| EMPLOYMENT — Contract of employment — Agency worker — Applicant employed by company treated as contractor and required to provide services through agency — Working arrangements between applicant and company remaining the same but agency paying applicant’s salary — Whether implied contract of service between applicant and company
Muscat v Cable & Wireless plc [2006] EWCA Civ 220
CA: Sir Anthony Clarke MR, Smith and Maurice Kay LJJ: 9 March 2006
{The essentials of a contract of employment were the obligation to provide work for remuneration and the obligation to perform it, coupled with control. It did not matter whether the arrangements for payment were made directly or indirectly.
The Court of Appeal so stated when dismissing an appeal by the defendants, Cable & Wireless plc, from the decision of the Employment Appeal Tribunal on 25 February 2005, by which it upheld the decision of an employment tribunal promulgated on 15 June 2004 that it had jurisdiction to hear a claim for compensation for unfair dismissal by the applicant, Patrick Muscat, on the basis that he was at all relevant times an employee of the defendants by virtue of an implied contract of employment.
During 2001 the applicant was employed by a company, EIL, although he was treated as a contractor and his salary paid through the applicant’s company, E-N, which had been set up at EIL’s request. EIL was subsequently taken over by the defendants in a takeover to which the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied. The applicant continued to work for the defendants as before. The defendants refused to deal directly with independent contractors and, regarding the applicant as a contractor they required him to enter into an agreement with an agency to supply his services to them. (The defendants subsequently accepted that he had been employed by them at that time). Having entered into the agency agreement the only change in the applicant’s working arrangements was that the agency paid him for the work which he performed for the defendants. In November 2002 the defendants told the applicant that they no longer required his services. He claimed compensation for unfair dismissal maintaining that he was employed by the defendants and that he had been continuously employed for more than one year. The defendants disputed that he was an employee. The employment tribunal held that the applicant had an implied contract of employment with the defendants. The Employment Appeal Tribunal dismissed the defendants’ appeal against that decision. The defendants appealed.
SMITH LJ, delivering the judgment of the court, said that in Dacas v Brook Street Bureau (UK) Ltd [2004] ICR 1437 the Court of Appeal considered the effect of the triangular relationship between worker, agency and end-user. The court, by a majority, advised that employment tribunals should give careful consideration to the question whether there might exist an implied contract of employment between the worker and the end-user, where the worker was introduced by an employment agency to work at their client’s premises; and that tribunals had to examine all the evidence in context and to see whether it spelled out the relationship of employer and employee. The view of the majority in Dacas was correct and the guidance provided for employment tribunals was unimpeachable and, although not strictly binding, it was plainly right for employment tribunals to heed it. The applicant’s contract for services with the agency did not preclude the existence of a contract of employment with the defendants. It was possible to infer a contract of employment by examining the conduct of the parties.
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