Case law on types of employment contract

​(unreported, UKEAT/0123/12 6 August 2012, EAT)
Issue: Zero hours contracts

Six care workers provided 24 hour care for a woman with severe physical difficulties. Initially they worked for Carewatch, then the care contract transferred to Pulse Healthcare, thereby raising the issue of a TUPE transfer. All employees were then dismissed by Pulse Healthcare. Both companies said the that the claimants were not employees since there was no mutuality of obligation, or alternatively they did not have sufficient continuity of employment to claim unfair dismissal.

The Employment Appeal Tribunal agreed that Tupe applied and that the claimants were employees under a global contract. The documents provided to the claimants by Carewatch did not reflect the full agreement between the parties. The reality was that, whilst the contract on paper was for ‘zero hours’, the carers had for a number of years been working a fixed working pattern. All employees had the requisite continuity of employment. The fact that the claimants were obliged to carry out the work offered to them and Carewatch undertook to offer work and that the claimants had to personally do the work and could not provide a substitute to do so, were indicative of the true nature of the employment contract.

Implications for employers

• Even employees on 'zero hour contracts' can have employee status if the reality of their employment reveals mutuality of obligation and control by the employer.
• The written agreement between a potential employer and employee is extremely important.
• However, the written terms of a contract are not determinative of the relationship and it is always necessary to consider how the relationship works in practice.
• In deciding employee status the tribunals will still consider control, mutuality of obligation, integration and multiple tests.
• The mere fact a relationship has continued for some time will not, in itself, establish employee status.
• A contract of employment may be implied even though there is no express contract, either written or oral between the parties. However the inference must be a necessary one where the contract operates in a way which is only consistent with an implied contract.
• Employers should always address workers and employees status in a clear contract, even though this will not be determinative in all cases.