Iles v Ross Newton Associates (t/a Ross Newton Recruitment)

Permission to appeal should ordinarily be granted where the proposed appeal has a real prospect of success based on an error of law. An appeal does not lie merely against findings of fact. Whether an agency worker is employed by the agency depends on ordinary contractual principles. The special statutory provisions governing employment agencies do not determine whether a contract of employment exists. Where liability for redundancy depends on the ending of a specific engagement, the court may need to examine both the general engagement with the agency and the particular engagement with the client.

Mr Iles worked for GEC Alsthom Metro Cammell while on Ross Newton Associates’ books and was paid by the agency. After the engagement ended, he claimed redundancy payment and pay in lieu of notice, naming the agency as his employer.

The Employment Tribunal dismissed the claim, finding that Mr Iles was not an employee of the agency. The Employment Appeal Tribunal allowed his appeal, holding that the Employment Tribunal had applied the wrong legal test and finding a contract of service. Ross Newton Associates applied for permission to appeal. The central issue was whether the proposed appeal had a real prospect of success and raised an error of law.

1. Permission granted. The application was allowed and the applicant was directed to lodge its notice of appeal within 28 days.
2. Permission to appeal should ordinarily be granted only where the proposed appeal has a real prospect of success. The appeal must identify an error of law by the Employment Tribunal or Employment Appeal Tribunal. There is no appeal against findings of fact.
3. The proposed appeal raised an arguable issue concerning the legal relationship between an employment agency, an agency worker and the client for whom the work was performed. The terms of service described the relationship as a contract of service, the agency paid wages after deductions for PAYE and National Insurance, and the general conditions imposed duties commonly associated with employment.
4. Whether a contract of employment exists is determined by ordinary contractual principles. The statutory provisions governing employment agencies, including the Employment Agencies Act 1976 and regulations made under it, were not relevant to that issue.
5. The reasoning in McMeechan did not resolve all aspects of the proposed appeal. Further clarification was required concerning the interaction between a general engagement with an agency and a specific engagement with a client, particularly where redundancy liability followed the ending of the specific engagement. The judge expressly stated that this did not mean the appeal would succeed.

No direction was made concerning a pending Employment Tribunal hearing on redundancy pay. The court drew attention to the ordinary costs consequences of an appeal in the Court of Appeal.

• Court of Appeal (Civil Division): Permission to appeal granted from the decision of the Employment Appeal Tribunal. Notice of appeal to be lodged within 28 days.
• Employment Appeal Tribunal: Appeal by Mr Iles allowed. The Tribunal held that the Employment Tribunal had applied the wrong test and found that Mr Iles was employed by the agency under a contract of service.
• Employment Tribunal: Claim for redundancy payment and pay in lieu of notice dismissed on the basis that Mr Iles was not an employee of Ross Newton Associates.