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Chambers & Partners
09/04/2006

Cable & Wireless v. Muscat

Uncategorized

Court of Appeal

The employment tribunal had to consider on the whole of the evidence whether the legal consequences of the arrangements between worker, employment agency and end user included an implied contract of employment between the worker and the end user. The guidance given by the majority of the Court of Appeal in Brook Street Bureau (UK) Ltd v Dacas (2004) EWCA Civ 217, (2004) ICR 1437 was correct.

The appellant (C) appealed against the decision of the Employment Appeal Tribunal that a contract of employment was to be implied between C and the respondent (M). M had been employed as a telecommunications specialist by an internet company (E). E had dismissed M and then immediately re-engaged him as a contractor providing his services through a limited company. E had been taken over by C and M continued to work as before although under the direction of C's management. Within C's departmental structure M was described as an employee. C did not deal with contractors directly and had entered into an agreement with an agency to provide contract personnel. C therefore required M to deal with the agency and M's company accordingly entered into an agreement with the agency to provide services to C. Thereafter the agency paid M's invoices. C later dispensed with M's services and M claimed compensation for unfair dismissal. C maintained that M was not an employee. The employment tribunal held that M had continued to be employed by E after he became a contractor, that M had become an employee of C after C's takeover of E, which was subject to the Transfer of Undertakings (Protection of Employment) Regulations 1981 , and that M remained an employee by virtue of an implied contract. C submitted that there could not be a contract of employment between it and M, even though it exercised control, since the agency was responsible for paying M and there was therefore insufficient mutuality of obligation between it and M.

HELD: In a typical "triangular" case, the employment tribunal had to consider on the whole of the evidence whether the legal consequences of the arrangements between worker, employment agency and end user included an implied contract of employment between the worker and the end user, Brook Street Bureau (UK) Ltd v Dacas (2004) EWCA Civ 217 , (2004) ICR 1437 applied. The requirement for mutuality of obligation could be satisfied where the obligation to remunerate did not lie on the person having control of the worker's work so long as the remuneration was being provided by the employer albeit indirectly. Dacas was not authority for the proposition that in the circumstances there must be a finding of an implied employment contract: it only gave guidance to employment tribunals to consider the possibility that an implied contract might exist. That guidance was correct. The contract for services between M's company and the agency did not preclude the existence of an implied contract between M and C, Stevedoring and Haulage Services Ltd v Fuller (2001) EWCA Civ 651 , (2001) EWCA Civ 651 distinguished. In the instant case it was possible to infer a contract of employment by examining the conduct of M and C. The case was particularly clear because of the existence of a contract of employment between M and E and the transfer of that contract on the takeover. It was necessary to infer the existence of an employment contract in order to give business reality to the arrangements in operation and to create enforceable obligations in circumstances where one would expect to find that they existed, The Aramis Independent, December 9, 1988 applied. The decision of the employment tribunal had been correct according to established law.

Appeal dismissed.

[2006] ICR 975; [2006] IRLR 355
CONTRACT OF EMPLOYMENT : EMPLOYMENT AGENCIES : EMPLOYMENT STATUS : IMPLIED CONTRACTS : UNFAIR DISMISSAL

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