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Supreme Court backs ‘purposive approach’ to employment contracts

27 July 2011

Courts must take a “purposive approach” when ruling on employment contracts, the Supreme Court said today.

A group of car cleaners from Derbyshire argued that they should be treated as workers for the purposes of the National Minimum Wage Regulations and the Working Time Regulations.

The court heard that they worked for Autoclenz, which regarded them as sub-contractors, and paid neither the minimum wage nor gave them holidays.

Delivering the judgment of the court in Autoclenz v Belcher and others [2011] UKSC 41, Lord Clarke said the question was whether an employment tribunal could disregard terms included in a written agreement between the parties and instead base its decision on their true intentions.

Lord Clarke said that in employment contracts the “relative bargaining power of the parties must be taken into account” and “the true agreement will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part.

“This may be described as a purposive approach to the problem. If so, I am content with that description.”

He agreed with the Court of Appeal that the employment tribunal was entitled to hold that four essential contractual terms were agreed between the parties: that the cleaners would perform the services required by Autoclenz within a reasonable time and in a good and workman-like manner; that they would be paid for that work; that they were obliged to carry out the work offered to them and Autoclenz undertook to offer work; and that they must personally do the work and could not provide a substitute to do so.

Lord Clarke agreed with the employment tribunal and the Court of Appeal that the claimants were workers because they were working under contracts of employment within the meaning of regulation 2(1) of the National Minimum Wage Regulations (SI 1998/584) and the Working Time Regulations (SI 1998/1833).

He dismissed the appeal by Autoclenz. Lords Hope, Walker, Collins and Wilson contributed to the judgment.

Categorised in:

Contracts & Rights Children