W v Highways England & Ors

The Employment Appeal Tribunal upheld the employment tribunal’s factual finding that there was no implied contract of any kind between the appellant and KPMG, applying the established test for implication of a contract (necessity, intention to create legal relations and certainty of terms) in the context of the separate contracts between the appellant and Highways England and between Highways England and KPMG. The tribunal erred, however, in striking out complaints against KPMG under section 47B of the Employment Rights Act 1996 and sections 13 and 26 and 112 of the Equality Act 2010 because KPMG could, on the pleaded case and available material, potentially be liable without a direct contractual relationship: liability could arise under the extended definition of "employer" in section 43K ERA, or on agency principles or as a party who knowingly aided or induced contraventions. The tribunal was correct to strike out the complaint under section 111 EqA by reference to section 111(7). The EAT substituted a determination of no implied contract, struck out only the section 111 claim against KPMG, and remitted the remainder of the claims to the employment tribunal for further proceedings.

Background and parties:

• The appellant (W) was employed by Highways England from March 2018. Highways England contracted KPMG in early 2019 to provide management consultancy services. The appellant alleged detriments for making protected disclosures, direct sex discrimination and victimisation in proceedings against KPMG and others.

Nature of the application and relief sought:

• The substantive preliminary hearing decided whether an implied contract (employment or worker) existed between the appellant and KPMG. KPMG applied to be struck out as a respondent on the ground of no reasonable prospect of success and alternatively sought a deposit order.

Issues framed by the tribunal:

• Whether an implied contract existed between the appellant and KPMG.
• Whether the appellant could be a worker of or treated as employed by KPMG under the extended definitions in section 43K ERA.
• Whether KPMG (or its employees) acted as agent of Highways England attracting liability under section 47B(1A)(b) ERA or sections 109–110 EqA.
• Whether KPMG instructed, caused, induced or knowingly helped Highways England to commit basic contraventions under sections 111 and 112 EqA.
• Whether any or all of the claims should be struck out under rule 37 for having no reasonable prospect of success.

Court’s reasoning (concise):

• On the implied contract point the tribunal’s factual findings (the appellant was paid by Highways England; KPMG had a consultancy contract with Highways England; KPMG had no authority to instruct or discipline Highways England staff; the appellant attended only two meetings and could not identify work done for KPMG) meant it was not necessary to imply a contract; there was no intention to create legal relations and no certain terms to imply. The EAT found that conclusion inevitable on the facts and substituted a determination of no implied contract.
• On strike-out the tribunal correctly applied the guidance that discrimination and whistleblowing claims should only be struck out in the clearest cases, but it erred in concluding that absence of an express or implied contract meant the appellant had no reasonable prospect of establishing liability by other routes. The EAT held that KPMG could potentially be liable notwithstanding absence of a contract: (a) under the extended definition of "employer" in section 43K ERA; (b) as agent or because KPMG’s employees acted as agents of Highways England in particular interactions; or (c) because KPMG might have knowingly helped Highways England to commit basic contraventions (section 112). Such questions are fact-sensitive and not suitable for strike-out.
• The tribunal was, however, correct to strike out the section 111 claim: section 111(7) prevents its application unless the relationship between the person said to have instructed/caused/induced and the other is such that the former could commit a basic contravention against the latter, which could not arise where the putative victim is an incorporated body such as Highways England.

Disposition: The EAT set aside the tribunal’s order dismissing KPMG in full, substituted a finding of no implied contract, struck out the section 111 claim against KPMG and remitted the remaining claims against KPMG for further consideration by the employment tribunal.

Appeal allowed in part. The EAT upheld the tribunal’s finding that there was no implied contract between the appellant and KPMG and substituted that determination. The EAT found that the tribunal erred in striking out the appellant’s claims under section 47B ERA and sections 13, 26 and 112 EqA because KPMG could be liable without a direct contract (for example under section 43K, as agent, or for knowingly helping a basic contravention). The EAT agreed the tribunal was correct to strike out the section 111 EqA claim by reference to section 111(7) and therefore struck out that claim. The remaining issues were remitted to the employment tribunal for further factual investigation and determination.

Appeal from an employment tribunal judgment dated 15 November 2022 (employment tribunal, EJ Wedderspoon) following a three-day preliminary hearing from 31 August to 2 September 2022. Permission to appeal was sifted and limited by HHJ Shanks (Order dated 29 February 2023); full appeal heard in the Employment Appeal Tribunal on 4–5 February 2025. Neutral citation: [2025] EAT 18.