Employment Status: Stephenson -v- Delphi Diesel Systems Ltd

Background

The applicant registered with an employment agency under a contract which provided that the agency would pay the applicant for work done for clients, that he was not obliged to accept any assignment offered by the agency and could terminate an assignment at any time without notice, but that if he accepted work he would be under the direct supervision and control of the client and observe their rules and regulations.

The agency found him a position with the respondent company for whom he worked on that basis from 1 December 1999 until 24 August 2000 when he became employed by the company directly doing the same work but receiving his salary from the company rather than the agency. On 15 January 2001 he was dismissed, and, on his complaint of unfair dismissal, an employment tribunal considered as a preliminary issue of jurisdiction whether the applicant could rely on the period between December 1999 and August 2000 to give him the necessary qualifying period of one year's continuous employment.

The Tribunal dismissed the complaint, holding that, since the applicant had been under no obligation to accept an assignment and could have left the job at any time, there was insufficient mutuality of obligation to establish a contract of employment between himself and the company for that period and that there was also an insufficient degree of control exercised by the company over the applicant.

The applicant appealed.

Appeal

The Employment Appeal Tribunal held:

The significance of mutuality was that it determined whether there was a contract in existence at all and the significance of control was that it determined whether, if there was a contract in place, it could properly be classified as a contract of service rather than some other kind of contract.

During a period when an individual was actually working a contract clearly existed, even if it was terminable by either side at will. Accordingly, the Tribunal's conclusion that there was no mutuality of obligation between the applicant and the company for the reason that the applicant could at any time leave the job was wrong.

But, although the Tribunal had not approached the question of mutuality correctly, it was correct in concluding that there was no mutuality of obligation such as to create any contractual relationship between the applicant and the company, since there was no ground for suggesting that the company had ever intended to enter into a direct contractual relationship with the applicant or that by paying the applicant the agency was simply acting as the company's agent or that by exercising day-to-day control there was an implied contractual relationship between the company and the applicant.

The appeal was dismissed (11 November 2002).
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