Knight v Fairway & Kenwood Car Service

An umbrella contract is not a contract of employment unless the individual is obliged to accept and perform at least some minimum or reasonable amount of work. A right to refuse particular work does not itself prevent employee status, provided that irreducible obligation exists.

Clear written terms allowing a person to work or not work at will, without contractual adverse consequence, preclude an umbrella employment contract. Regular and economically necessary work cannot, without more, justify implying an obligation that contradicts those terms.

The claimant worked as a minicab driver under a signed agreement and company handbook. He paid a circuit fee and could sign on and off when he chose. The Employment Tribunal held that he was not employed under a contract of employment and therefore could not bring his wrongful-dismissal claim in the Tribunal.

He appealed, contending that the Tribunal had applied the wrong mutuality-of-obligation question and should have inferred an overarching employment contract from his seven-day working pattern and economic dependence on the work. The central issue was whether the written umbrella arrangement required him to accept a minimum or reasonable amount of work.

1. Appeal dismissed. The Employment Tribunal had framed its inquiry too narrowly by asking whether the claimant had to work specified days or hours. The correct inquiry was whether the umbrella contract required him to accept and perform some minimum or reasonable amount of work.

2. The requirement derives from the wage/work bargain. A person may retain the right to refuse particular work, and an employer may retain a choice whether to offer it, without preventing an overarching employment contract. There must nevertheless be an irreducible obligation on the individual to do some work and on the other party to provide or pay for it.

3. On the written terms, the claimant had no obligation to work at all. Subject to paying the circuit fee and giving appropriate notice, he could sign on and work when he wished or decline to work altogether without contractual adverse consequence. The umbrella agreement therefore was not a contract of employment.

4. The claimant's seven-day working pattern and the economic difficulty of not working did not warrant implication of a work obligation. Such an implication would contradict the genuine written terms. St Ives Plymouth Ltd v Haggerty was distinguishable because it concerned a relationship apparently not governed by written overall terms and depended on its particular factual basis for inferring legal obligations from conduct.

5. The judge observed that, while signed on, the claimant was very likely working as an employee for a shift or individual job. That observation did not establish employee status under the separate umbrella agreement.

• Employment Appeal Tribunal: dismissed the claimant's appeal on 10 July 2012.
• Employment Tribunal: Employment Judge Mordsley decided on 29 September 2010 that the claimant was not working under a contract of employment. No citation was stated.