O'Kelly v Trusthouse Forte Plc

JurisdictionEngland & Wales
Judgment Date20 July 1983
Judgment citation (vLex)[1983] EWCA Civ J0720-1
Docket Number83/0330
CourtCourt of Appeal (Civil Division)
Date20 July 1983
H. O'Kelly & Others
Respondents (Applicants)
Trusthouse Forts Plc
Applicants (Respondents)

[1983] EWCA Civ J0720-1


The Master of the Rolls

(Sir John Donaldson),

Lord Justice Ackner


Lord Justice Fox





From: Employment Appeal Tribunal

Royal Courts of Justice,

MR ALEXANDER IRVINE, Q.C., and MR TIMOTHY CHARLTON (instructed by Messrs Linklaters & Paines) appeared on behalf of the Appellants(Respondents).

MR STEPHEN SEDLEYS, Q.C., (instructed by Mrs T. Gill) appeared on behalf of the Respondents (Applicants)


At the Grosvenor House Hotel the appellants carry on two distinct operations. They operate an hotel and a restaurant business which is open to the public, and by reason of the regular and continuous nature of that business the staff engaged are all employees working under contracts of employment. The appellants also carry on the business of hiring out rooms for private functions for which they provide the catering and other services. This part of the business is undertaken by the Banqueting Department. Because of the fluctuating and seasonal nature of this trade there are only 34 permanent staff, including the banqueting staff manager Mr Hourigan, the bar manager Mr Mardel and the managerial and supervisory staff and the head waiters. All the other staff in the department are known as casual staff and they are paid at a set rate for the work actually performed.


Because of the large number of casual staff required during the busy season and the difficulty of finding staff in sufficient numbers during the slack season Mr Hourigan maintains a list of some 44 wine butlers and 60 food service waiters and waitresses. They are known as "regulars" and are rostered in preference to other casual staff, numbering between 200 and 300, who work less regularly and are employed for fewer functions. The "regulars" are members of staff who can be relied upon by the appellants to offer their services regularly and, in return, have the assurance of preference in the allocation of any available work. They receive exactly the same rate of remuneration as other casuals, but have the ability to earn more money by being offered more frequent engagements, and there is more regularity in their earnings. "Regulars" are offered any available engagement during the slack season. Because of the extent of the work they are offered they may work longer hours than the permanent staff working a regular 40 hour week. Because of the extent to which they make their services available to the appellants some "regulars", including the respondents, have no other regular employment.


The appellants' practice of staffing banquets and other functions with workers designated as casual staff is widespread throughout the hotel and catering industry in London, although there may be individual variations in rates and conditions. The staff are considered by the employers to be casual workers and not employees engaged under a contract of employment. The separate position of casual workers is recognised by the Wages Council and in Appendix 2 of the current Wages Council Order a "casual worker" is defined as meaning:

"A worker who undertakes engagements on either an hourly or day-to-day basis and has the right to choose, without penalty, whether or not to come to work".


The respondents are members and stewards of the Hotel Catering Workers Union. They have made an application to the Industrial Tribunal for interim relief under section 77 of the Employment Protection (Consolidation) Act 1978, as amended by the Employment Act 1982 ("the Act"). By their letter of 26 February 1983 they complain that the appellants unfairly dismissed them from their employment at the Grosvenor House Hotel, and that their dismissal is to be regarded as unfair by virtue of section 58 of the Act, that is to say, they were dismissed for an inadmissible reason, the alleged reason for the dismissal being that they were members of a trade union and had taken part in its activities The Industrial Tribunal directed the hearing of a preliminary issue, namely, whether or not the applicants were "employees" who worked under a contract of employment within the meaning of section 153(1) of the Act, or whether they were independen contractors who worked under a contract for services. If the respondents were not "employees" of the appellants it followed that their complaint of unfair dismissal and their application for interim relief must necessarily fail. After a hearing which lasted some two days the Industrial Tribunal held that the respondents were not "employees". The respondents appealed to the Employment Appeal Tribunal, and after a hearing which lasted some three days it allowed the appeal, but gave leave to appeal to this court.


Section 153 of the Act defines "employment" as being "employment under a contract of employment". It defines "employee" as meaning "an individual who has entered into or works under or (where the employment has ceased worked under) a contract of employment. It defines "contract of employment" as meaning "a contract of service or apprenticeship, whether express or implied and (if it is expressed) whether oral or in writing".


This appeal therefore raises the familiar problem: Were the respondents working under a contract of service or under a contract for services?


As the Employment Appeal Tribunal pointed out, just because a person is an "employee" within the meaning of the Act, he does not automatically enjoy all the rights and protection accorded by the Act. For most purposes an "employee" does not enjoy such protection unless he has a period of qualifying continuous employment with the employer against whom he brings his case, the most common example of which is the requirement that an employee shall have 52 weeks of continuous employment with that employer before becoming entitled to bring a claim for unfair dismissal. The period of continuous employment is calculated in accordance with the provisions of Schedule 13 to the Act which, amongst other things, normally requires the minimum number of hours employment in each week in order for that week to be counted. However, there is one exception to the requirement for a qualifying period of employment: Where the claim is based on dismissal for an inadmissible reason there is no minimum period before an employee may bring a claim for unfair dismissal. (See section 64(3)—Dismissal because of taking part in trade union activities is an inadmissible reason). (see section 58(1) and (5)).


So far as the respondents are concerned, Mr O'Kelly and Mr Pearman were wine butlers, and Mr Florent was a dispense barman. They were "regular" casuals in regard to whom the evidence established that in practice they worked virtually every week for hours varying in number from as little as 3 in some weeks up to as much as 57 in others. In the last year they each had only two weeks in which they did not work. Over this period of 52 weeks two had worked an average of 31 hours per week and one 42 hours per week.


I join in the tribute which the Employment Appeal Tribunal paid to the Industrial Tribunal for the most careful way in which they investigated the facts and for the detailed grounds which it gave for its decision. They found that:

"The principles on which a casual worker is employed are simple. There is no obligation for the worker to offer his services and there is no obligation for the employer to provide work".


(The accuracy of this proposition, in so far as it related to "regulars", was strongly contested before us).

"If an engagement is undertaken the worker is paid at the appropriate hourly or sessional rate for the work performed. During the function the casual worker works under the direction and control of the employer as part of his organisation and the relationship ends automatically at the end of the function without the need of notice on either side. Many casual workers have other regular employment".


The Industrial Tribunal conveniently set out a number of headings under which they considered the facts of the case, and it would be convenient if I now referred to these in summary form.


Engagement. Mr Hourigan has the responsibility of engaging casual staff for functions. He receives a list of functions for the following month and this is up-dated weekly on Thursday mornings. He prepares a list of wine service staff and a separate list of food service staff required for the following days. The lists are posted on Thursday evenings showing the names of the casual staff rostered for each function. Thus, the casual staff know what work, if any, is available for them for the week commencing on a Friday. During the slack period the lists are posted fortnightly. A similar roster of bar staff is prepared by Mr Mardel.


Tax treatment and payment. The Inland Revenue requires the appellants to deduct from the remuneration they pay to casual workers income tax under PAYE and social security contributions and to account to the Inland Revenue for the money deducted. As a matter of necessary convenience the appellants ensure that any casual staff working regularly at the hotel are entered on the computer payroll and they are paid weekly, in arrear, on Thursdays like any weekly paid employees. The Industrial Tribunal accepted that the tax and social security contributions are deducted as a requirement imposed upon the appellants by the Inland Revenue and that this is not, of itself, indicative of the legal basis of the relationship between the appellants and the casual staff, for employment protection purposes.


Holiday pay. Although casual workers...

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