Curr v Marks & Spencer plc

Under section 212(3)(c) of the Employment Rights Act 1996, a week counts towards continuous employment only where an arrangement or custom causes both parties to regard the former employee as continuing in the employer’s employment for some purpose. A general continuing relationship, future re-employment option, regular contact or intermittent work is insufficient without that mutual recognition.

An agreement is not a contract of employment under section 212(1) merely because it contains mutual obligations. The core terms must satisfy the requirements of a contract of service, including sufficiently defined work obligations.

Mrs Curr had worked for Marks & Spencer since 1973. In 1990 she entered a four-year Child Break Scheme, resigned, received a P45 and lost employment benefits, but retained an option of later re-employment and undertook limited temporary work.

When she was made redundant in 1999, the company calculated her redundancy payment from 1994. The Employment Tribunal dismissed her claim. The Employment Appeal Tribunal unanimously rejected her argument that the Child Break agreement was a contract of employment, but by a majority held that it preserved continuity under section 212(3)(c) of the Employment Rights Act 1996. The Court of Appeal considered both issues.

Disposition. The appeal was allowed and the cross-appeal was dismissed. The Court of Appeal set aside the Employment Appeal Tribunal’s order and restored the Employment Tribunal’s decision. The reasoning of Peter Gibson LJ was accepted by Clarke and Scott Baker LJJ.

1. Section 212(3) is a deeming provision covering specified weeks in which section 212(1) does not apply. Under section 212(3)(c), an arrangement or custom must cause both the employer and the former employee to regard the employee as continuing in the employer’s employment for some purpose. This requires mutual recognition or a meeting of minds. The condition must be satisfied in every relevant week, because a non-qualifying week breaks continuity.
2. The statutory test is not whether a general employment relationship continues. The court must examine all the circumstances, especially the precise terms of the arrangement. Here the scheme required resignation, a P45, loss of benefits, repayment of a house-purchase loan and an unpaid break. The later management post was an option for future re-employment, not continuing employment. The limited work, contact arrangements and consultation requirement concerning other employment did not establish continuity. The Employment Tribunal was entitled to reach that conclusion, and the majority of the EAT had applied the wrong approach.
3. The Child Break agreement was also not a contract of employment under section 212(1). Applying the three conditions stated in Ready Mixed Concrete (South East) Ltd v Ministry of Pensions and National Insurance [1968] 2 QB 497, mutual obligations and control were not the decisive difficulties. The third condition was not met: the agreement did not specify when or where Mrs Curr would work, what work she would perform or what she would be paid. Temporary contracts might arise when particular work was agreed, but the Child Break agreement itself was not a contract of employment.
4. The court treated the discussion in G F Sharp & Co Ltd v McMillan [1998] IRLR 632 and Marshall v Harland & Wolff Ltd [1972] ICR 101 cautiously. Whether an arrangement satisfies section 212(3)(c) depends on its precise terms. The court also expressed strong disquiet about the failure to explain the scheme’s statutory consequences or encourage independent legal advice, but left any legal remedy arising from that failure undecided.

1. Court of Appeal: In [2002] EWCA Civ 1852, the appeal was allowed, the cross-appeal was dismissed, the EAT’s order was set aside and the ET’s decision was restored.
2. Employment Appeal Tribunal: The EAT unanimously rejected the contract-of-employment argument, but by a majority allowed Mrs Curr’s appeal on the section 212(3)(c) issue.
3. Employment Tribunal: The ET dismissed Mrs Curr’s claim for an unlawful deduction from wages arising from the calculation of her redundancy payment.