Bunce v Postworth Ltd (t/a Skyblue)

This Court of Appeal dismissed an appeal challenging the Employment Appeal Tribunal's upholding of an employment tribunal finding that the claimant was not an "employee" for the purposes of the Employment Rights Act 1996. The court applied the statutory definitions in sections 230 and 94 of the 1996 Act and established that the critical features for a contract of service are an "irreducible minimum" of mutuality of obligation and the presence of control.

The court found that the written "umbrella" agreement between the claimant and the employment agency (Skyblue) did not create a contract of service. The claimants argument that separate contracts of service arose for each assignment was rejected because the umbrella document comprehensively regulated assignments and, in any event, the actual day-to-day control over the claimant during assignments rested with the end-user client. The origin of that control in a clause of the umbrella agreement did not suffice to attribute the requisite control to Skyblue.

The appellant was a welder supplied by an employment agency, Skyblue, who brought a claim for unfair dismissal after Skyblue ended the relationship following client complaints. The claim alleged that he was an "employee" of Skyblue and so entitled to protection under the Employment Rights Act 1996. Procedurally the claim was considered by an employment tribunal which found no contract of service with Skyblue; that decision was upheld by the Employment Appeal Tribunal and was the subject of this appeal to the Court of Appeal.

Nature of the claim/application: an unfair dismissal claim under the Employment Rights Act 1996, asserting employee status.

Issues framed by the court:

• whether the written umbrella agreement created a contract of service between the appellant and Skyblue;
• whether separate contracts of service arose in respect of each assignment accepted by the appellant;
• whether control over the appellant's work, in substance exercised by the end-user client but originating in a clause of the umbrella agreement, was sufficient to render Skyblue the employer.

Court's reasoning: The court accepted that, in principle, a master or umbrella agreement and separate assignment contracts can coexist, but emphasised that the detailed umbrella agreement here governed pay, conduct and health and safety on each assignment, leaving little room for separate assignment contracts with Skyblue. Even if separate assignment contracts existed, a contract of service requires the irreducible minimum of mutuality of obligation and sufficient control. The tribunal and the EAT had found a lack of mutuality and that day-to-day control during assignments rested with the client. The Court of Appeal held that the mere contractual origin of the client's control in Skyblue's umbrella agreement did not mean Skyblue had the requisite power of control; delegation of control to the client did not make Skyblue the employer. The appeal was therefore dismissed.

The court also observed the wider policy consequence that agency workers who work regularly may lack statutory protection from unfair dismissal because the qualifying requirements of the 1996 Act are not satisfied, and that this is a matter for Parliament rather than judicial intervention.

Appeal dismissed. The court held that the umbrella agreement did not create a contract of service with Skyblue and that, even if separate assignment contracts existed, Skyblue lacked the necessary day-to-day control and there was insufficient mutuality of obligation for a contract of service. The origin of client control in a clause of the umbrella agreement was insufficient to render Skyblue the employer.

Appeal from the Employment Appeal Tribunal (EAT) which had upheld the employment tribunal's decision that the claimant was not an employee of Skyblue; EAT reference: A2/2004/1551 EATRF. The appeal was heard by the Court of Appeal, reported at [2005] EWCA Civ 490.