“Bank” workers NOT employees…

The vexed question of whether a “bank” worker is actually an employee has troubled HR professionals and employment lawyers alike for many years. A decision of the Employment Appeal Tribunal, earlier this year, appears to have provided a definitive answer, but is this the end of the story? Mike Smith explains more.

21/10/2009

In this article...

The vexed question of whether a “bank” worker is actually an employee has troubled HR professionals and employment lawyers alike for many years. A decision of the Employment Appeal Tribunal, earlier this year, appears to have provided a definitive answer, but is this the end of the story? Mike Smith explains more.

Background

Bank staff is the collective name used for a pool of people an employer can call on as and when work becomes available. The employer is not obligated to provide work for its “bank staff” nor is any member of the pool of bank staff obliged to accept it should it be offered. The intention behind this type of working relationship is that the individual will be a worker, rather than an employee or self-employed contractor. It is commonly used by seasonal businesses and in areas where workflow is variable; it is also commonly found within the provision of social care or healthcare where service requirements may vary.

Bank workers are a handy resource for employers who are increasingly seeking flexibility in their workforce, but can be a difficult arrangement for the workers who get none of the protection afforded to “employees” under case law and statute.

It is not uncommon to see “bank” workers (particularly those who have been regularly engaged on the “bank” for many years) seeking to argue that they are in fact employees and entitled to the protections that accompany such a position.  This is exactly what happened in the case of Little v BMI Chiltern Hospital UKEAT/0021/09  and the EAT have given some guidance as to what must, or rather must not, take place in order for there to be no employment relationship between the parties to a bank contract.

Facts

Mr Little (“L”) worked for the Respondent, BMI Chiltern Hospital Trust (“BMI”) as a “bank” theatre porter for various periods between 15 October 1992 and 28 February 2008. L averaged around 20 -30 hours per week although his hours did vary from time to time.

L’s working arrangements were governed by a number of written agreements confirming that he would work on an “as and when” basis. The agreements also confirmed that BMI would not guarantee to  provide L with work and L had the right to refuse any work he was offered, however if L refused work on four consecutive occasions or was unavailable for work for four consecutive weeks he would be removed from the “bank”.

As part of the agreements governing the working relationship L had also signed a letter confirming there was no mutuality of obligation and each assignment he was given was separate.

The Claim

BMI terminated L’s arrangement to work on the bank in early 2008 and L sought to bring an unfair dismissal claim.

The Tribunal

The Tribunal arranged a pre hearing review to determine if L was eligible to bring a claim for unfair dismissal (only employees can bring claims for unfair dismissal).

At the PHR the Tribunal determined he was not an employee – because there was no mutuality of obligation – and his claim failed.

The Tribunal found that the lack of mutuality of obligations (i.e. an obligation to provide work on the part of BMI and an obligation on L to accept it if offered) was evidenced by the fact L had a choice of if and when he worked for BMI. Although the choice was restricted by BMI’s conditions that L could not refuse work on four consecutive occasions or be unavailable for work for four consecutive weeks, this was still inconsistent with employment status.

The Appeal

L appealed the Tribunal’s decision.

The basis for the appeal was that while L accepted there was no overriding contract of employment and that between engagements there was no mutuality of obligation, each separate period of work fro BMI amounted to a separate contract of employment during which mutuality of obligation did exist.

L relied on the Court of Appeals decision in Cornwall County Council v Prater and the EAT’s decision in North Wales Probation Area v Edwards UKEAT/0468/07 to support his appeal. In both cases the Courts had found that each engagement constituted a contract of employment and any gaps between assignments were temporary cessations of work that preserved continuity of employment.

In the current case, the EAT noted that mutuality of obligation was a core element of a contract of employment. In the present case, the documents L had signed and entered into clearly envisaged that there would be no mutuality of obligation.

The EAT also considered how the arrangement had operated in practice and held that the Employment Tribunal’s finding that bank workers were sometimes sent home halfway through a shift  without being entitled to payment for the remainder of the shift distinguished the case from the Prater and Edwards cases. On this basis the Tribunal had been entitled to conclude that, as the parties themselves had agreed, there was no mutuality of obligation.

The EAT did find that a contract was in existence whenever L worked for BMI on the “bank” but this was a contract for freelance services and not one of employment.

L’s attempt to bring an unfair dismissal claim therefore failed.

Key Points

So is this the end of the story? Is there no longer a risk that”bank” workers are or could be found to be employees? Unfortunately not.

Each case will turn on its facts, however, the following hints will assist organisations in avoiding a later determination their “bank” worker was in fact an employee:

  • Written evidence of the parties’ intentions when entering into a “bank” arrangement is critical (provided they are not so obviously a sham and the reality of the working relationship is something different entirely).
  • Reviewing the length of time a worker has been continuously engaged on the “bank” to ensure this does not fall into a regular arrangement for the same hours, in the same role etc
  • Making provision in any agreement (and in practice) for shifts to be ended part way through if necessary with no obligation to pay the worker for the remainder.
  • Ensuring you have written confirmation that the worker understands there is not intended to be any mutuality of obligation.

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