James v Greenwich London Borough Council: [2008] EWCA Civ 35

CA: Mummery, Thomas and Lloyd LJJ: 5 February 2008

The claimant was employed by the respondent council until 1997, when she ceased working for a short time. She subsequently began working again for the council, through an employment agency, from about September 2001, and in 2003 she moved to another agency which paid a better hourly wage. There was no express contract between the claimant and the council, and the terms of her contract with the agency provided that it was a contract for services between the claimant and the agency and did not give rise to any contract of employment with the agency or with the council. Unlike those working directly for the council, the claimant was not entitled to sick pay or holiday pay and arrangements in respect of sickness and holiday were made with the agency. The claimant was absent from work due to sickness in August and September 2004 and the agency provided another worker in her absence. When she returned she was told that she was no longer required as the agency had replaced her. On the claimant's claim against the council for unfair dismissal, the employment tribunal found that, as there was no obligation on the claimant to provide her services to the council, or on the council to provide her with work, sick pay or holiday pay, there was no irreducible minimum of mutuality of obligation necessary to create a contract of service, and no facts from which such a contract could be implied between the claimant and the council. The employment tribunal accordingly held that the claimant was not an employee, as defined by section 230 of the Employment Rights Act 1996, and dismissed her claim. The Employment Appeal Tribunal dismissed an appeal by the claimant.

The claimant appealed.

The Court of Appeal held:
In cases involving an agency worker, rather than considering whether the irreducible minimum of mutual obligations existed, the real question was whether it was necessary, in the tripartite setting of worker, employment agency and end-user, to imply a contract of service between the worker and the end-user to explain the provision of work by the worker to the end-user or the end-user's payment of the worker via the agency. The question was to be decided in accordance with common law principles of implied contract and, in some very extreme cases, by exposing sham arrangements. On the facts found by the tribunal, the provision of work by the council, its payments to the agency and the performance of work by the claimant was fully explained by the express contracts each entered into with the employment agency, and it was unnecessary to imply the existence of a third contract.

The appeal was dismissed.

Appearances: Richard O’Dair (Solicitor, Hammersmith & Fulham Law Centre) for the claimant; Jonathan Cohen (Solicitor, Greenwich London Borough Council) for the respondent council.