Montgomery v Johnson Underwood Limited (9.3.01) Court of Appeal [2001] IRLR 269
Another case on what the Court of Appeal describes as "the troublesome question whether an individual was employed under a contract of employment". Whilst the introduction of European Community legislation like the Working Time Regulations, and Part time Work Regulations has extended some employment rights to "workers", the central employment right - not be to unfairly dismissed - still only applies to "employees" as defined by section 230 Employment Rights Act 1996: "Employee means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment".
Mrs Montgomery approached Johnson Underwood, an employment agency, looking for work. They placed her with a local company O&K Ltd. Hours of work and the rate of pay were discussed and agreed. Mrs Montgomery received a letter of confirmation from JU Ltd together with their printed terms and conditions, she sent in her P45 and bank details. She was paid direct into her bank account on the basis of her time sheets which were approved by O&K. Mrs Montgomery worked for O&K for two years, they became unhappy about the amount of time she was spending on personal telephone calls and asked JU Ltd to terminate her assignment. A director of JU Ltd visited Mrs Montgomery and told her it was over.
Mrs Montgomery claimed for unfair dismissal. She named both JU Ltd and O&K Ltd as Respondents. Both Respondents denied that she was their employee. At a preliminary hearing the Employment Tribunal decided that she was an employee of JU Ltd. Their decision was upheld by a majority of the Employment Appeal Tribunal and the appeal went to the Court of Appeal.
The Court of Appeal decided that she was not employed by JU Ltd. The Employment Tribunal had not properly considered the three elements of a contract of service which are (i) That she agrees to provide her own work and skill in the performance of some service for the employer in return for pay, (ii) That she agrees, expressly or impliedly, to do that service subject to the other's control in a sufficient degree to make that other master; and (iii) That the other provisions of the contract are consistent with its being a contract of service.
The three tests are described as "an irreducible minimum of obligation on either side".
The Employment Tribunal had not given sufficient weight to the issue of control and had accepted that there was little or no control by JU Ltd of Mrs Montgomery and had said that "the absence of mutuality of obligation appears to us to be largely irrelevant to the specific engagement". The Court of Appeal were satisfied that the approach of the Employment Tribunal to these two essential ingredients of a contract of employment was wrong in law.
The Court of Appeal went on to say that they were not surprised that the lower tribunals tried to give Mrs Montgomery the rights under modern employment law but stressed that the remedy lies with Parliament. The Employment Relations Act 1999 gives Parliament the right to extend employment rights to workers. They should use it.