Smith v Carillion (JM) Ltd & Anor (Contract of Employment : Whether established)

In a tripartite agency arrangement, an individual claiming statutory employment protection against an end-user must first establish a contract with that end-user. Whether such a contract should be implied is determined by ordinary contractual principles and the reality of the arrangements.

A contract may be implied only where necessary. It is not permissible to imply one where the parties’ conduct is equally explicable without it. Integration, operational control, a long assignment, interview, removal from site, or the absence of written agency terms do not necessarily establish such a contract. The Human Rights Act 1998 and Convention rights neither require nor permit a contract to be implied where domestic law would not imply one.

The claimant supplied engineering services to John Mowlem Construction plc, later acquired by Carillion, through the Chanton employment agency. He also supplied services through another agency on a project connected with Schal. He alleged that the end-users had subjected him to detriments through blacklisting because of trade union and health and safety activities.

The Employment Tribunal held that no contract, whether of employment or a worker contract, could be implied between the claimant and either end-user. It dismissed claims under section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992 and section 44 of the Employment Rights Act 1996. The claimant appealed against the dismissal of the claim concerning John Mowlem; the appeal concerning Schal was withdrawn. Carillion cross-appealed on a factual point concerning work after the commencement of the Human Rights Act 1998.

The central issue was whether the Tribunal had erred in declining to imply a contract between the claimant and the agency end-user.

1. Appeal dismissed. The existence of a contract between the claimant and John Mowlem was a fundamental prerequisite to claims under section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992 and section 44 of the Employment Rights Act 1996. The claimant bore the burden of establishing an express or implied contract with the end-user.

2. Whether an agency worker has a contract with an end-user is determined under generally applicable contractual principles. The agreements between worker and agency, and agency and end-user, form part of the evidential setting but are not conclusive. A tribunal must examine the reality of the arrangements, including whether an express exclusion is a sham. Autoclenz did not create a different rule for parties of unequal bargaining power and no sham was alleged here.

3. The necessity test remained applicable in agency arrangements. A contract may be implied only if necessary; where the facts are equally explicable without a contract between worker and end-user, implication is impermissible. The test is not confined to arrangements containing an express contractual exclusion of an employment relationship.

4. The Tribunal had considered the totality of the evidence and was entitled to find that interview, anticipated duration, integration, control, removal from an assignment and the lack of written agency terms were consistent with the conventional agency arrangements. There was a proper evidential basis for its conclusion that no contract with John Mowlem existed, and the EAT would not interfere.

5. The Human Rights Act 1998 and Convention rights did not require or permit a contract to be implied where domestic law would not imply one. Since the contract issue disposed of the appeal, the EAT expressed no view on whether the unamended statutory protections could be construed to extend from employees to workers. The cross-appeal was academic and no order was made upon it.

• Employment Appeal Tribunal: Appeal dismissed. The Tribunal’s conclusion that no contract could be implied between the claimant and John Mowlem was upheld.
• Employment Tribunal: Judgment sent on 23 January 2012. The Tribunal dismissed claims under section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992 and section 44 of the Employment Rights Act 1996, holding that the claimant had no contract with the end-users.