RSA Consulting Ltd v Evans

The Court of Appeal considered whether the claimant, Dr Evans, had an arguable case that she was a "worker" within the meaning of section 230 of the Employment Rights Act 1996 in respect of RSA Consulting Limited, such that she could pursue a statutory claim under section 23 for an unauthorised deduction from wages. The court emphasised that, when a claimant seeks to establish an implied contract by necessity, the tribunal must consider not only the contractual documents but also the factual evidence of how the relationship was conducted. The employment tribunal judge had relied principally on documentary material and did not address or record the claimant's oral evidence or identify the legal test he was applying, so his striking-out decision could not stand.

The Court of Appeal therefore dismissed RSA's appeal against the Employment Appeal Tribunal's decision to allow the claimant's appeal to proceed to a full hearing, concluding that there was a real risk the claimant's case had not been properly considered and that factual disputes ought not ordinarily to be struck out.

Background and parties:

• Dr Patricia Evans, a molecular immunologist engaged as a consultant, contracted with Parasol, which provided payroll services and was described as her employer. Parasol had a contract with RSA Consulting Limited, who introduced Dr Evans (through Parasol) to an end-user, PharmaNet.
• After her relationship with PharmaNet ended, Dr Evans brought claims of unauthorised deductions from wages under section 23 of the Employment Rights Act 1996 against Parasol, RSA and PharmaNet.

Procedural history:

• The Employment Tribunal conducted a pre-hearing review and struck out the claim against RSA, concluding the documents demonstrated Dr Evans was employed by Parasol and not RSA.
• Dr Evans later found an email from Parasol indicating a one-month notice period and sought a review of the Tribunal decision; the review was refused. She appealed to the Employment Appeal Tribunal (UKEAT/0536/08/RN). Bean J allowed the appeal against the Tribunal, holding the Tribunal should have reviewed its decision in light of the email and that it had not addressed whether the claimant might be a "worker" (not merely an employee) of RSA; he allowed the claim against RSA to go to a full hearing.
• RSA sought permission to appeal to the Court of Appeal; permission was granted by Lord Justice Rimer following an oral hearing.

Issues framed:

• Whether Dr Evans had an arguable case that, notwithstanding the documentary contractual chain, it was necessary to imply a contract between her and RSA so as to render her a "worker" under section 230(3) and thus enable a claim under section 23 ERA.
• Whether the Employment Tribunal was entitled to strike out the claim against RSA at a preliminary hearing when factual issues were disputed, and whether the Tribunal had properly taken account of the claimant's oral evidence and applied the correct legal test for implying a contract (the test of necessity).

Court’s reasoning and decision:

• The Court of Appeal accepted the legal principles cited by the Employment Appeal Tribunal and earlier authorities: an implied contract may be recognised only if necessary to give business reality to the relationship and evidence of the actual relationship (not merely the documents) must be considered.
• The appellate court found the Employment Tribunal judge had applied too narrow a focus by relying solely on the documents, had not recorded or assessed the claimant's oral evidence bearing on the actual relationship, and had not identified the legal principles he was applying. Because of that omission, the decision to strike out could not stand: where factual matters are in dispute it is rarely appropriate to strike out and the tribunal should assess the claimant's evidence at its highest for that purpose.
• Although the Court expressed scepticism that the claimant’s evidence would ultimately satisfy the necessity test, it was not the Court of Appeal’s role to make factual findings; on the material before the tribunal the Employment Appeal Tribunal was right to allow the matter to proceed to a full hearing.

Appeal dismissed. The Court of Appeal held that the Employment Tribunal judge had erred by treating documentary material as determinative without considering the claimant's oral evidence or identifying the correct legal test for implying a contract by necessity; because factual disputes remained and the tribunal had not properly directed itself, the EAT was right to allow the claimant's case against RSA to proceed to full hearing.

Employment Tribunal: pre-hearing review struck out claim against RSA (PHR decision). Employment Appeal Tribunal (UKEAT/0536/08/RN): Bean J allowed the claimant's appeal, concluding the tribunal should have reviewed its decision in light of new evidence and should have considered whether an implied contract made the claimant a "worker". Permission to appeal to the Court of Appeal was initially refused on paper but later granted orally by Rimer LJ; Court of Appeal decision reported at [2010] EWCA Civ 866.