.C.R, 403 that the Scottish Employment Tribunal observed that practicability may depend on the size of the employer’s undertaking: “It was not realistic to make an order of this nature in a case In 16 other words where the parties involved were in close personal relationship to each other as they were in the present situation. It is one thing to make an order for reinstatement where the employee concerned works in a factory or other substantial organization. It is another to do so to an employer with few staff. Where there must exist a personal relationship as is the case here, reinstatement can only be appropriate in exceptional circumstances and to enforce it upon a reluctant employer is not a course the Industrial tribunal should pursue unless persuaded by powerful evidence that it would succeed.”(Bateman) Further in Colas Ltd. V. Cloake EAT [1995], the tribunal shows flexibility in fashioning terms which will result in amicable reinstatements. This is a case on the relationship between reinstatement orders and misconduct by a unfairly dismissed employee- note that the ERA- 116 (3) ©- replacing EPCA 1978 s.69 ©- requires the tribunal to take account “where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order his reinstatement and (if so) on what terms”. In this case, however, the EAT held that even quite serious misconduct by the employee need not be a bar to reinstatement. (Colas) Works Cited Airfix Footwear LTD v. Cope [1978] ICR 1210 Alidar v. Taylor [1978] ICR 445 [1978] IRLR 82 Astbury v. Gist LTD [2005] Bateman v. British Leyland [1974] ICR 403 B. L. (UK) v. Swift Brookstreet Bureau UK LTD v. Dacas B.S.C. Sports and Social Club v. Morgan [1987] IRLR 391 EAT Cable & Wireless plc v. Muscat [2005] Colas LTD v. Cloake EAT [1995] Department of Trade and Industry-Employment Relations-Rights to Notice and Reasons for Dismissal Disability discrimination Act 1975 Emplaw.com Employment Rights Act 1996 Employment Rights Act 2002 EPCA 1978 s.69 ERA 1996 s.205/s.86 (6) Fixed Term Employees Prevention of Loss Favourable Treatment Regulations 2002 Industry Relations Act 1971 Landwell Employment Law Masters, Andrew Agency Workers or End User Employee Norton Tool v. Tewson [1972] ICR 501 Oakley v. Labour Party [1988] IRLR 34 Pierce, David Albert, Classification of Workers: Indepenfant Contractors versus Employees Polkey v. A. E. Dayton Services LTD HL [1988] ICR 142 Royal National Lifeboat Institution v. Bushaway [2005] Smith’s detection-Walford Limited (‘SLTD’) v. Berriman (‘B’) Snell, Thompson & Passmore, The Law Society Transfer of Undertakings (Protection of Employment) Regulations 1981 Trust House Forte LRD v. Aguilar [1976] IRLR 439 Trade Union and Labor Relations Act 1974 Read More