Blakely v On-Site Recruitment Solutions Ltd & Anor

In a commercial work arrangement, the existence of a contract must be assessed objectively from all the circumstances. A tribunal errs if it treats one putative employer’s asserted lack of intention to create legal relations as determinative despite communications and arrangements showing reciprocal work and payment obligations.

For limb (b) worker status under section 230(3)(b) of the Employment Rights Act 1996, the tribunal must determine whether a contract exists, whether it includes an undertaking of personal work or services, and whether the client-or-customer exception applies. Services may be undertaken for a contractual counterparty even where work is performed for a third party.

The claimant, a pipefitter, was recruited by the first respondent, a recruitment business, to work at a construction site. He was directed to an umbrella company, the second respondent, for payment. Deductions from his pay included sums said to reimburse employers’ National Insurance contributions, a management-company margin and retained holiday pay.

The Employment Tribunal held that he was neither a worker nor an employee. It found no contract with the first respondent and a payroll, tax-accounting and insurance-services contract with the second respondent. It dismissed his claims for unlawful deductions and holiday pay.

The claimant appealed. The central issue was whether the Tribunal had correctly approached the existence and nature of contracts relevant to limb (b) worker status under section 230(3)(b) of the Employment Rights Act 1996.

1. Appeal allowed. The Tribunal’s conclusion that there was no intention to create legal relations between the claimant and the first respondent was fundamentally flawed. This was a commercial context in which an individual sought paid work. The Tribunal had to assess the issue objectively and by reference to all relevant circumstances, rather than treating the first respondent’s asserted intention as decisive.

2. The pre-engagement communications, viewed with the first respondent’s contemporaneous letter, were capable only of showing an agreement of some kind. They identified the work, place, rate and payment arrangements. The letter also recorded a temporary appointment and reciprocal obligations, including obligations to the first respondent. It was therefore wrong to conclude that there was no enforceable arrangement merely because the claimant had not received that letter.

3. The error at the contractual stage meant that the Tribunal had not properly addressed the remaining statutory questions. It had to determine whether each relevant contract required personal work or services and, if so, whether the client-or-customer exception in section 230(3)(b) applied. A person may undertake to provide services for a party to a contract by performing work for a third party. The Tribunal had wrongly excluded that possibility in relation to the second respondent and had not considered whether it acted as the first respondent’s agent.

4. The separate Autoclenz ground did not succeed. Unlike that case, there were no extensive written terms which purported to govern the relationship and could be tested against the practical reality. The essential inquiry on remittal remained what the parties had truly agreed.

5. The Appeal Tribunal could not itself determine worker status because more than one outcome remained possible, including worker status in relation to either or both respondents. The case was remitted to a freshly constituted Employment Tribunal. The original Tribunal’s error affected the whole analysis, such that it would in substance have to begin again.

• Employment Appeal Tribunal: allowed the claimant’s appeal and remitted the case to a freshly constituted Employment Tribunal.
• Employment Tribunal (Reading): held that the claimant was neither a worker nor an employee of either respondent, and rejected claims for unlawful deductions and holiday pay.