ESM1073 - Detailed guide to determining status: continuous contracts of service

Where work is regularly offered and accepted over a period of time a continuous (or 'umbrella') contract of employment may be created. The parties may claim that between each offer and acceptance of work there is no obligation to offer or accept further work. But such an obligation can be implied in certain circumstances. As Dillon LJ said in the Court of Appeal in 1984

' I see no reason in law why the existence of a contract of service may not be inferred from a course of dealing continued between the parties over several years………There was a regular course of dealing between the parties for years under which garments were supplied daily to the outworkers, worked on, collected and paid for’

[Nethermere (St Neots) Limited v Gardiner and another (see ESM7110)]

In the similar case of Airfix Footwear Limited v Cope (see ESM7060), it was argued that there was no obligation on the company to provide work and no obligation on Mrs Cope, who was an outworker, to take the work offered. However, the Employment Appeal Tribunal confirmed the Industrial Tribunal’s finding that there was in fact a continuing, or ‘umbrella’, contract of employment.

The relevant issue in the case was whether Mrs Cope was employed under a contract of employment when the engagement was terminated. She had applied to the Industrial Tribunal for a determination of the question as to whether she had been unfairly dismissed. In order for the application to succeed, the Tribunal had to be satisfied that Mrs Cope was an employee and that she had been employed for 26 weeks.

In the case of Carmichael and Another v National Power plc (see ESM7200), Mrs Carmichael was engaged as a tour guide on a casual as required basis and she was trying to establish that she was not only an employee but an employee for at least thirteen weeks. The House of Lords decided, in December 1999, that the Industrial Tribunal was entitled to find that the original documentation and subsequent conduct of the parties indicated that there was no intention to have the relationship regulated by contract whilst Mrs Carmichael was not working as a guide. It was stated that ‘the documents provided no more than a framework for ad hoc contracts of service or for services’. The Courts did not consider the issue of status when Mrs Carmichael was actually working as a guide.