GE Caledonian Ltd v McCandliss [2011] EAT
Published on: 20/01/2012
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Background
Employment or Training Contracts?This was an appeal against a finding of Unfair Dismissal where the respondent argued that the Tribunal had no jurisdiction to hear the case because the claimant was not employed under a contract of employment.The appellant company sponsored the respondent, a former mechanical engineering apprentice, for the purpose of his university degree under a „University Sponsorship‟ contract. The claimant later withdrew from his degree course without completing it. The company informed the Claimant that he had three options which were to return to university, 13accept an internship (which they were prepared to offer) or resign. The claimant was not prepared to consider any of these options.The sponsor refused him full time employment to which he considered he was entitled.The Employment Tribunal found that the claimant had been unfairly dismissed and awarded him compensation (based on the full time rates payable to a semi skilled engineer –approaching matters on the basis that he had been continuously employed).On appeal, the Court held that the Tribunal had erred. The Claimant was not employed under a contract of employment and had, accordingly, no rights under s.94 of the Employment Rights Act 1996. Its reasoning was:The tribunal ought to have recognised that jurisdiction was an issue in the case before proceeding directly to consider Unfair Dismissal.The "overarching and primary purpose" of the sponsorship contract was to advance Mr McCandliss's training and education. The contract "bore all the hallmarks of a training contract". Although there was an expectation that Mr McCandliss would take up industrial training during the summer holidays, there was no obligation on him to do so. At the end of his course, he was obliged to offer his services to GE, but GE was under no obligation to accept his offer and employ him.The tribunal had fallen into "the trap for the unwary" by focusing on individual aspects of the sponsorship contract, rather than considering the whole of the relationship. The phrase "continued employment" was inappropriate and references to "terms and conditions of employment" were ambiguous. However, this language did not detract from the clear and plain objective of the contract (training).There was insufficient evidence to conclude that Mr McCandliss was employed under short fixed-term employment contracts during his summer holiday training placements. However, even if he had been, this would not give him the necessary continuity of employment to claim Unfair Dismissal.It is not uncommon for companies to sponsor students to advance their training, particularly where there is an expectation (or commitment) that the student will work for the company at the end of their course. This case confirms that such arrangements are unlikely to be considered to be contracts of employment if the primary purpose of the arrangement is training and education. The fact that the student carries out some paid work for the company during their studies and may work for the company afterwards will not make the contract an employment contract if the work is only the contract's secondary purpose. Furthermore, any references in the sponsorship contract to employment will not give a student employment status, if training is the overall objective.http://bit.ly/zZ1hWK
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The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.
This article is correct at 20/01/2012
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