GE Caledonian Ltd v McCandliss EAT/0069/10
employment status | training | sponsorship contract | unfair dismissal
The Employment Appeal Tribunal (EAT) has held that the employment tribunal was wrong to hold that a former apprentice, who had a “university sponsorship contract” with the respondent company, was an employee and had been unfairly dismissed when that contract came to an end.
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Implications for employers
- Employers that wish to offer sponsorship or training contracts to individuals should draft such contracts carefully, avoiding any ambiguous or confusing wording.
- If the employer does not intend the individual to be an employee, it should avoid references to “continued employment” and “terms and conditions of employment” in the contract.
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In August 2002, Mr McCandliss began a four-year apprenticeship with GE Caledonian Ltd. He had no entitlement to employment with the company after the termination of his apprenticeship. In July 2006, he accepted an offer from the company to sponsor him for an engineering degree after he completed his apprenticeship. The terms of the contract stated that the company would provide Mr McCandliss with periods of industrial training and that, after he completed his degree, he committed to “offering his services for continued employment” with the company for two years. The contract also stated that “all other terms and conditions of employment will apply”.
Mr McCandliss studied for a year at Glasgow University and then switched to Strathclyde University. By August 2009, he was in debt, and his degree course had one more year left. Until this time, he had apparently been working for the company, in his university holidays, on his apprentice rate of pay.
Mr McCandliss told the company that he wanted to take a year off from university and, when the company asked him what he was going to do with his year, and he said that he would work for the company. The company informed him that it had no positions and that, by refusing to return to university, he would be in breach of his contract. The company told him that he could return to university, accept an internship with the company, or resign. Mr McCandliss was not prepared to consider any of these options, and told the company that he just wanted to return to his full-time position with it.
Mr McCandliss told the company that he wanted to take a year off from university, during which he would work for the company. The company informed him that it had no positions and that he would be in breach of contract by refusing to return to university. It offered him an internship, but Mr McCandliss refused, saying that he just wanted to return to his “full-time position”. He told the university that he would not be returning. The company told him that he did not currently have a full-time position, given that his previous role was as an apprentice and his current contract allowed him to “work on a placement basis during the summer holiday period only”. The company treated the sponsorship contract as having been terminated by Mr McCandliss, and he claimed unfair dismissal.
At the tribunal hearing, the company's main argument was that Mr McCandliss did not have a contract of employment and could not claim unfair dismissal. It argued, in the alternative, that any dismissal was fair. The tribunal, however, did not address the fundamental question of whether or not it had jurisdiction to hear the unfair dismissal claim. It found that the sponsorship contract did not represent the “sole contractual relationship” between the parties, and that the wording of the contract was evidence that Mr McCandliss had a continuing contract of employment throughout (and after) his study. The tribunal found, by a majority, that he had been unfairly dismissed.
The company took the case to the EAT, arguing that Mr McCandliss’s contract was for training, not employment. It admitted that “some of the wording” in the contract could have been clearer, but said that it was evident from the contract as a whole that it was not one of employment. Mr McCandliss argued that, when his apprenticeship ended in July 2006, he had “moved on to something else and, even if it was casual employment, that was employment”. He submitted that he was an employee during the university summer holidays, and that this was comparable to seasonal work.
The majority of the EAT held that the tribunal should have recognised that jurisdiction was an issue in the case, and asked itself: “what was the objective of the contractual relationship between the parties?” The EAT was satisfied that the purpose of the university sponsorship contract was to provide Mr McCandliss with training and education. Although there was an expectation that he would take up a training placement with the company each summer, there was no obligation on him to do so. Further, the company was not obliged to offer him a job at the end of his degree.
The majority found that this arrangement “bore all the hallmarks” of a training contract. Although some of the wording in the contract was “inappropriate” and “ambiguous”, that did not detract from the “clear and plain objective”. The majority could not conclude that Mr McCandliss was employed during his summer industrial placements but said that, even if they were wrong, short fixed-term contracts in the summers of 2007, 2008 and 2009 would not themselves demonstrate that the sponsorship contract amounted to continuous employment for the purposes of an unfair dismissal claim. The majority dismissed Mr McCandliss’s claim.
One of the EAT members disagreed with the majority, and would have refused the company’s appeal. He considered that the contract contained “clear, unambiguous and express terms” that constituted a continuing contract of employment throughout and after Mr McCandliss’s studies.
Additional resources
Case transcript of GE Caledonian Ltd v McCandliss (Microsoft Word format, 67K) (on the EAT website)
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