In the recently decided case of Cable and Wireless plc v Muscat, the Employment
Appeals Tribunal (EAT) has held that employment tribunals and the EAT are bound
by the ruling by the Court of Appeal in Dacas v Brook Street Bureau. The case
impacts employment law relating to employment status, agency workers and implied
contracts of employment.
Agency employment relationships are often referred to as triangular as there
are three contractual relationships: firstly between the employment business
and the client; secondly between the employment business and the agency company;
and thirdly the law may imply a contract relationship between the agency worker
and the client. An agency worker may argue an implied contract exists as the
statutory rights available to employees offer far greater protection, and specifically,
only employees have the right not to be unfairly dismissed.
In Dacas, the Court of Appeal held that the employment business was not the
employer however a majority of the court stated it would have implied a contract
of employment between Mrs Dacas and the client. The court said that employment
tribunals should always consider the possibility of an implied contract of
service between an agency worker and client.
In Muscat, the tribunal held that an implied contract existed. Cable and Wireless
appealed, however the EAT upheld the tribunal's decision. The EAT held that
the Court of Appeal in Dacas had taken a "conscious decision to extend
radically the circumstances in which a contract of employment might be implied".
This extension refers to circumstances in which an agency worker would otherwise
have no employer (in Dacas, there was an express provision in the contract
of employment stating that Mrs Dacas was employed neither by the employment
business nor the client). The extension would apply where, as a matter of commercial
reality, the agency worker was an employee of the client.
The EAT has indicated that, for now, tribunals ought to bear the comments
of the Court of Appeal in mind. This will remain the case until the issue is
considered further if the decision is appealed to the Court of Appeal.