Employment status
An individual can be an employee, a worker or self-employed. Employment status determines the statutory rights the individual is entitled to such as national minimum wage, paid annual leave for employees and for temps, or sick pay. It is essential therefore that a recruitment business understands the status of every individual it introduces or supplies to a client.
This section will tell you what you need to know about employment terms.
What is the difference between an employee and a worker?
In UK law individuals are either employees, “workers” or self-employed. An employee is an individual employed by another person under a contract of employment. A “worker” includes both employees and also individuals engaged by another (‘the employer’) under a contract for services to personally perform work for the employer (except for an individual who is genuinely in business on their own account and where the ‘employer’ is a client or customer of their business i.e. a self -employed person).
The difference between an employee, a “worker” and a self-employed person is of great importance because it impacts on the legal rights a person enjoys. Most employment rights and obligations arise in relation to those with contracts of employment, who are known as “employees”. A contract of employment is sometimes referred to as a contract of service.
“Workers” are engaged under a contract for services and this generally means that they are not employees and therefore not entitled to the same legal rights and protection as employees.
How can I tell if someone has a contract for services (worker) or a contract of employment (employee)?
First look to see if there is a written contract and whether the wording of the contract states that it is a contract of employment or a contract for services. The industry standard contract for most agency workers, reflected by the REC model terms of engagement, is a ‘contract for services’.
If there is no written contract or if the wording is not clear the position is more complicated involving an examination of the facts surrounding the relationship between the individual and the employer.
In determining the question of who is and who is not an employee courts and tribunals draw up a “balance sheet” detailing all those characteristics of the individual’s engagement that are consistent with an employment relationship and those that are not.
To establish whether a Contract of Employment exists, the facts should indicate each of the following:
- The existence of an agreement or ‘contract’ either express or implied, in writing or verbal between the individual and the employer
- The existence of some “mutuality of obligation” between the parties. Mutuality of obligation is where there is an obligation on the part of the employer to provide and pay for work done and an obligation on the worker to perform that work
- The worker agrees to be subject to a sufficient degree of control on the part of the employer over how, when and where they work
- There is an obligation for the worker to provide his services personally
- The facts are not inconsistent with a contract of employment.
By contrast, a Contract for Services is likely to provide, amongst other things, that:
- There is no obligation to provide work and no obligation to perform any work offered
- There is no right for the employer to control how the worker performs the work
- That the individual need not perform the work personally.
For example the REC model terms of engagement provide that the employment business will endeavour to look for work but will not be liable to the individual if no suitable work is available; that either party may terminate an assignment at any time without a period of notice or liability; and that no contract for services exists between assignments. It is not necessary for all of these elements to be present in a contract for it to be a contract for services.
The sort of factors which a court will look at to determine whether someone is an employee include:
- Any verbal or written agreement
- Whether the individual is told what, how and when to do the work and if so by whom
- How payment is made to the individual for work done i.e. whether it is made net of income tax and National Insurance contributions (see question 7 below in relation to Sections 44-47 of the Income Tax (Earnings and Pensions) Act 2003)
- Whether the individual is obliged to work exclusively for one employer
- Whether there are any disciplinary, grievance and specific dismissal procedures that apply and whether they have been applied to the individual
- Whether the individual or the employer is required to give a period of notice to terminate the contract
- Whether the individual has fixed hours of work or can choose when they work
- Whether there is a requirement for the individual to perform the work himself rather than subcontract or hire an assistant
- The degree of financial risk taken by the individual i.e. if the work is done badly are they liable to put it right at their own expense
- Whether the individual is entitled to be or is paid when they are not working (other than for holiday or statutory sick pay as these are now both statutory entitlements attaching to all workers regardless of employment status).
What are the rights and benefits of temporary agency workers?
Temporary workers do not have all of the legal rights that employees enjoy, they do however have the following protections and rights, which are enjoyed by all workers, and these are as follows:
- Not to be discriminated against on the grounds of race, sex, disability, (sexual orientation, religion or belief from 1 and 2 December 2003 respectively);
- To be provided with a safe place and safe system of work where applicable;
- To be paid his wages free of any unlawful deductions;
- Statutory sick pay entitlement subject to fulfilling certain qualifying conditions;
- Statutory paid annual leave subject to fulfilling certain qualifying conditions;
- Statutory maternity pay subject to fulfilling certain qualifying conditions;
- Statutory paternity pay subject to fulfilling certain qualifying conditions;
- Statutory adoption pay subject to fulfilling certain qualifying conditions.
A temporary worker engaged under a contract for services does not normally have the right to paid time off for antenatal checks or to return to work after maternity leave (as distinct from SMP). The right to these two entitlements accrue only to “employees” as defined by the Employment Rights Act 1996. Workers engaged under contracts for services do not meet this definition. They would also not be able to claim unfair dismissal or redundancy payment on termination of an assignment unless they were able to prove that they were, in fact, the employees of the employment business or client.
What responsibilities does an employer have towards its employees or workers?
In addition to observing an employee’s rights an employer will have a responsibility to provide employees with work or pay them when there is no work available. He is obliged to provide a written statement of terms within 8 weeks of the start of employment; to deduct tax and National Insurance Contributions from their pay and provide the employee with an itemised pay statement.
Employers are also responsible for the acts of their employees whilst they are working for the employer and will be liable to both the employee and any third party for any damage arising from their lawful employment. If an employment business decides to employ its temporary workforce and hire that workforce out to its clients, it is important to remember that the employment business will have vicarious liability for the acts and omissions of those employees when they are on assignment. For example if an employment business specialising in HGV drivers employs its drivers it will be liable for any negligent acts of those drivers while on assignment.
Employment businesses who engage workers on contracts for services will be responsible for agreeing written terms of their engagement and to pay for work done subject to PAYE and NIC deductions.
In addition, all employers have a responsibility for the health and safety of their employees and any workers who come onto premises controlled by them to perform any work. Thus clients using temporary agency staff will have to carry out risk assessments and take the same responsibility for the temporary workers, as the client has to take for its own employees on that site. If an employment business engages its workers on contracts of employment they will be responsible for conducting risk assessments and should therefore obtain indemnities from the client in the event of any harm occurring to the worker in the course of employment at the client’s site.
I pay my workers PAYE. Does this mean they are my employees?
No, employment businesses are required to account for PAYE and NI at source for temporary worker on contracts for services under Section 44-47 Income (Earnings and Pensions) Taxes Act 2003. It is often suggested that the deduction of PAYE income tax at source from temporary workers’ pay indicates employment status. It is important to remember in this context that employment businesses are specifically required to make such deductions but without this statutory provision PAYE would not be deductible from the pay of temporary workers engaged on contracts for services.
This is a vital point to make in a tribunal when dealing with a dispute over a particular worker’s status. The fact that PAYE income tax for temporary workers working through an employment business is addressed separately by the 2003 Act indicates that those workers do not have the same status as employees.
Can an agency worker supplied by me become the employee of the hiring client?
In a number of recent well-publicised cases the courts have accepted the possibility that a worker supplied by an agency and having a written contract with the agency could have an implied contract of employment with the hiring client.
In order for this to be the case it is necessary for the facts to support the following necessary criteria of a contract of employment between the individual worker and the client:
- The existence of an agreement or ‘contract’ either express or implied, in writing or verbal between the individual and the employer;
- The existence of some “mutuality of obligation” between the parties. Mutuality of obligation is where there is an obligation on the part of the employer to provide and pay for work done and an obligation on the worker to perform that work;
- The worker agrees to be subject to a sufficient degree of control on the part of the employer over how, when and where they work;
- There is an obligation for the worker to provide his services personally;
- The facts are not inconsistent with a contract of employment.
I currently supply an agency worker engaged under a contract for services to one of my clients; the client wants to discipline the worker for performance issues. Should I allow the client to do this?
Ultimately disciplining a temporary worker isn’t as straight forward as it may sound, this could cause employment status issues for the client or the employment business. Employment status issues are important to consider because in law individuals are entitled to different rights depending on which of the three categories of employment status they fall into. In the UK there are currently three different categories of employment status, individuals can be either ‘employees,’ ‘workers’ or they can be ‘self-employed.’
Temporary workers engaged under contracts for services are workers and consequently they are not entitled to employment rights such as statutory notice, unfair dismissal protection and maternity leave. The UK courts hear many employment status cases each year during which individuals claim to be employees as opposed to workers and consequently are entitled to employee rights. These claims include claims by agency workers that they have become employees of either the client or the employment business. The courts have established that the following elements need to be present for a contract of employment to be present:
- The existence of an agreement or ‘contract’ either express or implied, in writing or verbal between the individual and the employer;
- The existence of some “mutuality of obligation” between the parties. Mutuality of obligation is where there is an obligation on the part of the employer to provide and pay for work done and an obligation on the worker to perform that work;
- The worker agrees to be subject to a sufficient degree of control on the part of the employer over how, when and where they work;
- There is an obligation for the worker to provide his services personally;
- The facts are not inconsistent with a contract of employment.
Can a Limited Company Contractor be the employee of the hiring client?
In theory the individual supplied by a limited company via an agency to perform work for the hiring client may be an employee of the client if they can establish the criteria set out in the question posed in the section above 'Can an agency worker supplied by me become the employee of the hiring client?'
However in the case of Hewlett Packard Ltd v O’Murphy 2001 the Employment Appeal Tribunal considered that a limited company contractor supplied by an Employment business to a client company was not the employee of the client company due to the existence of a written contract between his company and the employment business.
Are there any steps I can take to protect my clients from having claims brought against them by temporary workers that I supply?
In most cases problems arise because the client treats the worker as if they were one of their own employees. For example where there are disciplinary issues or performance problems the client should refer these matters to you to deal with rather than using their own formal procedures. Also requests for holiday and other absences should be handled by you rather than the client. Explain to your client that as you are the employer they should defer to you in all dealings with the worker other than simply directing or supervising them in their work.
It has been common in the past for client to terminate the assignments of all temporary workers shortly before they reach the qualifying period required by employees in respect of unfair dismissal claims. This was broadly because they took the view that if the temporary worker was able to show that they had a contract of employment with the client, they would be precluded from pursuing a claim for unfair dismissal having not reached the qualifying period of employment to do so.
Another option may be for an employment business to employ the candidate under a “zero hours” employment contract. But this is also not a guarantee against a worker being found to be an employee of the client if the court or tribunal concludes that all the criteria have been established. You should also think carefully about the implications of employing your temporary workforce involving increased health & safety responsibility and employers liability insurance.
If I employed the temporary worker on a contract of employment would this be guaranteed to protect my client from claims of employment status?
With the recent trend of cases finding or seeking to find that the agency worker is the employee of the client more clients are looking to the employment business supplying them to either employ workers supplied or indemnify them against any costs and compensation payable to workers by the client. This is entirely a matter for each employment business but it is not necessarily the answer for a couple of reasons.
One option is for the employment business to employ the candidate under a contract of employment. Most commonly such contracts are known as “zero hours contracts” because the employment business has no obligation to provide any number of hours of work and the employee would be contracted for a basic working time of zero hours. In essence then it fails one of the criteria to establish an employment relationship so is really only a contract of employment in name rather than substance. Some employment businesses go further than this and offer a basic number of hours work per year but again the arrangements allow for flexibility. The contract would need to be drafted carefully, confirming the obligations between the employment business and the employee and the fact that control over the employee remains with the employment business.
But employing temporary workers is not a guarantee against a worker being found to be an employee of the client if the court or tribunal concludes that all the criteria of an employment relationship have been established in the relationship between the worker and the client. You should also think carefully about the implications of employing your temporary workforce as employers have increased health & safety responsibility for employees than for workers and additional employers liability insurance cover is likely to amount to an uplift in premiums of around 20% due to the fact that the worker is under the client’s supervision, direction or control. You should therefore also make sure you get your client to provide you with undertakings or assurances that they will look after your agency employees in the same way as their own staff and will indemnify you in the event of any harm.
Summary
For a contract of employment to exist between an individual and an employer (whether client or employment business) the individual must be able to establish the following five criteria:
- The existence of an agreement or ‘contract’ either express or implied, in writing or verbal between the individual and the employer;
- the existence of some “mutuality of obligation” between the parties. Mutuality of obligation is where there is an obligation on the part of the employer to provide and pay for work done and an obligation on the worker to perform that work;
- an agreement by the worker to be subject to a sufficient degree of control on the part of the employer over how, when and where they work;
- an obligation for the worker to provide his services personally; and
- the facts are not inconsistent with a contract of employment.
Case law: there is an agreement or contract express or implied, written or verbal between the worker and the employer (either the employment business or the client)
In this group of cases the Courts have shifted their opinion on the question of whether a contract can exist, express or implied, between a worker supplied by an employment business and a client. From the case of Hewlett Packard Ltd v O’Murphy in 2001 where the existence of a written contract between the worker’s company and the employment business precluded a contract existing between the worker and the client; to the decisions of the Court of Appeal in later cases directing tribunals to look at the facts of the relationship to determine whether an implied contract of employment should be found to exist between the worker and the client notwithstanding written terms of an employment business that may contradict this. The overriding authority on the question of implied contracts of employment is the case of James v Greenwich Council 2008 in which the Court of Appeal upheld the decision of the Employment Appeal Tribunal the previous year that a temporary worker supplied by an employment business to Greenwich Council over a 5 year period was not the employee of the Council.
James v Greenwich Council 2008
On 5 February 2008 the Court of Appeal handed down a landmark decision in the case of James v Greenwich Council [Ms Merena James v London Borough of Greenwich [2008] EWCA Civ 35] in which it upheld the decision reached by the Employment Appeal Tribunal in the same case in early 2007 that Ms James, a temporary worker, who had been supplied to Greenwich Council for a number of years through an employment business was NOT the employee of the Council under an implied contract of employment.
The Facts
In 1997 Ms James began working full time directly for Greenwich Council as a support worker on the Council’s Asylum Seekers Team. After some years she left to spend time abroad. When she returned she began an engagement with Greenwich Council through an employment agency, Greenwich Social and Care Staff Agency as a Housing Support Worker. During this time Ms James was subjected to a degree of control by the Council which arranged her working instructions and conditions, provided the materials used in her work and organised the procedures she was to follow. She also wore a staff badge bearing the Greenwich Council logo.
In 2003 Ms James changed agencies but continued to be supplied to the Council. In April 2004 she signed a temporary worker agreement with an agency called BS Project Services Ltd which gave her a better hourly rate than previously. The terms stated that the contract constituted a contract for services, that she was self employed in relation to each assignment and that she .was not obliged to take up any particular assignment offered to her by BS Project Services.
In August 2004 she was absent from work due to sickness. She did not notify the Council of the reasons for her absence, nor did she receive payment of statutory sick pay from the Council. She passed all such matters through BS Project Services. While she was away BS Project Services replaced her with another worker so that when she returned on 24 September there was no role for her at the Council. A meeting took place some days later to discuss issues about her conduct and other matters but these were not resolved and no further meetings took place.
Ms James did not undertake any further work for the Council. Ms James did not make any claim against BS Project Services but instead brought a claim for unfair dismissal against the Council. The Council rejected her claim on the basis that she was not their employee.
Decisions of the Employment Tribunal, Employment Appeal Tribunal and Court of Appeal
The Employment Tribunal (ET) concluded in the first instance that on the facts there was no obligation on Ms James to provide her services to Greenwich Council and no obligation on the part of the Council to provide her with work. There was therefore an absence of the irreducible minimum of mutual obligation necessary to create a contract of employment between the two parties.
The decision of the ET was appealed to the Employment Appeal Tribunal (EAT) which itself concluded that the ET had made no error of law in reaching the conclusion it did. The EAT stated that although the ET had focussed on the absence of mutuality of obligation between the parties it could simply have said that there was no necessity to imply a contract of employment in this case in order to give business reality to what was happening because the contracts between Ms James and BS Project Services and BS Project Services and Greenwich Council “told the whole story” about the relationships and working arrangements between the three parties.
The EAT provided guidance for other tribunals as to the tests to apply in order to determine whether to imply a contract of employment between an agency worker and an end user. It said that the issue as to whether a contract can be implied between the worker and end user rests on whether the way in which the relationship between worker, agency and end user is consistent with the tripartite agency arrangements or whether the way in which the arrangements are actually carried out could only be made sense of if a contract was implied between the worker and the end user and that the absence of any such contract is a sham.
In a tripartite agency relationship the end user is not paying directly for the work done by the worker. It is paying for the services supplied by the agency which comprises the payment of wages and other elements such as expenses and agency margin. The end user frequently has no idea what the worker is receiving and can also not insist on the agency providing any particular worker. Provided these arrangements are genuine and the actual relationship is consistent with them, it is not then necessary to explain the provision of the worker’s services or how the worker is paid with reference to a contract between the worker and the end user. The express contracts between the worker and the agency and the agency and the end user themselves both explain and are consistent with the nature of the relationship and no further implied contract is justified or necessary.
Having regard to this, the EAT stated that where the arrangements are genuine and accurately represent the actual relationship between the parties - as is likely to be the case where there was no pre-existing contract between worker and end user – it would be rare for evidence to emerge entitling the Tribunal to imply a contract between the worker and the end user. It is only where the agency arrangements no longer dictate or adequately reflect how the work is actually being performed that the reality of the relationship by necessity can only be made sense of with the implication of the contract between the worker and the end user.
The EAT also observed that where the agency arrangements are super-imposed on an existing contractual relationship, it is more likely that the agency arrangement will be a sham and that the worker and end user have simply remained in the same contractual relationship with one another. However, in these cases the Tribunal is not strictly implying a contract as such but is rather concluding that the agency arrangements have never brought the original contract to an end.
A further point made by the EAT was that the mere passage of time was not sufficient to require a contract of employment to be implied. This cuts both ways; i.e. just because a worker who has been on the same assignment for a long period does not mean they will be an employee and just because a worker has been in an assignment for a short period of time does not mean that they will not be an employee.
The Court of Appeal agreed with the overall conclusions of the EAT and stated that a challenge to the correctness of the ET’s decision could only succeed if it could be shown that the ET’s decision, which was correct in law, was nevertheless perverse. The Court of Appeal’s conclusion was that it was not perverse and that what Ms James did and what the Council did were fully explained by the express contracts each of them had entered into with the agency.
In short the circumstances in which the Council received and paid for work done by Ms James and the facts about the working relationship between them did not “lead irresistibly to the result that they were only explicable by the necessary existence of a contract of service between them.” (Mummery LJ)
The judgment also stated that the mutuality of obligation point was not the essential one in this case. Mutuality of obligation, the judgment explains, is important in deciding whether a contract which has been concluded between parties is a contract of employment or some other kind of contract. In this case there was no express contract between Ms James and Greenwich Council and ultimately insufficient grounds for requiring one to be implied.
Obiter comments (additional remarks) from the Court of Appeal judgment
Some of the most important elements of the judgment are found in the obiter remarks of two of the Court of Appeal judges, Mummery LJ and Thomas LJ, with which Lloyd LJ agreed in their entirety.
The first point Mummery LJ makes is that there was little prospect of appeals from the ET or the EAT succeeding now where the decision of the ET, as to whether or not an implied contract of employment existed, had been reached by correctly applying the test of necessity.
He went on to say that some litigants and their advisers have unrealistic expectations about what courts and tribunals can legitimately do to remedy their grievance that the statutory right not to be unfairly dismissed was confined by Parliament to workers with contracts of employment. Courts and tribunals exist to adjudicate legal disputes he explains and in this respect only are builders in the law. They are not the overall architects of economic and social policy and must operate within the legal architecture created by Parliament. In other words courts and tribunals cannot confer the right not to be unfairly dismissed on a worker who does not have an express contract of employment and they will not imply one unless it is necessary to do so to make sense of the factual arrangements between the parties. Workers may feel as though they are the employee of the end user but that of itself does not lead to any conclusion. If on examination the relationship between the agency and the worker is consistent with the terms of the written contract between them and the relationship between the agency and the end user is consistent with the contract between them, the courts will not imply a direct contractual relationship between the worker and the end user.
The courts and tribunals are, Mummery states, well aware of the current controversy about the absence of job protection for agency workers and of the nature of the arguments both for and against a change in the law but emphasises that it is not for them to express views about change or to initiate change. This is a matter he says of controversial social and economic policy for debate and decision in Parliament informed by discussions between interested parties. And while “policy decisions have to be taken by others about what changes if any are needed, …the increasing amounts of money, time and effort spent litigating this issue in tribunals and on appeal might in some cases be invested more productively in making representations to and through bodies which can pursue the debate on policy or even reform the law.” In other words whatever people might think about the fairness of a two tier workforce it was not the job of the courts and tribunals to create economic and social policy but to interpret the existing law.
Thomas LJ’s obiter remarks perhaps summarise some of these points more succinctly. He says:
“Parliament has provided in Part X of the Employment Rights Act 1996 that various rights, including the right to protection against unfair dismissal, depend on whether a person is employed under a contract of service (contract of employment), express or implied. That question is to be determined by the application of ordinary principles of law. Accordingly those who need the services of persons to work in their business can within the legal regime enter into arrangements with others to provide the services of persons without those persons becoming their employees, unless on ordinary principles of law it is necessary … to imply a contract of employment between the individual providing the services and the person receiving the benefit of them. They have, in essence, the freedom to contract in these respects within the ordinary principles of law.
There are plainly arguments of social and economic policy as to whether the present position under Part X is one that should be maintained, particularly where the individual renders services to the same person for a significant period of time. The arguments go both ways. It is the function of the courts to apply the clear legal regime under Part X; it is for those who legislate to determine by examination of the social and economic arguments whether there should be any change. Unless and until they do so, Employment Tribunals must continue to apply the principles of the law of contract (as set out so clearly in the judgments of Mummery LJ and the President of the EAT in this case) to an analysis of the specific facts of each case.”
What steps to you need to take?
The questions you need to ask in conjunction with your clients are as follows:
- is the assignment being performed in a way that is consistent with the arrangements as set out in the written contracts (the worker’ contract with you and your contract with the client)? If so it should not be necessary to imply an employment contract;
alternatively
- is the assignment being performed in reality in such a way that can only be consistent with there being an implied contract between the worker and the end user? If yes, then an employment relationship may exist between the two. However it would ultimately be for deduction by the employment tribunal as to whether that contract is a contract of employment or a contract for services, unless you can reach agreement privately.
You must therefore ensure that the contracts in place in any particular arrangement genuinely and accurately reflect the actual relationship between all parties and that that actual relationship is not operating in such a way as to create a direct relationship between the worker and the client/end user.
Hewlett Packard Ltd v O’Murphy 2001
Mr O’Murphy was a limited company contractor whose company (“CTL”) contracted with Eaglecliff Ltd - a recruitment consultancy. Hewlett Packard Ltd subsequently became a client of Eaglecliff Ltd. Eaglecliff employed CTL to carry out work for Hewlett Packard for a fee. Mr O’Murphy, as an employee of CTL carried out the work in turn receiving his remuneration from CTL.
In October 2000 Hewlett Packard contacted Eaglecliff stating Mr O’Murphy was incapable of efficiently performing the work expected of him. Eaglecliff contacted Mr O’Murphy as director of CTL, notifying him of the termination of the assignment with Hewlett Packard (HPL). Mr O’Murphy brought a claim against Hewlett Packard Ltd on the grounds that he was their employee.
The Employment Tribunal in reaching a decision undertook a balancing exercise, examining all the facts of the case to determine whether an employment relationship existed or not. They found on balance that Mr O’Murphy was the employee of Hewlett Packard Ltd. HPL appealed to the Employment Appeal Tribunal and they found that the Employment Tribunal had erred in law by finding that Mr O’Murphy was their employee.
The Employment Appeal Tribunal made this decision on the basis that the task of the Employment Tribunal was to ascertain whether there had been a contract of any kind between Hewlett Packard and Mr O’Murphy. If the Employment Tribunal had asked that question then it would have come to the conclusion that there was no contractual relationship between Hewlett Packard and Mr O’Murphy due to the existence of a contract between CTL and Eaglecliff.
Franks v Reuters Limited & Others 2003
In this case Mr Franks had a temporary worker agreement with First Resort Employment Agency. Mr Franks began his assignment with the client (Reuters) at the end of 1993. In August 1999, after almost 6 years on the assignment, Mr Franks’ assignment with Reuters was terminated.
Mr Franks brought claims for unfair dismissal, redundancy pay and damages for breach of contract. The Court of Appeal allowed Mr Franks’ appeal and remitted the case to an Employment Tribunal for them to look at the facts of the relationship between Mr Franks and Reuters in order to address the question of whether there was an implied contract of employment between Mr Franks and Reuters.
The Court of Appeal raised the question of whether sufficient length of service with a single client could give rise to an implied contractual relationship of employment between a client and an agency worker. The Court pursued the idea of an implied contract of employment between the client and the worker in the following two cases: Brook Street v Dacas and Cable & Wireless v Muscat.
Dacas v Brook Street (UK) Ltd 2003
Mrs Dacas worked as a cleaner on an assignment with Wandsworth Council from around 1996 to April 2001. Mrs Dacas was engaged by Brook Street under a temporary worker agreement. She was withdrawn from the assignment in April 2001 following an allegation that she had been rude to a visitor to the hostel where she worked.
The Employment Tribunal, as a finding of fact, held that Brook Street exercised considerable control of Mrs Dacas. Some of this control was in keeping with her contract which stated that she must co-operate with the staff and accept the direction, supervision and control of the client, and observe their rules and regulations. However, the Tribunal also noticed that some control was exercised by way of discipline. For example, Mrs Dacas was given a warning in August 2000. The Tribunal also found that there was mutuality of obligation in that Mrs Dacas had to attend the assignment at the hostel, if she was sick she had to notify her sickness and if she wished to have holiday she needed to book it with them.
However the Tribunal found that the control and mutuality of obligation that arose was consistent with the temporary worker’s agreement and no more onerous in respect of the assignment with Wandsworth Council than with any other assignment. They therefore concluded that Dacas was not the employee of either the Council or Brook Street.
The Employment Appeal Tribunal overturned this decision, stating that where a Tribunal makes a finding of control and mutuality of obligation this must lead them to conclude that a contract of employment subsisted between the two parties. The EAT said that Mrs Dacas was the employee of Brook Street.
Brook Street decided to appeal this ruling to the Court of Appeal. Initially Mrs Dacas’ case had only been brought against Brook Street. Although not joined in the proceedings the Court of Appeal asked for Wandsworth Council (the client) to be represented at the hearing since the court wished to consider the client’s role.
The Court of Appeal came to the unanimous decision that Mrs Dacas was not an employee of Brook Street. This was because they found that Brook Street was under no obligation to provide Mrs Dacas with work, nor was she under any obligation to accept the work offered. The mutuality of obligation necessary for a contract of employment was not present. In terms of control Brook Street exercised very little day-to-day control over Mrs Dacas’s work and therefore no contract of employment existed. As a result the Court concluded that Mrs Dacas could not be an employee of Brook Street.
With regards to Wandsworth Council (the client) the majority of the Court were of the view that an implied contract of employment had probably arisen between Mrs Dacas and Wandsworth. The reason that this implied contract may have arisen was because of the conduct of both parties over the years. Essentially given the control that Wandsworth had showed in their dealings with Dacas it was the Court of Appeal’s view that the Employment Tribunal should have looked further into the nature of the relationship between Dacas and Wandsworth in order to assess whether an implied contract of employment had arisen.
This case is very important for employment agencies given that it places the emphasis on the end user (i.e. the agency’s client) and its relationship with the worker. It is now more likely, following this decision, that Tribunals will focus on whether an implied contract of employment has arisen between the client and the worker rather than the agency and the worker. The Court held that “the fact that the obligations were contained in express contracts made between Mrs Dacas and Brook Street and Brook Street and the Council does not prevent them from being read across the triangular arrangements into an implied contract and taking effect as implied mutual obligations as between Mrs Dacas and the Council”. In short the Dacas case is authority that clients are at an enhanced risk that agency workers may be deemed to be implied employees of clients.
Cable & Wireless v Muscat 2005
Mr Muscat, a Limited Company Contractor, supplied his services through an employment business to C&W. In the case, the EAT found that the approach taken by the Court of Appeal in Dacas v Brook Street 2004 was binding on Employment Tribunals and upheld an Employment Tribunal’s finding that Mr Muscat was an implied employee of C&W.
Mr Muscat was an employee of EIL Ltd, a telecoms company. In October 2001, just before a take over of EIL by C&W, Mr Muscat was advised by his employer that in order to facilitate a buy out of EIL, they needed to reduce headcount and that he would have to be made redundant and become a designated contractor via a limited company. Mr Muscat was made redundant, but continued to be engaged as an independent contractor supplying his services through a Limited Company called E-Nuff Ltd to EIL. The EAT found that although Mr Muscat had changed his contractual status from an employee to a Contractor, in all the circumstances he was still was an implied employee of EIL at this stage. C&W took over EIL Ltd and due to the operation of TUPE, Mr Muscat’s employment transferred from EIL Ltd to C&W. In April 2002 C&W informed Mr Muscat that he would have to provide his services through an employment business Abraxas, rather than directly through his own limited company. In this regard the relationship became a quadrangular one: Mr Muscat had a contract with E-Nuff, E-Nuff had a contract with Abraxas; Abraxas had terms of business with C&W. The contracts were drafted to avoid an employment relationship and provided for E-Nuff Ltd to have a right of substitution.
Mr Muscat’s services were terminated and he subsequently claimed unfair dismissal against C&W. The Employment Tribunal followed the Dacas case and on the facts found an implied employment contract between Mr Muscat and C&W. Mr Muscat’s position was strengthened by the fact that he had started with EIL Ltd as an employee and although his contractual arrangements with EIL and C&W had changed over time, the essential nature of the work he carried out and the fact he was under their direction and paid for work done did not change. C&W appealed the decision.
The EAT considered whether they were bound by the Dacas decision. C&W argued, amongst other things, that Dacas was decided per incuriam i.e. the Court of Appeal had not properly considered earlier precedent case law when deciding whether a contract could be implied in these circumstances. The EAT however stated “it would be a brave Employment Tribunal” that decided it should not follow the decision of the Court of Appeal in Dacas. They considered the Dacas case was binding on them and other Employment Tribunals and went on to say, “The commercial reality of the case was that to all intents and purposes Mr Muscat was working for Cable & Wireless not Abraxas (the employment agency) and not E-Nuff (his service company)”.
Employment Appeal Tribunal came to this decision because, “In our opinion the majority of the Court of Appeal seem to us to have taken a conscious decision to extend radically the circumstances in which a contract of employment might be implied. It considered that such a contract should be implied in circumstances where otherwise the ‘contractor’ would be employed by no one, and was as a matter of commercial reality, the employee of the ‘end user’”.
Cable & Wireless appealed but the Court of Appeal dismissed their appeal stating that 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.
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.
Case law: there is sufficient mutuality of obligation (i.e. an obligation to offer or accept work) between the worker and the employer
Clarke v Oxfordshire Health Authority 1998
In January 1991 Mrs. Clarke joined the Oxfordshire Health Authority’s nurse bank as a staff nurse. The nurse bank was a pool of nurses used to fill temporary vacancies in hospitals administered by the Authority and Mrs. Clarke was part of the nurse bank for 3 years until she was dismissed. She claimed unfair dismissal. The Tribunal had to decide whether Mrs. Clarke was an employee of the Authority or whether she was self-employed. In this case the Tribunal was not looking at whether a contract of employment existed in relation to a particular assignment but whether there was a global contract of employment covering all assignments and the periods between assignments.
Her terms of engagement entitled “Statement of Employment”, set out her hours of work as being up to 37.5 per week; that there was no guarantee of work and no payment for hours not worked; that she was responsible for reporting to a particular nurse; and set out the grievance and disciplinary procedures which applied. There was no period of notice and the Statement of Employment did not identify any particular place of work.
The Tribunal found when considering Mrs. Clarke’s terms in total, that there was no mutuality of obligation, since there was no obligation on her to accept work offered or on the Authority to offer her work. It also found that if the Authority did not offer her any work there was no action Mrs. Clarke could take to require them to do so and she had no entitlement to pay when she did not work. On balance therefore it found no global employment relationship existed.
This decision was overturned by the Employment Appeal Tribunal. The Authority then appealed the matter to the Court of Appeal which agreed with the findings of the Industrial Tribunal and overturned the EAT’s decision. It agreed that there was no global contract of employment between Mrs Clarke and the Authority and stated that in order for there to be such a contract some mutuality of obligation between the parties had to exist between assignments.
Carmichael and Leese v National Power PLC 1998
Mrs. Carmichael and Mrs. Leese worked as guides at Blyth Power Station in Northumberland between 1989 and 1994. They were employed as “casual” workers on an “as required” basis. It was not full time work but when they were offered work they usually accepted and were paid for the number of hours they did. They brought a complaint to the Industrial Tribunal on the basis that, as employees, they were entitled to a written statement of terms of employment and National Power had not supplied them contrary to Section 1 Employment Rights Act 1996. National Power defended the claim on the basis that they were not entitled to a written statement of terms under the employment legislation because they were not employees.
The Tribunal looked at the agreements between the parties and held that there was no mutuality of obligation. National Power were not obliged to use Carmichael and Leese for tours, and nor were they obliged to provide work when there were no tours booked. Similarly Carmichael and Leese were not obliged to work if they did not wish to. The case was appealed to the EAT and the Court of Appeal before finally reaching the House of Lords.
The House of Lords took the view that the agreement entered into at the start of the arrangement between Carmichael and Leese and National Power did not give rise to any obligation on the part of National Power to provide casual work nor on the part of Carmichael and Leese to undertake it. Thus there was no minimum level of mutuality necessary to create an employment relationship. There was nothing in the agreement between National Power and Carmichael and Leese, which provided how, when or with what frequency work would be offered by National Power. In addition there was no provision for notice of termination on either side, and no provisions relating to sickness, holiday or pension arrangements which were in place for regular staff. In addition the documentation made no mention of grievance and disciplinary procedures.
It was also significant that both workers, although worked when asked to, were not always available for work and on several occasions both workers had declined offers of work. There was no record of either having been disciplined on any of these occasions. They were not therefore employees and not entitled to a statement of terms and conditions under the Employment Rights Act.
Case law: the worker agrees to be subject to a sufficient degree of control by the employer over how, when and where they do their work
Motorola Limited v Davidson and Melville Craig Group Limited (2000)
In November 1996 Mr Davidson saw an advertisement placed by Motorola Limited for staff. He applied for a position and was taken on to work at the Motorola site but via an employment business, Melville Craig Group Limited. Their terms and conditions stated that Mr Davidson was a temporary worker engaged under a contract for services with Melville Craig Group Limited. Davidson worked at the Motorola site until December 1998, when he was suspended and later terminated by Motorola following a disciplinary hearing. Mr Davidson brought a claim for unfair dismissal against Motorola.
Motorola argued that Mr Davidson was not entitled to pursue his claim because he was not employed by them. The Employment Tribunal reached a unanimous decision that Mr Davidson had been employed by Motorola and was, therefore, entitled to pursue his claim against them. Motorola Limited appealed on a single ground, that they did not exercise sufficient control over Mr Davidson to give rise to an employee/employer relationship.
The Employment Appeal Tribunal (EAT) observed that there were a number of factors that suggested that Motorola had effective control over Mr Davidson. Mr Davidson worked at Motorola’s site, he received instructions from Motorola’s employees, used Motorola’s tools, wore a company uniform and was obliged to book holidays and raise any grievance with a supervisor employed by Motorola. Finally, it was Motorola Limited’s own staff that suspended Mr Davidson and went on to terminate his assignment.
Motorola Limited argued that these facts were irrelevant and the key factor was whether Motorola Limited had legal power to control Mr Davidson. They argued they did not since Mr Davidson could, at any time, choose not to work for them without breaching a contract with them. Further they pointed out that it was Melville Craig Group that had a contractual power to control Mr Davidson and that they could have removed him from Motorola’s site at any time and assigned him elsewhere.
The EAT found that Mr Davidson’s so called “freedom” to work where he wished was more theoretical than it was real since under the contract with Melville Craig Group Limited he was obliged to attend work at Motorola’s request. The EAT stated that Motorola’s practical control of Mr Davidson could not be ignored for the purposes of the control test even though Motorola Limited had no direct legal right over Mr Davidson.
In this case the EAT were only asked to examine the question of control. When concluding that the “control” test had been satisfied, the EAT stated “as to whether we would have concluded, more widely [that Mr Davidson was an employee], as in the Employment Tribunal, we say nothing”. This is a technical but important point. The point that Motorola appealed was whether or not it exercised sufficient control over Mr Davidson to be his employer and not whether they were actually his employer. This case therefore provides a useful guide to the interpretation of the “control” test for the purposes of determining whether an employment relationship exists but does nothing further.
Bunce v Postworth Ltd t/a Skyblue 2005
Bunce v Skyblue is significant as it is extremely helpful support for the view that an employment business using properly drawn terms of engagement is not the employer of a temporary worker who is sent to work under the control of a client.
Skyblue, an employment business, engaged Mr Bunce on a contract for services, as a temporary worker to carry out welding work for a number of their clients on a regular basis. In the 52 weeks before his engagement was terminated by Skyblue, Mr Bunce had worked on 142 assignments, the majority of which were for a particular client, Carillion Rail. On termination of his assignment, Mr Bunce claimed unfair dismissal against Skyblue and Carillion Rail.
On appeal to the Court of Appeal, Mr Bunce sought to claim that he was an employee of Skyblue, by arguing that the terms and conditions of the general agreement between him and the agency comprised an implied 'umbrella' contract of employment, and that, in addition to this, a further contract between him and the agency came into being each time he was sent on an assignment.
The Court of Appeal accepted that there may, in certain circumstances, be an umbrella contract of employment with an agency, however they rejected the argument that this was so in this case.
When Skyblue supplied Mr Bunce to its clients, the contract and the reality of the situation provided that he would be under the direct control, supervision and direction of the client during the assignment. The Court rejected the argument put by Mr Bunce’s representatives that the client’s day-to-day control originated in the contractual terms between Skyblue and their client, and Skyblue had sufficient control akin to that of an employer through delegation. Keene LJ decided that 'control' over Mr Bunce's work resided not with the agency but with the end-user or client. He stressed that the law in this area has “always been concerned with who in reality has the power to control what the worker does and how he does it. In the present case, during those periods that the appellant was working on an assignment, it was the client, the end-user, who had the power to direct and control what he did and how he did it”. It followed that Mr Bunce’s claim of employment status against Skyblue was dismissed.
Case law: the worker is required to personally perform his services and cannot provide a substitute
Express & Echo Publications Ltd v Ernest Tanton 1999
In this case the Court of Appeal found in favour of the company and held that Mr. Tanton was in fact a self-employed driver. In reaching its decision the Court of Appeal stated that an employer/employee relationship could not exist where a person was not required to personally perform his services. They placed great emphasis on a clause that allowed Mr. Tanton to use a substitute driver at his own expense and concluded that although he had not agreed to the clause initially he had actually used it to his benefit by having a substitute driver on occasions when he was sick.
Glasgow City Council v (1) McFarlane (2) Skivington 2001
By contrast, local authority gym instructors were held to be employees despite having contracts stating they were self-employed. The Employment Appeal Tribunal distinguished their situation from that of Tanton because essentially they were required to perform the work personally and were only entitled to send a substitute if they were unable to work. They had to choose from a list of registered instructors and the Council paid the substitute directly.
Usetech Limited v Young (HMIT) 2004
Many limited company contractors specifically request the inclusion of a right of substitution in their contracts with employment businesses to avoid creating an employment relationship for tax purposes. This case held that the reality of the relationship between a contractor and the client will override the wording of a contract.
William Hood provided his services to ABB Vecto Gray (UK) Ltd as a software specialist via his company Usetech Limited through a contract between his company and a recruitment agency NES International Limited. The contract gave Usetech the right to substitute Mr Hood’s services with that of another and provided that there was no obligation on ABB to provide work for Mr Hood. Usetech therefore argued that the income received for Mr Hood’s services to ABB was not income derived from employment (as opposed to self-employment) and that the Inland Revenue had therefore wrongly decided that it was subject to deductions for income tax and national insurance contributions under IR35.
The Court considered that the legislation envisaged only one contract between the contractor, Usetech Ltd and its client ABB and although the interposition of the agency, NES complicated matters the contracts had to be looked at as if there was one contract. Mr Justice Parker came to the conclusion that had Mr Hood had a contract personally with ABB to provide his services there would not have been a provision allowing him to substitute another. On the question of whether there was mutuality of obligation between ABB and Mr Hood sufficient to lead to a relationship of employer/employee for tax purposes, the Judge concluded that this might be satisfied by the obligation on Mr Hood to work and on ABB to pay him for that work.
Therefore the issue is whether the individual, in reality would be allowed to substitute another person to do the work on his behalf. If not then he may be an employee provided all the other criteria for a contract of employment can be established.
Case law: the terms are not inconsistent with a contract of employment
McMeechan v Secretary of State for Employment 1995
This was the first case in which the Employment Appeal Tribunal found that a temporary worker was the ‘employee’ of the employment business despite being engaged under a contract which was stated to be a contract for services.
Mr. McMeechan had been working as a temporary worker through Noel Employment for almost a year on various assignments when Noel Employment became insolvent during one of his assignments. Mr. McMeechan sought to recover unpaid earnings for his last assignment from the State Redundancy Fund under Section 122 of the Employment Protection (Consolidation) Act 1978. The Department of Employment refused his claim on the basis that he was not an employee and could not therefore claim from the redundancy fund. The Industrial Tribunal ruled that as a matter of law temporary workers could not be the employees of their agencies. Mr. McMeechan appealed to the Employment Appeal Tribunal (EAT) and the Industrial Tribunal’s decision was overturned.
In reaching a decision the EAT looked at the terms of McMeechan’s engagement with Noel Employment and, drew up a balance sheet of those contractual provisions which were consistent with an employment relationship and those which were not. McMeechan’s terms of engagement described him on the one hand as providing his services as a “self-employed" worker and not under a contract of service”. At the same however they also provided that he would be “instantly dismissed” for misconduct and that good performance would ensure his job security. In addition the terms of engagement provided for procedures the employment business would follow if the worker raised a grievance. Such provisions are more consistent with an employment contract. The EAT found that these provisions taken together were sufficient to override those that gave the temporary worker’s status as being that of a self employed worker.
The Secretary of State then appealed the EAT’s decision to the Court of Appeal. The Court of Appeal examined whether an employment relationship arose during a specific assignment and also whether an employment relationship could exist outside the specific assignment so that a global contract of employment arose between the employment business and the temporary worker between assignments. The Court of Appeal reaffirmed the EAT’s finding that Noel Employment’s terms gave rise to a contract of employment in relation to each specific assignment but on considering the issue of a “global contract” governing the periods between assignments, declined to make a definitive ruling.
This case shows that the Courts will only pay a limited regard to the term ‘contract for services’ and will look instead at the reality of the relationship as a whole in deciding whether an employment relationship exists between a temporary worker and employment business.
Case law: employment/worker status
Muschett v HM Prison Service
In this case, an agency worker, Mr Muschett, brought tribunal proceedings against an end user client that he had been supplied to arguing that he was in fact their employee.
His claim for unfair dismissal, sex, race and religious discrimination all rested on his ability to show that he was an ‘employee’ of HM Prison Service, to whom he was supplied by an agency as a cleaner for a period of less than four months. Here the Court of Appeal upheld earlier decisions to dismiss his claims on the basis that amongst other things he could not show that there was any contract between him and the client requiring him to provide his services personally. He was free to terminate his assignment with the client at any time by giving notice to the agency. The Court was satisfied that written contract for services between him and the agency that supplied him reflected the position between the parties and it was not necessary to consider whether there was an implied contract of employment between Mr Muschett and the client.
Additionally, Mr Muschett failed to convince the court that he met the wider definition of a contract worker. The absence of any obligation on his part to undertake the work personally for the client was a key factor. Much weight was placed on the fact that the agency or the client were permitted to terminate Mr Muschett’s contract at any time without notice or without liability and that Mr Muschett himself could also terminate the assignment at any time without notice or liability.
It will be encouraging for agencies to see from this case that the position regarding employment status as established in the key case of James v London Borough of Greenwich, still holds true. As was in the James case, Mr Muschett had a written contract for services with the agency and in the court’s view, the arrangements that he worked under were consistent with that written agreement. On this basis and in the absence of there being any mutuality of obligation between Mr Muschett and the end user client, the Court of Appeal reiterated the findings made in the case of James stating that it was not necessary to imply a contract of employment between the agency worker and the end user client.
Agencies and clients alike should take comfort in this decision. This also serves as a reminder of just how important it is for recruiters to have written contracts in place with the temps that they supply which clearly set out the working relationship and also how important it is that this does reflect that actual arrangements under which the temp works for the client.
Case law: independent contractor or worker?
Pimlico Plumbers v Gary Smith (Court of Appeal) (2017)
This case concerned a plumber, Gary Smith, who was working for a plumbing and maintenance company named Pimlico Plumbers between August 2005 and April 2011. In their agreement, Mr Smith was described as a “self-employed operative” and “independent contractor” where he was required to provide his own tools and equipment, as well as his own insurance. He also acknowledged personal liability for the work he performed and could decide his own working hours. Mr Smith, however, also drove a van with Pimlico’s logo, wore Pimlico uniform and could only contact customers through Pimlico’s “control room”. In Mr Smith’s agreement with Pimlico Plumbers, he was also obligated to work a minimum number of hours each week.
Following a heart attack in January 2011, Pimlico Plumbers terminated the agreement with Mr Smith. Mr Smith then brought a claim against Pimlico for unfair dismissal and wrongful dismissal (under the Employment Rights Act 1996), direct disability discrimination and discrimination arising from a disability (under section 13 and 15 of the Equality Act 2010) and finally, a claim for holiday pay (under regulation 13 of the Working Times Regulation 1998) and unauthorised wage deductions (under section 13 of the Employment Rights Act 1996). All of these claims could only succeed if Mr Smith was held to be an employee or worker, under the Employment Rights Act 1996. Opposing Mr Smith’s claim, Pimlico Plumbers sought to argue that Mr Smith was an independent contractor to which all of the aforementioned claims would fail.
Pimlico Plumbers appealed to the Employment Appeal Tribunal (EAT) on the continued ground that Mr Smith was an independent contractor and not a worker. The EAT upheld the ET’s decision however and concluded that Mr Smith was indeed a worker. The EAT explained that worker status can only be established if there is an obligation to personally provide work. This obligation is removed if there an ‘unfettered’ right to substitution (i.e. an unrestricted right to provide a substitute to undertake the same work). The EAT concluded that Mr Smith was only entitled to carry out ‘shift-swapping’ with other plumbers after seeking prior approval from Pimlico Plumbers and therefore did not have an unfettered right to substitution. Moreover, the fact that the agreement between Mr Smith and Pimlico Plumbers made no reference to this right to substitution also reinforced Smith’s status as a worker. Thus, the EAT dismissed Pimlico Plumbers’ appeal and Mr Smith’s cross appeal.
Pimlico Plumbers then appealed to the Court of Appeal (CA). The CA upheld both the ET and EAT judgments. It highlighted the fact that in the agreement between Pimlico Plumbers and Mr Smith, Mr Smith was obligated to work a minimum number of hours per week and there was no express right to substitute, which was held to be incompatible with the idea that Mr Smith was an independent contractor. The CA also explained that the express wording in the agreement between Mr Smith and Pimlico Plumbers suggested that Mr Smith was required to personally do the work himself. Thus Pimlico Plumber’s appeal, which attempted to establish Mr Smith’s status as an independent contractor, was dismissed.
The implications of this case are important as it draws attention to the modern-day business model (particularly as we move toward the ‘gig economy’) where many businesses seek to reflect to clients that individuals who work for them are employees or workers of the business but, in their contractual arrangements, seek to establish a strict relationship of independent contractor and customer/client as opposed to a relationship of employer and employee.
Case law: intermediaries and contracts with workers
Blakely v On-Site Recruitment Solutions Ltd
This was an appeal by B against an earlier ET decision which dismissed his claims for unlawful deduction from wages and holiday pay brought against On-Site and Heritage on the basis that he had no contract with On Site at all and that while he did have a contract with Heritage, he was not a ‘worker’ for the purpose of the ERA nor the WTR.
- B responded to vacancy advertised by On-site for a pipe fitter. He received information by text about the role from On-Site – name of the main contractor and the address of the site. He also received a text from them asking him to contact Heritage ‘for payment’ but (as set out in the judgment) ‘no one explained the precise nature of the proposed working arrangement to the Claimant before he commenced’.
- On-Site’s evidence was that they also sent B a letter on 20 Jan (the day he started the assignment) which said ‘we are pleased to confirm your temporary appointment for On-Site…and would like to confirm that you have chosen to sub-contract through Heritage Solutions, an approved supplier to On Site London Ltd.’ The letter purportedly also set out further assignment information, information about timesheets and H&S etc. and informed him that a copy of his passport was required for immigration purposes.
- B disputes this and gave evidence that he did not receive this letter.
- After starting work, he received payslips and pays from Heritage – deductions were made for various costs – a management fee and employers NI.
- Heritage sent him a contract that he did not sign as he was not happy with the terms. They threatened to withhold his wages if he did not sign. He didn’t sign, but did engage with his trade union (Unite).
- He worked on for a few months until, on B’s evidence, he took some holiday, but On-Site say he just did not turn up for work. Either way, he was told by On-Site that he was not required anymore. He subsequently issued his ET claims.
- His claims failed in the first instance. But the EAT accepted on appeal (as set out in this judgment) that the ET decision was ‘perverse’ – I agree. It seems odd that the ET concluded that there was no contract between On-Site and B when they advertised the role and provided him with initial job details. The question to me seems to be how On-site demonstrate that B then entered into a contract with Heritage.
- The case has been remitted to a fresh tribunal to hear the claim again, so this is not the end of the matter.
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