HMRC internal manual

Employment Status Manual

ESM7200 - Case Law: Carmichael & Another v National Power plc

[1999] 1 WLR 2042

Point at issue

Whether Mrs Carmichael (“Mrs C”) was an employee under a “contract of employment” as defined in the Employment (Consolidation) Act 1978 and therefore entitled to written terms of the particulars of employment. Under this Act it was necessary to be engaged under a contract of employment for a minimum of 13 weeks to obtain this entitlement.### Facts

On 15 November 1988, the Central Electricity Generating Board (“CEGB”) invited applications “for the post of station guides” at Blyth Power Station. The duties included the supervision of parties of visitors on pre-selected tour routes, explaining and answering questions on various parts of the plant, and giving a short presentation about the CEGB and how electricity is made and transmitted.

Employment was to be on “a casual as required basis” and payment made at an hourly rate. Mrs C applied and was accepted. In the letter of offer of 1 March 1989 she was asked to return a pre-typed reply letter which read:

“Station Guide – Casual Employment

I am pleased to accept your offer of employment as a station guide on a casual as required basis.”

She worked for about 3¾ hours a week in 1990 and 6 hours a week in 1991. In the following years this increased and by 1995 she may have been working as many as 25 hours a week.### Decision

The Industrial Tribunal held that the case fell at the first hurdle. They considered that, when not working as guides, the correspondence did not constitute any contract at all. The EAT dismissed the appeal but, by a majority, the Court of Appeal allowed Mrs C’s appeal.

National Power plc, the successor to the CEGB, appealed against that decision.

The House of Lords decided that the Industrial Tribunal had correctly concluded that the case “founders on the rock of absence of mutuality” because there was no contractual obligation when not working as guides.### Commentary

In the House of Lords, the Lord Chancellor, Lord Irvine, stated in his judgment that the initial correspondence provided “no more than a framework for ad hoc contracts of service or services” which Mrs C might make with the CEGB. It is therefore important when faced with this sort of case that you review the relevant documentation to establish whether what you have is a framework document or a legally binding contract.

Lord Irvine thought that it would only be appropriate to determine the issue in the case solely by reference to the documentation of March 1989, if it appeared from their own terms and/or what the parties said or did then, or subsequently, that they intended them to constitute an exclusive memorial of their relationship. The important point here is that, where the parties do not intend the written documentation to be a comprehensive record of the legal relationship, you will have to consider the surrounding circumstances and the conduct of the parties.

The judgment of the House of Lords was that the initial correspondence and the subsequent objective inferences from what was said and done did not amount to a contract of service. The relationship between the parties was not regulated by contract when they were not working as guides (in other words there was a finding that there was no “umbrella” contract of service).

The Lord Chancellor did however also say that ‘the documents did no more than provide a framework for a series of successive ad hoc contracts of service or for services’. Additionally Lord Hoffman took the view that the correspondence

“laid down the terms upon which it was expected that they would from time to time work for the C.E.G.B and it may well be that when performing that work, they were being employed….”

The case is not justification for claiming that people working on a “casual as required” basis cannot be employees.