Cable and Wireless plc -v- Muscat

The law distinguishes between workers and employees and accords them different employment rights, so it is important to know what status someone has.

In Cable and Wireless plc -v- Muscat, the Court of Appeal said that an agency worker was an employee as he had an implied contract of employment with the client.

What were the facts?

Mr Muscat agreed in October 2001, at the request of his employer, Exodus Internet Ltd, to become an independent contractor with his own limited company E-Nuff.

In February 2002, Exodus was taken over by Cable & Wireless who told Mr Muscat that he had to work through an agency. On 13 August 2002, E-Nuff agreed a contract for services with Abraxas, expressly stating that it constituted “the entire agreement” between them, and that no verbal or other written contract would be valid. It also said he was not an employee.

Cable & Wireless brought the agreement to an end in December 2002 and Mr Muscat claimed unfair dismissal.

What did the tribunals decide?

Following the decision of the Court of Appeal in Dacas -v- Brook Street Bureau(UK) Ltd (see LELR 88 for details), the tribunal said Mr Muscat had been employed by Exodus and had an implied contract of employment with Cable & Wireless.

The company appealed on the basis that Dacas had been wrongly decided, but the employment appeal tribunal disagreed. It appealed again on the same grounds.

Was Dacas correctly decided?

The company argued at the Court of Appeal that the decision in Dacas could not be relied on because it had not taken all the relevant cases into account, and that the guidance was not binding because it had not been directly relevant.

The Court of Appeal first looked at the relevant authorities. First up was Ready Mixed Concrete (South East) Ltd -v- Ministry of Pensions and National Insurance, in which the judge said that, if the rights and duties in the contract implied that it was a contract of employment, then it was irrelevant what the parties had actually called it.

In Carmichael -v- National Power PLC, the House of Lords said that, unless the parties specifically stated that the documentation setting out the rights and duties “constituted an exclusive record”, it was open to the courts to consider what the parties had said and how they had behaved as well as what they had written down.

On that basis, the court said that Dacas had been correctly decided. It also decided that, although the guidance was not strictly binding, tribunals should certainly take note of it.

Was the contract the “entire agreement”?

Cable & Wireless then argued that there could not be an implied contract of employment between them and Mr Muscat because of the terms of the contract that he had agreed with Abraxas. 
But the Court of Appeal disagreed. Given that Cable & Wireless was not a party to the Abraxas agreement, the court could see no reason why Mr Muscat could not have an implied contract of employment with them.

Was it necessary to imply a contract of employment?

The company then argued that in Dacas, the court had not mentioned the need for tribunals to consider whether it was necessary to imply a contract of employment between worker and end-user “to give business reality to what was happening between the parties.”

The Court of Appeal disagreed. It said that this issue had been addressed in Dacas, and by implication, by the tribunal.

The Court concluded that “it was necessary to infer the continuing existence of the employment contract in order to give business reality to the relationship and arrangements between Mr Muscat and C&W … and in order to establish the enforceable obligations that one would expect to see in these circumstances.”