Stevedoring & Haulage Services Ltd v Fuller & Ors

For casual workers, an overarching contract of employment requires an irreducible minimum of obligation on both sides.

Express terms that neither party is obliged to offer or accept work ordinarily create only a framework for successive ad hoc engagements. The court cannot imply obligations that contradict those terms, whether by business efficacy, necessity or reasonableness. Later conduct may evidence the agreement or a variation, but regular work and practical arrangements do not do so where they remain consistent with the agreed framework.

Eight former permanent dockers accepted voluntary redundancy and then worked as casual dockers under documents describing the engagements as ad hoc. The documents stated that the company had no obligation to offer work and the workers had no obligation to accept it. In practice, the respondents worked regularly, received priority over agency labour, and were trained and directed by the company.

Under section 1 of the Employment Rights Act 1996, the respondents applied for written statements of employment particulars. The Employment Tribunal found an overarching contract of employment and ordered the statements. The Employment Appeal Tribunal dismissed the company’s appeal. The central issue before the Court of Appeal was whether mutual obligations could be implied from the parties’ conduct despite the express terms.

1. Disposition. The appeal was allowed. The Employment Tribunal’s order requiring statements of employment particulars was quashed.
2. Statutory context. Section 1 of the Employment Rights Act 1996 applies to employees. Section 230 defines an employee by reference to a contract of employment, and a contract of employment as a contract of service. The question was therefore whether the parties had an overarching contract between the individual periods of work.
3. Mutuality of obligation. The Court of Appeal accepted that an overarching contract requires an irreducible minimum of obligation on each side. The express documents stated that the company was not obliged to offer work and that the respondents were not obliged to accept it. Those terms were inconsistent with an overarching contract and instead provided a framework or facility for successive ad hoc engagements. This conclusion was consistent with Clark v Oxfordshire Health Authority [1998] IRLR 126 and Carmichael v National Power [1999] 1 WLR 2042.
4. Implied terms. The Tribunal could not first find a contract and then create sufficient mutuality by implying terms requiring the company to offer a reasonable amount of work and the respondents to make themselves available. If there was no contract, implication could not create one. If there was a contract, the proposed terms flatly contradicted the express terms. Business efficacy and necessity could not justify that result.
5. Conduct and variation. Subsequent conduct may assist in identifying the parties’ agreement. A variation might be inferred where the relationship had obviously changed. Here, the rota, regular work, priority over agency labour, training and protective clothing were all consistent with successive ad hoc engagements. The relationship had not changed, and substantially identical documents were agreed in later years.
6. Further proceedings. The case was not remitted to determine variation or whether individual engagements were contracts of employment. The respondents had not advanced the latter case, and no practical reason justified prolonging the proceedings. Separate proceedings could still be brought if appropriate. The respondents were ordered to pay costs of £6,588.70, and permission to appeal to the House of Lords was refused.

1. Court of Appeal (Civil Division): In [2001] EWCA Civ 651, the appeal was allowed and the Employment Tribunal’s order was quashed.
2. Employment Appeal Tribunal: Dismissed the company’s appeal and upheld the Employment Tribunal’s conclusion.
3. Employment Tribunal: Found that the respondents were employees under an overarching contract of employment and ordered written statements under section 1 of the Employment Rights Act 1996.