Carmichael v National Power Plc

A continuing contract of employment between casual engagements requires an irreducible minimum of mutual obligation. The employer and worker must undertake reciprocal legal obligations to offer or provide work and to accept or perform it. A casual as required arrangement may instead provide only a framework for future ad hoc contracts.

Whether documents comprise the whole agreement is a question of fact. If an agreement is derived from documents, oral exchanges and conduct, its terms are also factual. A tribunal may consider the parties’ shared understanding and subsequent conduct as objective evidence. Terms based on business efficacy cannot be implied unless a contractual relationship already exists.

Mrs Leese and Mrs Carmichael undertook part-time guiding work at power stations when invited and available. They sought written particulars under section 1(1) of the Employment Protection (Consolidation) Act 1978, contending that correspondence exchanged in 1989 had created continuing contracts of employment. Their claim did not rely on any ad hoc contracts that might have existed while they were actually working.

The industrial tribunal found that the correspondence was only a framework for future engagements and that neither side was legally obliged to provide or accept work. The Employment Appeal Tribunal dismissed an appeal, but a majority of the Court of Appeal allowed a further appeal, Kennedy L.J. dissenting: [1998] I.C.R. 1167. The central issue before the House was whether the 1989 arrangement itself created contracts of employment subsisting between individual engagements.

1. Disposition. The House unanimously allowed National Power’s appeal and restored the industrial tribunal’s decision. Lord Irvine of Lairg L.C. delivered the leading speech, whose reasons were accepted by every other Law Lord.
2. Mutuality of obligation. Per Lord Irvine, a contract of service requires an irreducible minimum of mutual obligation, consistently with Nethermere (St. Neots) Ltd v Gardiner [1984] I.C.R. 612 and Clark v Oxfordshire Health Authority [1998] 1.R.L.R. 125. The documents imposed no obligation on the employer to provide casual work or on the guides to undertake it. The parties’ practice confirmed that the guides could decline work without disciplinary consequences. The arrangement therefore created no continuing contractual relationship while they were not working.
3. Documents, conversations and conduct. Per Lord Irvine, the correspondence could be treated as the exclusive memorial of the relationship only if the parties objectively intended that result. The tribunal was entitled to examine the documents, surrounding circumstances, the parties’ understanding and their subsequent conduct. Those materials supported its finding that the arrangement depended on mutual convenience and goodwill rather than legal obligation.
4. Fact and law. Lord Hoffmann, with Lord Goff and Lord Jauncey expressly accepting his additional reasons, held that construction is a question of law where the parties intend documents to contain all their contractual terms, apart from terms implied by law. Where the agreement must be gathered partly from documents and partly from oral exchanges and conduct, its terms are a question of fact. Whether the documents were intended to be exclusive is itself factual. The tribunal’s finding was open to it, and the Employment Appeal Tribunal had correctly declined to interfere.
5. Evidential limits and implied terms. Per Lord Hoffmann, evidence of the parties’ common understanding and subsequent conduct may help establish objectively what was agreed in a relationship not reduced wholly to writing. He added that later conduct may also be admissible to prove variation, enlargement or estoppel. Per Lord Irvine, terms based on business efficacy could not be implied to create reciprocal obligations because such implication presupposed an existing contractual relationship.
6. Scope. The House did not determine whether contracts of employment existed during individual guiding assignments. The statutory claim failed because the 1989 engagement did not itself create an employment relationship subsisting between assignments.

1. House of Lords: Allowed National Power’s appeal unanimously and restored the industrial tribunal’s decision: [1999] UKHL 47.
2. Court of Appeal: By a majority, Kennedy L.J. dissenting, allowed the guides’ appeal: [1998] I.C.R. 1167.
3. Employment Appeal Tribunal: Dismissed the appeal from the industrial tribunal.
4. Industrial tribunal: Held that the correspondence created no contract and dismissed the claim in its reserved decision of 11 September 1995.