Dacas v Brook Street Bureau (UK) Ltd

The Court of Appeal considered whether a cleaner supplied through an employment agency was an employee of the agency, the end-user (the local authority) or of no one for the purposes of unfair dismissal under the Employment Rights Act 1996. The court applied the statutory definition of "contract of employment" in s 230 and the classic common law tests (mutuality of obligation and control) derived from Ready Mixed Concrete and related authorities.

The court held that the written "Temporary Worker Agreement" between the worker and the agency was not a contract of service: Brook Street did not undertake to provide work and the worker was not obliged to accept work, so there was no umbrella contract of employment with the agency. The Employment Tribunal had, however, failed to consider the possibility of an implied contract of service between the worker and the Council (the end-user) and should have addressed that issue. The Employment Appeal Tribunal's conclusion that the worker was employed by Brook Street was set aside; Brook Street's appeal was allowed.

This dispute arose from a four-year working relationship in which Ms Dacas, a cleaner, performed regular duties at a Council-run hostel after being supplied by Brook Street. She brought unfair dismissal proceedings after her work was terminated. The Employment Tribunal found she was not an employee of Brook Street and that there was no contract between her and the Council. The Employment Appeal Tribunal reversed that decision, concluding that the only conceivable finding was that she was employed by Brook Street under a contract of service.

The Court of Appeal heard Brook Street's appeal. The issues framed by the court were: (i) whether the worker was an employee of the agency, (ii) whether she was an employee of the end-user, and (iii) whether she was not an employee at all. The court analysed the statutory definition of "employee" in s 230(1)-(2) and the right not to be unfairly dismissed under s 94 of the Employment Rights Act 1996, and reviewed the relevant common law tests (mutuality of obligation and control) and authority on triangular arrangements involving agencies and end-users.

The court concluded (a) that the express Temporary Worker Agreement with Brook Street was not a contract of service because Brook Street had no obligation to provide work and the worker had no obligation to accept work; (b) the Employment Tribunal erred in failing to consider whether, on the facts, an implied contract of service could be inferred between the worker and the Council; and (c) the Employment Appeal Tribunal’s finding that Brook Street was the employer was not sustainable. The appeal by Brook Street was therefore allowed. The court observed that, had the claim against the Council been appealed by the worker, it would have been open to remit that matter to the Employment Tribunal to determine whether an implied contract of service existed between the worker and the Council. The judgments emphasised the wider legal difficulty posed by triangular arrangements and advised that tribunals should consider implied contracts between worker and end-user where appropriate.

Appeal allowed. The Court of Appeal held that the Temporary Worker Agreement between the cleaner and Brook Street was not a contract of service and that the Employment Appeal Tribunal had been wrong to treat Brook Street as the employer. The Employment Tribunal had failed to consider the possibility of an implied contract of service between the cleaner and the Council; that issue should have been investigated in appropriate proceedings, but no appeal against the tribunal's dismissal of the claim versus the Council had been taken.

Employment Tribunal (London South) — initial decision dismissing claim for lack of employee status (extended reasons sent 9 April 2002). Employment Appeal Tribunal — allowed Ms Dacas' appeal and held she was employed by Brook Street (judgment sent 20 January 2003). Court of Appeal — Brook Street's appeal allowed ([2004] EWCA Civ 217, 5 March 2004).