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The case of Pulse Healthcare v Carewatch Care Services Ltd & Ors is a “TUPE” case where a healthcare contract to care for a severely disabled woman supported by a local Primary Care Trust had been transferred from one company (“Carewatch Care Services Limited”) to another (“Pulse Healthcare”). The persons providing the care to the woman argued that they had employee status and that TUPE therefore would transfer their employment to Pulse from Carewatch. Further, they alleged that they had sufficient continuity of service to claim unfair dismissal and that the termination of their contracts was therefore automatically unfair. They succeeded at a PHR on these points and Pulse appealed on the basis that there was not the necessary mutuality of obligation present to constitute employee status and, further, that the Claimants were employed on a series of short-term contracts (and therefore would not have sufficient continuity of service). The EAT rejected the grounds of appeal and found that the Employment Judge at the PHR had been entitled to conclude on the facts that there was sufficient mutuality of obligation (specialist care package, fixed monthly rotas etc.) and that the Claimants were employed under a global “umbrella” contract instead of a series of short-term contracts.

The facts in Pulse Healthcare v Carewatch Care Services Ltd & Ors

Mrs Short, Ms Tweedy, Ms James, Ms Sloane and Ms Kelly (together “the Claimants”) worked as part of a care team package supported by the local Primary Care Trust (“PCT”) for a severely disabled lady (“VF”). Until December 2010 they were employed by Carewatch Care Services Limited (“Carewatch”). In December 2010 the PCT terminated the contract with Carewatch and transferred it to Pulse Healthcare Limited (“Pulse”). The Claimants claimed they were employees of Carewatch, providing care services to VF (and that therefore the Transfer of Undertakings (Protection of Employment) Regulations 2002 transferred their employment from Carewatch to Pulse). Pulse denied this, principally on the grounds that:

  1. The Claimants were not employees of Carewatch as there was not the requisite mutuality of obligation; and
  2. The Claimants did not have sufficient continuity of employment to claim unfair dismissal; and
  3. Even if they were employees, their employment did not transfer to Pulse under TUPE

The Claimants succeeded at a pre-hearing review on the first two grounds: the Employment Judge found that on the balance of probabilities they were employees of Carewatch and that they did have sufficient continuity of service to claim for unfair dismissal (more than one year). The Respondent appealed these findings. The third point is yet to be determined at a full liability hearing.

The law relating to establishing employment status

To qualify to claim unfair dismissal under the Employment Rights Act 1996 a person be an employee of their employer. They must therefore have a contract of service with their employer (as opposed to a contract for service). Normally, showing that a contract of service is in existence is a fairly straightforward issue: the employee simply has to produce their contract of employment. However, there are two circumstances in which the situation can be more complicated:

  1. The person does not have a written contract with their employer; or
  2. The person does have a written contract with their employer but this contract purports to be a contract for services, not a contract of service

If either of the above two conditions apply then the person seeking to rely on the Employment Rights Act 1996 must show on the balance of probabilities that the facts suggest that they have a contract of service. In order to demonstrate this the person must principally show (among other things) that:

  1. Control: that their employer has “ultimate authority” over how they do their work
  2. Mutuality of obligation: that the employer was obliged to provide work and remuneration for the person and that this person had a corresponding obligation to provide personal service to their employer

The Employment Tribunal will look at all circumstances of the case to determine whether there was a contract of service or not. For example, if the person receives regular wages, holiday pay, sick pay and works at a regular premises then they are more likely to be considered an employee. If they provide their own equipment, do not receive a regular wage and are not paid on a PAYE basis then they may not be considered to be an employee but, instead, a worker. The Employment Tribunal will consider the existence and terms of a contract, if there is one, but is entitled to find that the contract is a “sham” if it contradicts the reality of the working situation.

The Employment Appeal Tribunal’s judgment in Pulse Healthcare v Carewatch Care Services Ltd & Ors

The Employment Appeal Tribunal rejected the Respondent’s appeal on both grounds. It found that the Employment Judge was entitled to find that there was sufficient mutuality of obligation to render the Claimants “employees” instead of workers and, further, found that the Claimants were employed on a global “umbrella” contract instead of a series of short-term contracts. Although Carewatch had requested that the majority of the Claimants sign a “Zero Hours Contract Agreement” this conflicted with the evidence that the Claimants had advanced of the nature of their working relationship, which suggested that they were employees (i.e. they had fixed rotas and were specifically employed in specialist positions on the VF contract).

Our specialist employment lawyers’ views on Pulse Healthcare v Carewatch Care Services Ltd & Ors

This case shows that even if persons are employed on “zero hour contracts” (which are becoming ever more popular) they may be deemed to have employee status if the reality of their employment suggests that there is mutuality of obligation and control by the employer present in the working relationship.

Redmans are employment solicitors in Richmond, London.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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