The employment status of temps has been at the centre of numerous cases and much academic debate for a number of years. A recent court decision involving Cable and Wireless has turned the spotlight back on this area of law. Following this closely watched case, what are the exact implications for employers of using agency workers?
Background
The agency worker will generally be in a triangular relationship, contracted to the agency but working for an end user. The arrangement does not fit in easily with the numerous tests that the courts have developed for establishing employee status.
However, in the case of Dacas v Brook Street Bureau (UK) Ltd 2004, the Court of Appeal suggested that problems relating to the lack of contractual documentation between the agency worker and end user could be overcome by the Tribunal implying a contract. It recommended that all the evidence relating to the relationships between the parties be examined, including written agreements, oral statements and the conduct of the parties and in the light of that evidence, consideration should be given to the possibility the worker had an implied contract of employment with the ‘end-user’.
The Cable and Wireless case
The case of Cable and Wireless v Muscat 2006 concerned the application of the guidance given in Dacas to reach a finding that a contract of employment should be implied.
The facts of the case were that Mr Muscat was employed as a telecommunications specialist. However the company he worked for was under pressure to reduce headcount before the sale of the business to Cable and Wireless. He was told that he would have to become a 'contractor' and then provide his services through a limited company.
To facilitate these new arrangements he was dismissed and immediately re-engaged as a contractor through an intermediary company that had been set up for the purpose of receiving his pay. Cable and Wireless subsequently took over the business, and Mr Muscat was told that C&W did not deal with contractors direct and that his intermediary company must therefore deal with their agency company.
Contracts were entered by which it was agreed that Mr Muscat would continue to provide services to Cable and Wireless as an ‘independent supplier’ and that nothing in the agreement should be construed as establishing a relationship of employee and employer.
A few months later Mr Muscat was told that his services were no longer required. He successfully claimed unfair dismissal after the Tribunal found that a contract of employment could be implied between him and Cable and Wireless.
On appeal, it was submitted that the Tribunal should not have followed Dacas as the guidance given in that case was wrong. A contract should only be implied in circumstances where it was necessary, and not where there were already in existence contracts that set out the arrangements for the working relationship between the parties. Equally it submitted that it was only appropriate to imply contract terms insofar as these did not contradict existing express terms.
The Court of Appeal dismissed the appeal. It held that the Tribunal had been entitled to take into account the guidance given in Dacas and find that there was a contract of employment between Cable and Wireless and Mr Muscat.
