Hudson v Department for Work and Pensions

Regulation 18 of the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 disapplies the Regulations as a whole in relation to an employee employed on a qualifying government training or work-experience scheme. The exclusion is not confined to the period during which the employee remains on the scheme. Earlier scheme employment cannot therefore be counted towards the four years required by Regulation 8 for automatic conversion to permanent employment. The construction reflects the Regulations’ structure and purposes, including avoiding disincentives to employers providing training opportunities.

Mrs Tracy Hudson worked for the Department for Work and Pensions under successive fixed-term contracts. Her initial contracts were provided under a government scheme. After completing four years’ continuous employment, she sought a declaration under Regulation 9(5) that she had become a permanent employee under Regulation 8.

The Employment Tribunal rejected her claim, holding that Regulation 18 excluded the earlier scheme employment. The Employment Appeal Tribunal, under reference UKEAT039711SM, allowed her appeal, holding that the exclusion applied only to the current contract. The central issue before the Court of Appeal was whether earlier scheme contracts could count towards the four-year qualifying period once the employee entered a later, non-scheme fixed-term contract.

1. Disposition. By a majority, Maurice Kay LJ and Elias LJ allowed the appeal and restored the Employment Tribunal’s decision. Dame Janet Smith dissented and would have dismissed the appeal.
2. Interpretative approach. The majority construed the Regulations according to the natural meaning of their words in the context of the Regulations as a whole and their purposes. The case did not require an EU-conforming construction because proper implementation of the Directive was not disputed. Nor did it involve ambiguity leading to absurdity. The possible consequences were anomalies rather than absurdities. The approaches in Litster v Forth Dry Dock and Engineering Company Ltd [1990] 1 AC 546 and R (Confederation of Passenger Transport UK) v Humber Bridge Board [2004] QB 310 were therefore not applied.
3. Regulation 18. The reference to the Regulations in Regulation 18 means the Regulations as a whole. The exclusion applies to a fixed-term employee employed on a qualifying government training or work-experience scheme, regardless of when the scheme began or ended. Earlier employment under such a scheme cannot subsequently be relied on to accumulate the four-year period in Regulation 8.
4. Context and purpose. The similarly worded agency-worker exclusion in Regulation 19 supports a complete exclusion from the Regulations. The difference between fixed-term employee in Regulation 18 and employment under a fixed-term contract in Regulation 19 is immaterial because Regulation 1(2) gives the former its ordinary meaning. The majority also considered that the alternative construction could discourage employers from providing training and would leave the exclusions for trainees and apprentices largely ineffective in relation to Regulation 8. Elias LJ additionally noted that an implied contract between an agency worker and hirer may exceptionally arise where necessary to reflect the legal relationship, referring to James v Greenwich Borough Council [2008] IRLR 302.
5. Dissent. Dame Janet Smith considered that Regulation 18 excluded only employees currently employed on scheme contracts. On that view, earlier scheme contracts could count towards the four-year period after the employee entered a non-scheme contract. She regarded the resulting consequence as an unusual anomaly, not an absurdity.

1. Court of Appeal (Civil Division). On 7 November 2012, by a majority, allowed the Department’s appeal and restored the Employment Tribunal’s decision.
2. Employment Appeal Tribunal. On 3 May 2012, Mr Recorder Luba QC allowed Mrs Hudson’s appeal under reference UKEAT039711SM, holding that Regulation 18 applied only to the current fixed-term contract.
3. Employment Tribunal. On 7 April 2011, Employment Judge Gaskell rejected Mrs Hudson’s application for a declaration.