Bunce v Postworth Ltd (t/a Skyblue)

For an agency worker, an umbrella agreement may legally coexist with individual assignment contracts, but their existence depends on the agreement’s terms and the evidence. Detailed provisions governing assignments may leave little room for separate contracts. A contract of service requires an irreducible minimum of mutual obligation and control. The relevant control is the real power to direct what work is done and how it is done. A clause requiring obedience to the client does not give the agency sufficient control merely because the client’s power originates in the agency agreement. A worker is not an employee simply because he is not self-employed. Any resulting gap in employment protection is a matter for Parliament.

Mr Bunce worked as a welder after entering an agreement with Postworth Ltd, trading as Skyblue, an employment agency. He undertook assignments for Carillion Rail and other railway-maintenance companies. Following termination of the relationship, he brought an unfair-dismissal claim.

The employment tribunal held that he was not an employee of Skyblue or Carillion Rail and therefore had no jurisdiction. The EAT upheld the decision concerning Skyblue, finding no mutuality of obligation and insufficient control. The appeal concerned whether separate contracts arose for each assignment and, if so, whether they were contracts of service with Skyblue.

1. Disposition. The Court of Appeal dismissed the appeal. The employment tribunal had been entitled to conclude that Mr Bunce was not an employee of Skyblue.
2. Assignment contracts. Keene LJ accepted that an umbrella agreement between an agency and a worker may coexist with individual contracts for particular assignments. That possibility was recognised in O’Kelly v Trusthouse Forte plc [1983] I.C.R 728, McMeechan v Secretary of State for Employment [1997] I.C.R 549 and Clark v Oxfordshire Health Authority [1998] IRLR 125. Whether such contracts exist is a matter of construction and evidence. Here, the detailed agreement regulated pay, conduct and obligations during assignments, leaving little room for additional contracts between Skyblue and the appellant.
3. Contract of service. Even if an assignment contract had existed, it would have had to satisfy the irreducible minimum of mutual obligation and control, as reaffirmed in Dacas v Brook Street Bureau UK Limited [2003] IRLR 190 and Montgomery v Johnson Underwood Limited [2001] ICR 819. Control concerns the real ability to direct both the work and its method, as explained in Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd [1947] A.C. 1.
4. Agency control. During assignments, the end-user client alone controlled what Mr Bunce did and how he did it. Skyblue retained no equivalent power. The fact that the client’s power originated in clause 7(a) of the agency agreement did not amount to a delegation of control sufficient to make Skyblue the employer. That deficiency was fatal.
5. The tribunal had applied the holistic, non-mechanistic approach in Hall v Lorimer [1992] ICR 739. A person cannot be treated as an employee merely because he is not self-employed, as supported by Wickens v Champion Employment [1984] ICR 365 and Ironmonger v Movefield Ltd [1988] IRLR 461. The resulting limitations on unfair-dismissal protection under sections 108(1) and 210 of the Employment Rights Act 1996 were for Parliament to address. Gage LJ and Sir Martin Nourse agreed. The appellant was ordered to pay the first respondent’s standard costs.

• Court of Appeal (Civil Division): On 4 May 2005, dismissed the appeal from the EAT and ordered the appellant to pay the first respondent’s standard costs: [2005] EWCA Civ 490.
• Employment Appeal Tribunal: Upheld the employment tribunal’s conclusion that the appellant was not an employee of Skyblue, relying on absence of mutuality of obligation and insufficient control. No citation is stated in the judgment.
• Employment Tribunal: Held that the appellant was not an employee of Skyblue or Carillion Rail and therefore had no jurisdiction to determine the unfair-dismissal claim. No citation is stated in the judgment.