Mutuality of Obligations and the Contract of Employment: Carmichael and Another v National Power plc

AuthorLinda Clarke
Publication Date01 Sep 2000
Mutuality of Obligations and the Contract of
Employment: Carmichael and Another vNational
Power plc
Linda Clarke*
Whether or not an employment relationship is characterised as a contact of
employment, rather than a contract for services, or indeed some other type of
contract (or even as not contractual at all) is a question which has consistently been
answered inconsistently. The various tests proposed by the courts include the
‘control’ test,1the ‘integration’ test,2the ‘mixed’ test3and the ‘economic reality’
test.4The question is of considerable practical significance, as many of the most
important statutory rights, such as the right to a redundancy payment and the right
to claim unfair dismissal, depend upon the existence of such a contract.
In addition to satisfying one of the tests propounded in the cases cited, the courts
have also required that the relationship contain ‘mutuality of obligations’. This has
been described as a second level of obligation, beyond the exchange of work for
remuneration: ‘the promises to employ and be employed’.5Deakin and Morris
have described this test as ‘an exclusionary one – the absence of mutuality will
most likely defeat a claim of employee status without in itself being a sufficient
condition.’6The question of mutuality of obligations is of particular importance in
respect of casual workers and homeworkers.
Such workers may be able to establish that they work under a contract of
employment in respect of each individual period of working, however short: so, in
Mc Meecham vSecretary of State for Employment7the Court of Appeal held that a
worker working through an employment agency and described as a ‘temporary
self-employed worker’ was an employee in respect of a single assignment, and was
thus entitled to a payment from the Secretary of State on the insolvency of the
agency. However, key statutory rights, notably redundancy and unfair dismissal,
are dependent not only upon working under a contract of employment, but also
upon establishing a period of continuous service. This can be done in two ways.
Firstly, sections 210–212 of the Employment Rights Act 1996 provide that in
certain circumstances continuity of employment is preserved, even though there
are periods (of a week or more) where there is no contract of employment in
existence. As long as for part of a week ‘the employee’s relations with his
employer are governed by a contract of employment’8that week counts towards
ßThe Modern Law Review Limited 2000 (MLR 63:5, September). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA. 757
* School of Legal Studies, Sussex University.
1Yewens vNoakes (1880) 6 QBD 530.
2Stevenson, Jordan & Harrison vMcDonald & Evans [1952] 1 TLR 101.
3Ready Mixed Concrete (South East) Ltd vMinister for Pensions and National Insurance [1968] 2 QB
4Market Investigations Ltd vMinister for Social Security [1969] 2 QB 173.
5 Freedland, The Contract of Employment, (Oxford: Clarendon Press, 1976).
6Labour Law, (Butterworths, London, 2nd edition, 1998).
8 ERA 1996, s 212(1).

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