Carmichael and Another v National Power Plc

JurisdictionUK Non-devolved
JudgeLORD IRVINE OF LAIRG L.C.,LORD GOFF OF CHIEVELEY,LORD JAUNCEY OF TULLICHETTLE,LORD BROWNE-WILKINSON,LORD HOFFMANN
Judgment Date18 November 1999
Judgment citation (vLex)[1999] UKHL J1118-2
CourtHouse of Lords
Date18 November 1999
Carmichael

And Another

(Respondents)
and
National Power Plc.
(Appellants)

[1999] UKHL J1118-2

Lord Chancellor

Lord Goff of Chieveley

Lord Jauncey of Tullichettle

Lord Browne-Wilkinson

Lord Hoffmann

HOUSE OF LORDS

LORD IRVINE OF LAIRG L.C.

My Lords,

1

Mrs. Leese and Mrs. Carmichael began to accept work as guides at Blyth Power Stations in Northumberland in 1989. The work was part-time. Both worked for about 3.75 hours per week in 1990 and 6 hours per week in 1991. In the following years their hours increased and by 1995 they may have been working for as many as 25 hours per week. They were paid at a flat rate for the hours actually worked.

2

The issue is whether they were employees under contracts of employment and therefore entitled under section 1(1) of the Employment Protection (Consolidation) Act 1978 (see now section 1 of the Employment Rights Act 1996) to written particulars of the terms of their employment from National Power Plc., the successor to Blyth Power Stations, formerly operated by the Central Electricity Generating Board ("C.E.G.B.").

3

The issue is narrow. The primary case advanced on behalf of Mrs. Leese and Mrs. Carmichael throughout has been that an exchange of correspondence between the parties in 1989 constituted a contract; and that that contract was to be classified as a contract of employment. The claim to particulars of terms of employment was not advanced on the basis that when they actually worked as guides they did so under successive ad hoc contracts of employment.

4

The industrial tribunal held that they failed at the first hurdle: the correspondence did not constitute any contract, whether of service or otherwise. The Employment Appeal Tribunal dismissed an appeal from that decision. By a majority (Kennedy L.J. dissenting) the Court of Appeal allowed their appeal [1998] I.C.R. 1167. National Power appeal by leave of your Lordships' House.

5

On 15 November 1989, the C.E.G.B. invited applications "for the posts of station guides." "Successful candidates" would be required to:- "Supervise parties of visitors on pre-selected tour routes around the power station site;" as well as explain and answer questions on the various parts of the plant; and give a short presentation about the C.E.G.B. and how electricity is made and transmitted. They were also to be given "full training." The invitation continued:

"Employment will be on a casual as required basis and payment will be at the rate of 376.56 pence per hour, being the minimum of Band I of the N.J.I.C. Agreement."

6

Mrs. Leese and Mrs. Carmichael applied, were interviewed and then received letters in common form:

"I am pleased to note that you are agreeable to be employed by the C.E.G.B. at Blyth "A" and "B" Power Stations on a casual as required basis as a station guide.

"When your services are required you will be paid at the rate of 376.56 pence per hour being the minimum of Band I of the N.J.I.C. Agreement. Your salary will be paid by credit transfer.

"Please find enclosed a pre-typed reply letter which should be returned to me confirming your acceptance of this offer together with the completed method of payment form.

"As mentioned at the interview it will be necessary for you to receive some formal training; accordingly I would like you to attend site on Thursday 9 March 1989 at 1300 hours. Please report to Mr. J. Lovatt Training Officer."

7

The pre-typed reply letter, which both signed and returned, reads:

"Station Guide - Casual Employment

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

8

Both were then trained; and thereafter worked as guides on invitation when they were available and chose to work. Mr. Langstaff Q.C. on their behalf contends that they were appointed to a post, guides, and emphasises that the language of "employment" is used; and that, when working, they were on the payroll for PAYE purposes.

9

The industrial tribunal held that their case "founders on the rock of absence of mutuality," that is that, when not working as guides, they were in no contractual relationship of any kind with the C.E.G.B.

10

The tribunal made this finding on the basis of (a) the language of the March 1989, documentation; (b) the way in which it had been operated; and (c) the evidence of the parties as to how it had been understood. For reasons I will amplify later, this was in my judgment the correct approach. In substance it held that the documents did no more than provide a framework for a series of successive ad hoc contracts of service or for services which the parties might subsequently make; and that when they were not working as guides they were not in any contractual relationship with the C.E.G.B. The parties incurred no obligations to provide or accept work but at best assumed moral obligations of loyalty in a context where both recognised that the best interests of each lay in being accommodating to the other.

11

The decision therefore was: that by accepting an "offer of employment as a station guide on a casual as required basis," Mrs. Leese and Mrs. Carmichael were doing no more than intimate that they were ready to be invited to attend for casual work as station guides as and when the C.E.G.B. required their services. Just as the C.E.G.B. was not promising to offer them any casual work, but merely intimating that it might be offered, so also they were not agreeing to attend whenever required.

12

The contrary, however, was argued by Mr. Langstaff Q.C. He maintained that, once appointed, they became employees under contracts of employment which obliged the C.E.G.B. to provide them with such guide work as might become available in future, which they in turn were obliged to undertake when made available.

13

This submission construes the words, "Employment will be on a casual as required basis," as empowering the C.E.G.B. to require Mrs. Leese and Mrs. Carmichael to undertake guide work as need for it arose.

14

If the issue were to be determined solely by reference to the documentation, I would, as a matter of construction, reject it. The words imposed no obligation on Mrs. Leese and Mrs. Carmichael, but intimated that casual employment on the pay terms stated could ensue as and when the C.E.G.B.'s requirements for the services of guides arose. Thus, the documents provided no more than a framework for ad hoc contracts of service or services which Mrs. Leese and Mrs. Carmichael might make with C.E.G.B. in the future.

15

The decision of the majority of the Court of Appeal to allow their appeals turned on two constructions of the documents which gave them immediate contractual effect.

16

Ward L.J. declined to hold that there was a contract in terms that Mrs. Leese and Mrs. Carmichael were obliged to provide their casual labour as guides as and when required, with the C.E.G.B. under no obligation to provide any casual work at all. He was, however, of the opinion that that might be the ordinary and natural meaning of the words; that is, that the C.E.G.B. would not be required to make any work available except as and when need arose; and that "whenever such a need arises the guide will be required to meet that need and perform the services as a guide" (p. 1187D). That imbalance of obligation, however, he avoided by holding that these obligations were subject to implied terms imposing "an obligation on the company to provide a reasonable share of work for each (guide) whenever the company had …work available" and "on the (guides) to take a reasonable amount of work once they have agreed to act as (guides) for the company …" (p. 1187E)

17

Chadwick L.J., however, was more restrictive. The words, "as required" meant that the guide's duties were "to be performed when there is a need for the services of a guide." Subject only to reasonable notice, the C.E.G.B. could "require the appointee to attend and to carry out the duties for which she has been engaged." (p. 1194D). Chadwick L.J. further held: "There is no basis upon which it could be held that the C.E.G.B. were under any obligation to arrange tours in order that the station guides should have work to do." (p. 1195D); but they were, in order to give the contract business efficacy, obliged "to ensure that work of the nature described in the notice of 15 November 1988, when available and in so far as it cannot be performed by full time employees of the C.E.G.B., will be offered to those who have been recruited and trained as part-time station guides before being offered to anyone who has not been so trained." (p. 1196D). The contract therefore obliged "the C.E.G.B. and the applicants to offer and to undertake the work which was available." (p. 1196H).

18

If this appeal turned exclusively - and in my judgment it does not - on the true meaning and effect of the documentation of March 1989, then I would hold as a matter of construction that no obligation on the C.E.G.B. to provide casual work, nor on Mrs. Leese and Mrs. Carmichael to undertake it, was imposed. There would therefore be an absence of that irreducible minimum of mutual obligation necessary to create a contract of service ( Nethermere (St. Neots) Ltd. v. Gardiner [1984] I.C.R. 612, 623C-G per Stephenson L.J., and Clark v. Oxfordshire Health Authority [1998] 1.R.L.R. 125, 128 per Sir Christopher Slade, at paragraph 22).

19

In my judgment it would only be appropriate to determine the issue in these cases solely by reference to the documents in March 1989, if it appeared from their own terms and/or from what the...

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