JENNIFER LEE MONTGOMERY v JOHNSON UNDERWOOD LTD (2001)

[2001] EWCA Civ 318

CA (Civ Div) (Brooke LJ, Longmore LJ, Buckley J) 9/3/2001

EMPLOYMENT - CONTRACTS

TEMPORARY WORKER : INDEPENDENT CONTRACTORS : EMPLOYMENT AGENCY : WHETHER EMPLOYED BY AGENCY OR COMPANY : CONTRACT OF SERVICE : CONTROL : MUTUALITY OF OBLIGATION : INFERENCES TO BE DRAWN : PARTIES' INTENTIONS : TERMS OF AGREEMENT : CONTRACT OF EMPLOYMENT : EMPLOYER/EMPLOYEE RELATIONSHIP

In determining whether someone was an employee of a company, an employment tribunal had to identify whether mutuality of obligation and control existed.

The defendant company ('C1') appealed from the Employment Appeal Tribunal's decision that the claimant ('W') was an employee of C1.

C1 was an employment agency and C2 was one of its clients.

In the standard term contract produced by C1, W was described as a "Temporary Worker".

W worked for C2 as a receptionist, having been assigned there by C1.

Approximately two years later, at the request of C2, C1 gave W oral notice terminating her assignment with C2.

All W's day-to-day dealings were with C2, from whom she took directions as to her detailed working activities.

All underlying contractual matters were between W and C1, by whom she was paid on a PAYE basis.

The fundamental elements such as rate of pay, hours of work and holiday entitlement were largely determined under terms agreed between C1 and C2.

A witness for C1 gave clear evidence that temporary workers were employed by neither the client nor by C1 because the business was predicated upon them being independent contractors under a contract for services.

Conversely, tax legislation did not allow them to be treated as self-employed and therefore their status was unknown.

C1 submitted on its appeal that the tribunal had failed to identify the existence of "mutual obligations" and "control".



HELD: (1) The Ready Mixed Concrete (South East) Ltd v Minister of Pension and National Insurance (1968) 2 QB 497 case was still the best guide for determining the irreducible minimum by way of legal requirement for a contract of employment to exist.

The case permitted tribunals appropriate latitude to consider the nature and extent of "mutual obligations" in respect of the work in question and the "control" the employer had over the individual.

It did not permit the concepts to be dispensed with altogether.

(2) If Waite LJ in Secretary of State for Employment v Alan John McMeechan (1996) (1997) ICR 549 intended to reduce the criteria of "mutuality of obligation" and "control" to no more than matters to be weighed up with all the other factors, then the approach should not be followed and was wrong.

(3) There was no sign that the employment tribunal directed themselves that sufficient mutual obligation in respect of the work and control was required.

There was no reference to Ready Mixed Concrete (supra), and there was no real evidence of, and no finding that, an overall contract came into being.

(4) The Employment Appeal Tribunal, by its majority endorsement of the employment tribunal's decision, had erred in law.

(5) Given the circumstances of the case, it was appropriate for the Court of Appeal directly to find that W was not an employee of C1.

Appeal allowed.


Charles Samek instructed by Eyton Morris Winfield (Northampton) for C1. Rambert de Mello instructed by Murria Solicitors (Birmingham) for W.

LTL 9/3/2001 : (2001) ICR 819 : (2001) IRLR 269 : Times, March 16, 2001 : Independent, May 7, 2001

Document No. AC8800439

Source: Lawtel http://www.lawtel.co.uk , copyright acknowledged.