Does work undertaken before a “start date” count towards continuity of employment?

Recent case highlights the difference between working under a contract of employment and ‘collateral work’.

Employees need two years’ service to bring an unfair dismissal claim in most circumstances.  

S.211(1)(a) of the Employment Rights Act 1996 provides that a period of continuous employment begins ‘with the day on which the employee starts work’.  Case law has subsequently established that this means work performed under a contract of employment.

It is not uncommon for employers and their former employees to dispute the employee’s length of service, whether there was some form of working relationship between the parties prior to the start date stated in an employment contract or the termination date can be put back in some way. A recent Employment Appeal Tribunal case considers a situation where the employee claimed their employment began during a week in which they received cash-in-hand payment for attending a worksite on which their employer was performing work.

Case details: O’Sullivan v DSM Demolition Ltd [2020]

DSM argued that the tribunal had no jurisdiction to hear Mr O’Sullivan’s unfair dismissal claim because he had insufficient service to bring it.

Mr O’Sullivan relied on the fact that he had performed work at a site where DSM was carrying out work for a client in the week before his contractual start date.  Mr O’Sullivan had been driven to the site by a member of DSM’s staff and was paid £100 cash-in-hand by another member of DSM’s staff for his work on the site that week.

At a preliminary hearing, the tribunal judge determined that the work carried out by Mr O’Sullivan had not been done under a contract of employment with DSM and that he had worked that week as a subcontractor.  The employment judge therefore found that Mr O’Sullivan did not have sufficient service to bring his claim. Mr O’Sullivan appealed.

Considering the appeal, the EAT made reference to the tribunal’s consideration of Koenig v Mind Gym Limited [2012].  In Koenig, an employee had been asked to attend a meeting prior to their agreed start date as it would be useful for them to do so, but they were not obliged to attend the meeting nor were they paid for attending it.  As a result, the EAT, when deciding on Koenig, differentiated between work performed under the contract of employment and work that was “collateral” to, but not performed under, the contract of employment. Collateral work does not count when calculating continuous service.

The EAT found that the tribunal had reasonable grounds on which to conclude Mr O’Sullivan’s employment did not begin prior to the stated contract date.  This was because the offer of work on the site the week previously was not obligatory and Mr O’Sullivan’s actions at the time did not suggest he considered this work to be under his agreed contract of employment.  This was evidenced by the fact he was only paid £100 for the week’s work, that he was not included on the payroll run for the work on the site and had not, at any time, brought a complaint about or a claim for underpayment of wages.  In addition, the tribunal had been entitled to consider Mr O’Sullivan to be a subcontractor on the basis that the £100 was paid cash in hand out of the pocket of a DSM employee and DSM’s client was not charged for Mr O’Sullivan’s work that week.

The appeal was dismissed.

Conclusion

This case provides useful guidance on the specific point of how to treat an employer’s interaction with anyone who later becomes an employee under a direct contract of employment with them.  In such cases the onus is placed on the employee to establish that their employment started at the earlier date.

In practical terms this can be very difficult, particularly if the employer’s payroll systems showed that the employer treated them as employed from the date claimed by the employer and this was not challenged by the employee. Employees might explore if there is an “associated employer” relationship which can extend continuity of employment, but which the personal payment by a DSM employee did not satisfy here.   .

This case also shows that it is possible for employers to invite new starters to engage in activities and even to perform work before a contract of employment begins without extending the employees’ continuity of employment, although the risk of it doing so and in particular the likelihood of the ensuing argument  on the point (which in this case went as far as the EAT) recommends care and caution.