James v Greenwich London Borough Council

The Court of Appeal dismissed an appeal against Employment Tribunal and Employment Appeal Tribunal decisions that the claimant, who had been supplied to the respondent by employment agencies, was not an employee of the respondent under Part X of the Employment Rights Act 1996. The court confirmed that the decisive issue was whether it was necessary to imply a contract of service between the worker and the end user to give business reality to their relationship (the test in The Aramis), and that where genuine express contracts between the worker and an agency and between the agency and the end user explain the working arrangements, it will generally be unnecessary to imply a contract with the end user.

The court endorsed the EAT's approach that mere length of service or integration into workplace practices does not of itself oblige implication of a contract; mutuality of obligation remains a relevant factor in determining whether any contract exists; and appellate interference is permissible only for error of law or perversity.

Background and facts: Ms Merana James worked as a housing support worker providing services to the London Borough of Greenwich but was engaged through employment agencies. From 21 September 2001 she worked via an agency and in 2004 she signed a Temporary Worker Agreement with a different agency which paid her and dealt with statutory deductions. While she performed duties on rotas, wore a staff badge and received instructions from Council managers, she was not on the Council's sick pay or holiday pay schemes and was replaced after a period of sickness. She claimed unfair dismissal against the Council and later joined the agency as a respondent.

Procedural posture: The Employment Tribunal found (13 October 2005) that there was no contract of service between Ms James and the Council. The Employment Appeal Tribunal (EAT) upheld that decision on 21 December 2006 ([2007] IRLR 168). Permission to appeal to this court was granted on 23 March 2007 and the Court of Appeal heard the appeal on 30 October 2007, delivering judgment on 5 February 2008.

Nature of the claim/application: Ms James sought protection for unfair dismissal under Part X of the Employment Rights Act 1996, contending in effect that a contract of employment should be implied between her and the Council.

Issues framed by the court:

• Whether, in a tripartite situation involving worker, agency and end user, it was necessary to imply a contract of service between the worker and the end user in order to give business reality to the arrangements (the Aramis necessity test).
• Whether the Employment Tribunal erred in law in its application of the implied contract test or in focusing unduly on mutuality of obligation.
• Whether the Employment Tribunal's conclusion was perverse such that appellate intervention was justified.

Reasoning and conclusions: The court agreed with the EAT and the ET that the correct analytical approach was to ask whether implication of a contract of service was necessary to explain the parties' conduct and the commercial reality. The tribunal had found genuine express contracts between (1) the claimant and the agency and (2) the agency and the Council. Those express arrangements, together with the factual findings that the agency paid the claimant and that the Council did not provide employee benefits, explained the working relationship without the need to imply an employment contract. The court held that length of service, the claimant's apparent integration into the workplace or the claimant's subjective expectation that she was an employee were insufficient to require implication. Because the ET applied the correct legal test and its factual conclusion was not perverse, the appeal was dismissed.

Wider context: The court commented on the wider prevalence of agency-working and the continuing need to apply ordinary contract principles in deciding employment status; it observed that policy reform to extend protection to agency workers is for Parliament, not the courts.

Appeal dismissed. The Court of Appeal held that the Employment Tribunal had applied the correct legal test (necessity to imply a contract of service per The Aramis) and that, on the facts found (genuine express contracts with the agency, payment by the agency, lack of employee benefits from the Council and the absence of mutual obligations), it was unnecessary to imply a contract of employment between the claimant and the Council. The ET's conclusion was not perverse and no error of law was shown.

Appeal from the Employment Tribunal decision of 13 October 2005 (Employment Tribunal). The Employment Appeal Tribunal upheld the ET on 21 December 2006 (reported [2007] IRLR 168). Permission to appeal to the Court of Appeal was granted on 23 March 2007; the Court of Appeal heard the appeal and dismissed it on 5 February 2008 ([2008] EWCA Civ 35).