AGENCY WORKER

Muscat v Cable & Wireless plc: [2006] EWCA Civ 220

CA: Sir Anthony Clarke MR, Smith and Maurice Kay LJJ: 9 March 2006

During 2001 the applicant was employed as a telecommunications specialist by E Ltd. In September 2001 he was told that he would have to become a "contractor" and provide his services through a limited company. Accordingly, in October 2001 E Ltd dismissed him and immediately re-engaged him as a contractor, paying him through N Ltd, a company set up by the applicant for that purpose. In April 2002 E Ltd was taken over by the respondent company, which required the applicant to supply his services through an agency, and on 13 August 2002 N Ltd entered into a contract with an agency, expressed to be a "contract for services", by which the applicant agreed (in part retrospectively) to provide his services to the respondent company, as the agency's "client". The only change in the working arrangements was that from August to December 2002, when the respondent company dispensed with his services, the agency paid the applicant's invoices for the work done by him for the respondent. On a claim by the applicant of unfair dismissal, the employment tribunal found that the applicant was employed by E Ltd at the time of the takeover by the respondent; that, despite the existence of the agency contract, the applicant had an implied contract of employment with the respondent; and that, since he had therefore been continuously employed for more than a year, he was entitled to bring his claim against the respondent. An appeal by the respondent, on the ground that the applicant did not have an implied contract of employment with the respondent after entering into the contract for services with the agency in August 2002, was dismissed by the Employment Appeal Tribunal.

The respondent company appealed.

The Court of Appeal held:
In considering the status of a person who worked under the control of an end-user but was paid by an employment agency, the correct approach was to consider the possibility of the existence of an implied contract of employment in the light of all the evidence about the parties' relationship. Such a contract would only be inferred where it was necessary to give business reality to the relationship between the parties and where both the irreducible minimum requirements of mutuality and control by the end-user were present, but it did not matter that remuneration was paid indirectly through the agency, so long as it was provided by the end-user. The applicant's contract with the agency did not affect his subsisting relationship with the respondent, under which, as the employment tribunal found, the applicant was an employee, and it was necessary to infer the continuing existence of an employment contract in order to give reality to the relationship and arrangements between them. Accordingly, the employment tribunal was entitled to hold that the applicant had been an employee throughout.

The appeal was dismissed.

Appearances: Frederic Reynold QC and Anya Palmer (Charles Russell) for the respondent company; Omar Malik (Steele Raymond, Bournemouth) for the applicant.