This article first appeared in People Management.
This case involved the care package for a lady known as VF, who suffered from severe physical disabilities requiring 24 hour critical care. This care was provided by a team of 15 specially trained people, working on shifts.
From 2003 until 1 December 2010, the care package was provided by Carewatch. The five Claimants worked for Carewatch providing care for VF, and they had all signed ‘Zero Hours Contract Agreements’.
The Primary Care Trust decided to award the contract for VF’s care to a new company, Pulse, which took over from 2 December 2010.
The Claimants argued that they had been employed by Carewatch, and should therefore have transferred to Pulse under TUPE. In order for the Tribunal to decide whether TUPE applied, it had to first consider whether or not the five Claimants had been employees of Carewatch.
The Tribunal therefore looked carefully at the ‘Zero Hours Contract Agreement’. In particular, the document made several references to ‘employment’ and stated that it was a statement of particulars under the Employment Rights Act 1996. It stated that continuous service started on the date given, and contained clauses regarding salary, sickness and notice, all of which were what you would expect in a contract of employment. There was however a specific clause stating that there was no obligation on Carewatch to offer any work, and that Carewatch had the right to reduce working hours whenever necessary.
The Employment Judge therefore examined the way that things operated in practice, and considered the evidence given by the Claimants. They did have regular hours of work each week, and took time off only for holidays or sickness. One of the Claimants had been suspended on one occasion, and had been paid in full during that time.
The Tribunal found that the written contract did not reflect the reality of the situation. There was an agreement that Carewatch would provide work and the Claimants would carry out that work. There was a requirement for personal service, and the Claimants were under the control of Carewatch. He therefore found that the Claimants had been employees throughout.
Pulse appealed against this finding to the Employment Appeal Tribunal (EAT). Their argument was that it was impossible to find that there was an ‘umbrella’ contract covering all of the work that the Claimants did for Carewatch – instead, there was a succession of individual contracts covering individual shifts, with no obligation in between. They relied on the wording of the Agreements, which they said was clear – there was no obligation to offer the Claimants any work.
The EAT said that the Employment Judge had been entitled to conclude that the wording of the Zero Hours Contract Agreement did not reflect the true contractual arrangement between the parties. There had been an ‘umbrella’ contract of employment in place throughout. The care package for VF was particularly challenging, and it was vital that there was an established team of carers. It was significant that Carewatch could not have relied upon ad hoc arrangements to fulfil VF’s care package.
The claims were then sent back to the Employment Tribunal to determine the other issues in the case.
This case is yet another reminder that the name given to an arrangement cannot change the reality of the situation. As we have seen with the recent cases about those who are labelled ‘self-employed’, the Tribunals are prepared to look behind the drafting of any agreement between the parties and examine what actually happens.
Zero hours or ‘bank’ arrangements are very common, and can be a valuable source of flexible labour. However, where these arrangements are used on a regular and/or long-term basis, workers may develop unintended contractual entitlements, so it is always best to keep arrangements under review and ensure that the documentation reflects the true relationship between the parties.
Do you operate a zero hours arrangement? We can help draft appropriate agreements and can also review matters for you to assess your risk following the Pulse case. Please call us on 01243 836840 for a no obligation chat or email us at [email protected].