Summary
Penn Legal welcome the judgement of the Court of Appeal in ruling that Mr Bunce, who was engaged on a contract for services with Potsworth Ltd (acting as an employment business) was not their employee.
Background
Mr Bunce was a welder engaged by Potsworth Ltd (Potsworth) on a fairly typical framework contract for services and was supplied to various railway maintenance companies.
Contractual Position
Potsworthís contract with Mr Bunce allowed him to refuse assignments, although it contained detailed provisions relating to his conduct when working for a client. It also required Mr Bunce to submit to the supervision and instructions of any client for whom he worked.
Employment Status
Mr Bunce complained of unfair dismissal when Potsworth terminated his contract. He took both Potsworth and their client to an Employment Tribunal claiming to have been the employee of either of them.
The Employment Tribunal held that Mr Bunce was neither employed by Potsworth or their client, he was instead self-employed.
First Appeal
Mr Bunce appealed the decision to the Employment Appeals Tribunal by claiming that he was an employee of Potsworth on the grounds that:
(1) Whilst the agreement between himself and Potsworth was not generally one of employment he was an employee when he was working because a contract with sufficient ëmutuality of obligationí arose upon accepting a particular assignment.
(2) Although his work may have been supervised by the client his work was undertaken pursuant to his contractual obligation to Potsworth. As Potsworth required him to accept the instructions of the client he argued that Potsworth were exercising control.
The Employment Appeals Tribunal dismissed his appeal, holding that there was no ëmutuality of obligationí and the element of ëcontrolí exercised by Potsworth was minimal.
Court of Appeal
The Court of Appeal upheld the judgment of the Employment Appeals Tribunal. The main points in their decision are that:
(A) Mr Bunces argument that a contract of employment arose when he accepted an assignment is incorrect. Although it is possible to have a framework agreement in which such relationships would develop this was not the way that the relationship between them was framed.
(B) Even if each assignment gave rise to a specific contracts the contract would not be one of employment since Potsworth lacked the required degree of control over Mr Bunce.
Opinion
This case adds to the growing body of case law showing that it is possible for a recruitment consultancy, acting as an employment business, to avoid being deemed to be the employer of a temporary worker.
It is particularly important to note that in this case the Court of Appeal held that the employment business lacked the necessary degree of control even though there were terms in the contract requiring the candidate to submit to the control of the client. Such clauses are common place in contracts between recruitment consultancies and candidates, and Mr Bunceís argument had been that this requirement was in itself a form of control.
Whilst this decision should be welcomed it is not all good news. This case does not roll back the decision in Dacas v Brook Street - which, although not technically binding, suggested that a client may be found to be the employer of the candidate. Clients are increasingly requiring employment businesses to indemnify them against claims that arise out of the client being found to be the employer of the candidate. Recruitment consultancies are unable to insure against such risks and should think very hard before agreeing to supply any candidate on that basis.
Penn Legal welcome the judgement of the Court of Appeal in ruling of Mr Bunce
Who was engaged on a contract for services with Potsworth Ltd (acting as an employment business) was not their employee
