Emerging Markets Partnership (Europe) Ltd v Bachnak

Whether parties created a contract of service depends on the substance and combined effect of their arrangements, not merely on the labels used in separate documents. Contemporaneous agreements between related parties must be read together where they form part of one transaction and are capable of co-existing. A services agreement with a company does not necessarily exclude a contract of employment between the individual and the client. The absence of an express term specifying remuneration in the employment document is not, by itself, fatal. The consideration may emerge from the surrounding circumstances, from terms outside that document, or from a non-monetary arrangement. The tribunal must construe the documents in their factual context and determine the parties’ actual contractual relationship.

Mr Bachnak had been employed by Emerging Markets Partnership (Europe) Ltd as an investment officer. After his employment was terminated, the parties entered into two linked agreements for a fixed period. One was an Advisory Agreement between his one-man company, Meyerowitz Bachnak (UK) Ltd, and associated investment funds. The other was a purported fixed-term employment agreement between Mr Bachnak and EMPEL.

Following termination of both arrangements, Mr Bachnak brought claims including unfair dismissal. The employment tribunal held that he was not an employee within the meaning of the Employment Rights Act 1996 and could not pursue his unfair-dismissal claim. The Employment Appeal Tribunal allowed his appeal and remitted the matter, holding that the two agreements had not been properly analysed together. EMPEL appealed to the Court of Appeal. The central issue was whether the arrangements, considered in context, created a contract of service between Mr Bachnak and EMPEL.

1. Appeal dismissed. The employment tribunal’s decision could not stand because it failed to address the central fact that the two contemporaneous agreements were linked, could co-exist and had to be read together. The respondent’s claim was remitted to a differently constituted employment tribunal.
2. The tribunal had to ascertain the combined effect of the documents by construing them in the context of all the surrounding circumstances. Relevant matters included the connection between Mr Bachnak’s immigration position and his employment, and the link between the October 2000 arrangements made for Meyerowitz Bachnak (UK) Ltd and those made for Mr Bachnak personally.
3. The guidance in Express & Echo Publications Ltd v Tanton [1999] IRLR 367 concerned the classification of an existing contract. It did not resolve the distinct issue whether a purported employment agreement existed alongside a services agreement between other related parties. Unless the employment agreement was a sham, the tribunal had to consider whether both agreements were valid and co-existing.
4. The absence of an express term stating the form or level of monetary remuneration was not, by itself, fatal to a contract of service. The consideration might be identified from the surrounding circumstances, from terms outside the express employment document, or in another form.
5. The Court declined to determine employee status itself on a late respondent’s notice. The tribunal was invited to consider whether the claim should proceed directly to a full hearing to avoid further delay.

• Court of Appeal (Civil Division): appeal dismissed; the respondent’s claim was remitted to the employment tribunal and costs were awarded to the respondent.
• Employment Appeal Tribunal: on 25 March 2003, allowed Mr Bachnak’s appeal from the employment tribunal and remitted the matter for redetermination by a fresh tribunal.
• Employment Tribunal: at a preliminary hearing, held that Mr Bachnak was not an employee within the meaning of the Employment Rights Act 1996 and could not pursue his unfair-dismissal claim.