When is an employee still considered an employee?
Cable & Wireless v Muscat, Employment Appeal Tribunal
Muscat was employed by EIL until, at the request of EIL, he became a ‘designated contractor’. He set up a limited company (‘E’) for invoicing purposes, but otherwise continued to work as before.
When Cable & Wireless (C&W) took over EIL, Muscat was told to provide his services through an agency, and an agreement between ‘E’ and the agency was entered into. But again, Muscat continued working as before.
All equipment he used was paid for by C&W, and he took his annual leave to suit C&W. His only contact with the agency was in relation to the payment of his invoices.
In December 2002, Muscat’s contract was terminated. A tribunal found that Muscat remained an employee of EIL when he became a designated contractor, and that his employment transferred from EIL to C&W by virtue of TUPE.
The tribunal held that there was an implied contract between C&W and Muscat, and that at all material times, Muscat was an employee of C&W.
C&W appealed, arguing that the agreement concluded between ‘E’ and the agency was crucial in that it removed Muscat as an employee of C&W and returned him to a status of being employed by neither the agency nor C&W. They argued that the agreement with the agency had destroyed the implied contract.
The Employment Appeal Tribunal held, however, that the commercial reality of the case was that Muscat was working for C&W, and not the agency or ‘E’.
Permission was given to C&W to appeal to the Court of Appeal.