Emerging Markets Partnership (Europe) Ltd v Bachnak

The Court of Appeal dismissed the employer's appeal and upheld the Employment Appeal Tribunal's conclusion that the Employment Tribunal's reasoning was inadequate and could not stand. The court held that two contemporaneous agreements entered into on 23 October 2000 (an Advisory Agreement between the claimant's one‑man company and the employer's funds, and a separate written document described as "fixed term employment" between the claimant and the employer) had to be read together. The tribunal erred in law by treating the documents in isolation, by failing to analyse whether both contracts could co-exist, and by concluding there was no contract because the fixed term employment document did not expressly specify monetary payments. The absence of an express provision for payment was not, of itself, fatal to the existence of a contract of service; the surrounding evidence might identify consideration.

Background and parties. The claimant, Mr Bachnak, a Slovak national, had been employed by Emerging Markets Partnership (Europe) Ltd (EMPEL) and, after termination, entered into two contemporaneous arrangements on 23 October 2000: an Advisory Agreement between his one‑man company Meyerowitz Bachnak (UK) Limited (MB) and certain associated funds, and a separate document described as "limited scope, fixed term employment" between Mr Bachnak and EMPEL. The claimant brought proceedings for unfair dismissal, unlawful deduction from wages and breach of contract after EMPEL terminated the arrangements.

Procedural posture. The Employment Tribunal held at a preliminary hearing that Mr Bachnak was not an employee within the meaning of the Employment Rights Act 1996. The Employment Appeal Tribunal allowed Mr Bachnak's appeal and remitted the matter for re‑determination. EMPEL obtained permission and appealed to the Court of Appeal.

Nature of the claim. The claimant sought to pursue an unfair dismissal claim (and related claims) on the basis that he was an employee of EMPEL after the 23 October 2000 arrangements.

Issues framed.

• Whether a contract of employment existed between EMPEL and Mr Bachnak after 23 October 2000.
• Whether the Advisory Agreement and the fixed‑term employment document should be considered together or whether the existence of the Advisory Agreement negatived any employment contract.
• Whether the absence of an express provision for remuneration in the fixed‑term employment document was fatal to the existence of any contract (consideration and mutuality of obligation).

Court's reasoning. The Court of Appeal agreed with the Employment Appeal Tribunal that the Employment Tribunal had failed to analyse the two documents together and had therefore erred in law. The court held that, since neither side alleged the documents were a sham, the parties plainly intended contractual relations; whether that intention was given effect required consideration of the documents in their factual matrix (including the claimant's immigration position and the link between the two arrangements). The court further held that an absence of express reference to the form or level of monetary payments in the fixed‑term employment document was not necessarily fatal: consideration may be identified from the circumstances or in some other form than direct payments to the claimant. The Court declined a late application to determine the employment status itself and remitted the matter to a differently constituted Employment Tribunal (or for the parties to invite a full hearing).

Result. Appeal dismissed and the respondent's claim remitted to the Employment Tribunal; costs awarded to the respondent.

Appeal dismissed. The Employment Tribunal's decision could not stand because it failed to consider the two contemporaneous agreements together and omitted the necessary factual analysis of whether the parties had given effect to their intention to enter a contract of service. The absence of an express provision for monetary payments in the fixed term employment document was not necessarily fatal to the existence of a contract of service; consideration might be established from the surrounding circumstances. The case was remitted to a differently constituted Employment Tribunal.

Employment Tribunal (preliminary hearing; reasons dated 17 July 2001) found claimant was not an employee. Employment Appeal Tribunal (judgment 25 March 2003) allowed the claimant's appeal and remitted the matter for re-determination. Court of Appeal (this judgment) dismissed EMPEL's appeal and remitted the claim to the Employment Tribunal. Neutral citation for the Court of Appeal judgment: [2003] EWCA Civ 1876.