Viral contracts

Shrewsbury NHS Trust v Lairikyengbam

The contracts of some public sector employees (such as those in the NHS) are governed by specific regulations as well as general statute. In Shrewsbury NHS Trust v Lairikyengbam, the Employment Appeal Tribunal (EAT) said that employees whose contracts have been renewed outside the terms of the regulations are still entitled to be treated as employees under statute.

Basic facts

Dr Lairikyengbam was appointed as a locum consultant cardiologist initially for six months with effect from 12 May 2003. This was then extended a number of times until November 2006 when he told that his contract would end on 31 March 2007.

On 6 November 2006, the Trust advertised for two consultant cardiologists. Dr Lairikyengbam applied but was unsuccessful.

He then received a letter from the Trust on 19 February confirming that his locum contract would not be extended beyond 31 March 2007. In a meeting on 5 March he was told that he was entitled to a redundancy payment of nearly £90,000.

However, the Trust then wrote on 30 March telling him that his post was not, in fact, redundant, since there was no reduction in the need for the work that he carried out. He was not, therefore, entitled to a redundancy payment and that his contractual position was “ultra vires” (beyond the power of the Trust).

This was because under the National Health Service (Appointment of Consultants) Regulations 1996 the Trust had no power to appoint a locum consultant for more than 12 months.

Tribunal decision

The tribunal decided that Dr Lairikyengbam was an employee within the meaning of section 230 of the 1996 Employment Rights Act (ERA). That is, someone who has entered into a contract of employment.

As the Trust was operating within the ERA, his employment “was within the capacity conferred on them by the Act; it was not a nullity or wholly void employment”.

The fact that his appointment as a locum consultant was outside the provisions of the regulations and therefore in excess or in abuse of those powers, did not mean his employment was ultra vires. That being so, “the contract of employment that was terminated was that of a fixed term contract and is not wholly void."

It concluded that he had been dismissed by reason of redundancy and that his dismissal was automatically unfair as the Trust had not complied with the statutory dispute resolution regulations which were in force at the time.

EAT decision

The EAT, however, disagreed. It said that although the Trust had a general power to appoint staff, that power was circumscribed by the 1996 regulations. Dr Lairikyengbam’s employment as a locum consultant after 14 May 2004 did not, therefore comply with those regulations and was ultra vires when it was renewed.

However, relying on the case of Eastbourne Borough Council v Foster the EAT went on to say that although the contract was ultra vires, the reality was that Dr Lairikyengbam had continued to work for the Trust under a contract of employment. He could therefore claim unfair dismissal for non renewal of contract.

As for the decision that he had been dismissed for redundancy, the EAT said that there was no evidence that the requirement for a consultant cardiologist had ceased or diminished on the termination of his appointment. As the post for a consultant cardiologist was still vacant, it was perverse to have found that his dismissal was for redundancy.

Equally as there was no redundancy, it had also been perverse to rule that he was entitled to a redundancy payment.

Finally, the tribunal was wrong to have decided what remedy Dr Lairikyengbam was entitled to, given that it had previously been agreed that the hearing was to decide liability only.