Ge Caledonian Ltd v McCandliss

A contract must be characterised by its principal object, assessed from the relationship as a whole. Where its primary purpose is training or education, it is a training contract rather than a contract of employment, even if some terms resemble employment terms. An Employment Tribunal has jurisdiction over unfair dismissal only where the claimant was dismissed under a contract of employment. Paid practical placements during training do not necessarily establish employment or continuous employment, particularly where the employer was not obliged to offer work.

The Employment Tribunal found that the respondent had unfairly dismissed the claimant and awarded compensation. The claimant had completed an apprenticeship and then entered a university sponsorship arrangement under which he received financial support, could undertake industrial training during university holidays, and was required to offer his services after completing his degree.

When the claimant declined to resume his degree or accept an internship, the respondent treated the sponsorship arrangement as terminated. The Tribunal treated the arrangement as part of a continuing contract of employment and proceeded to determine fairness. The central issue on appeal was whether the sponsorship arrangement was a contract of employment giving the Tribunal jurisdiction.

1. Appeal allowed. The Employment Tribunal had no jurisdiction to entertain the unfair dismissal complaint, and the claim was dismissed.
2. The Tribunal had failed to address the essential jurisdictional question before considering the potentially fair reason and fairness provisions in Employment Rights Act 1996. It should have determined the objective of the contractual relationship.
3. The majority held that the University Sponsorship contract was, in substance, a training contract. Its overarching and primary purpose was to provide university education and practical training leading to a degree. The claimant received sponsorship during university terms and could, but was not obliged to, undertake industrial training during the summer. The respondent was not obliged to offer him employment after the degree.
4. The references to continued employment and the application of employment terms were ambiguous or inappropriate in context. They did not displace the clear primary purpose of the arrangement. Focusing on those individual provisions, as the Tribunal had done, was the error identified in M&P Steelcraft Ltd v Ellis and another [2008] IRLR 355.
5. The majority could not determine from the Tribunal’s findings that the summer placements were themselves contracts of employment, because mutuality of obligation had not been addressed. Even if they were short fixed-term employment contracts, that would not by itself establish continuous employment under the sponsorship contract.
6. Mr Thomson dissented. He considered the references to continued employment, resignation and employment terms to be clear contractual provisions establishing continuing employment, and regarded the facts as distinguishable from Ellis.

1. Employment Appeal Tribunal: allowed the employer’s appeal, held that the Employment Tribunal lacked jurisdiction, and dismissed the unfair dismissal claim.
2. Employment Tribunal: a majority found unfair dismissal and awarded £33,518.75. The Tribunal had treated the sponsorship arrangement as part of a continuing contract of employment.