Mutuality of obligation

There must be mutuality of obligation in order for a person to be either an employee or a worker. There will be “mutuality of obligation” if there is a legal obligation on someone to carry out some work in return for some (usually money) payment. Without mutuality of obligation, there can be no “contract”. This explains why a genuine volunteer is neither an employee nor a worker (X (Appellant) v Mid Sussex Citizens Advice Bureau [2012] UKSC 59). (See Volunteers, pages 43 and 153). It also explains why interns who are genuine volunteers can be neither workers nor employees (see: Interns, pages 43 and 153).

The obligation is only to do some work. Having a contractual right to refuse work or to choose to withhold work does not mean there is no mutuality of obligation, as long as there is some obligation to work and some obligation to provide or pay for that work (Cotswold Developments Construction Ltd v Williams [2006] IRLR 181). There can still be mutuality of obligation even if the contract says someone is only obliged to do work if there is work available (Wilson v Circular Distributors [2006] IRLR 38).

Where a contract gives someone complete freedom to decide to refuse to work, there will be no mutuality of obligation. However, the moment they accept each new assignment or shift under the contract, this will create “mutuality of obligation” — a fresh legal contract — that lasts for the length of that assignment or shift (Drake v IPSOS Mori UK Limited [2012] UKEAT 0604/11/2507). Depending on the degree of control over the way tasks are performed during the shift or assignment (see page 35), that individual will be either a worker or an employee.