Contract workers protected

This report relates to 1 case(s)

In MHC Consulting Services v Tansell (14 September 1999) EOR88E, the EAT has held that a contract worker can bring a disability discrimination complaint directly against an "end-user" as a principal, even where there is no direct contractual relationship between the contract worker's employer and the end-user.

The issues

This important test case concerns the right to bring a discrimination complaint where there is a chain of contracts to supply labour.

Mr Tansell offered computer skills and services through Intelligents Ltd, a company in which he was sole shareholder and one of four directors. He placed his name with several agencies, including MHC, an employment agency specialising in placing computer personnel with third parties. MHC entered into an agreement with Abbey Life Assurance Co Ltd to supply personnel to them. Mr Tansell was interviewed by Abbey Life and a contract was entered into between MHC and Intelligents to supply Mr Tansell's services to Abbey Life. This contract had the effect of putting him under the control of Abbey Life. Fees were paid to MHC, who in turn paid Intelligents. Mr Tansell was paid a salary by Intelligents, but funds were also retained within the company.

Mr Tansell sought to complain that he had been discriminated against contrary to the Disability Discrimination Act 1995 by Abbey Life and/or MHC on grounds that he had been withdrawn from the site by MHC because Abbey Life rejected his services by reason of his disability. An employment tribunal held a preliminary hearing on whether he was a contract worker within the meaning of s.12 of the Act. Section 12(1) makes it unlawful "for a principal, in relation to contract work, to discriminate against a disabled person". Section 12(6) specifies that "principal" means "a person ('A') who makes work available for doing by individuals who are employed by another person who supplies them under a contract made with 'A'." The Sex Discrimination Act and the Race Relations Act contain similar definitions of contract worker.

The employment tribunal took the view that s.12 requires a direct contractual relationship between the employer and the principal. On that basis, the applicant was not a contract worker for Abbey Life. However, the tribunal found that he was a contract worker for MHC. The tribunal applied s.12(6) so as to find that a " 'principal' means a person ('A') (MHC) who makes work available for doing by individuals (the applicant) who are employed by another person (Intelligents Ltd) who supplies them under a contract made with A."

MHC appealed and Mr Tansell cross-appealed against the tribunal's finding that he had no claim against Abbey Life.

Held (allowing the appeal and the cross-appeal):

  • Where there is an unbroken chain of contracts between an individual and the end-user, the end-user is the "principal" within the meaning of s.12(6) of the Disability Discrimination Act. Such a construction of s.12(6), which provides that "principal" means "a person ('A') who makes work available for doing by individuals who are employed by another person who supplies them under a contract made with 'A''", gave effect to the general principle that the statute should be construed purposively and with a bias towards conferring statutory protection rather than excluding it.

Implications

This decision stretches the statute in order to arrive at a result which allows a contract worker to complain directly against the putative discriminator.

It is increasingly common for contract workers to supply their services through personal or quasi-personal companies. What happens when that company hires their services out to an employment agency, who in turn provides their services to an end-user?

The employment tribunal held that this arrangement did not debar Mr Tansell from claiming against the employment agency, even though he personally had not entered into a contract with them, the only contract being between the agency and Mr Tansell's company. However, it considered that the statutory language could not stretch to cover a case where there was no direct contractual relationship between the employer (Mr Tansell's company) and the putative principal (Abbey Life), even though this meant that "the legislation appears to allow for commercial arrangements to frustrate the purposes of the Act."

What the tribunal meant was that it was the end-user, Abbey Life, who was accused of discrimination. Abbey Life could not be the "principal" because MHC was not Mr Tansell's employer.

The EAT, presided over by Mr Justice Morison, feels that it can go further than the employment tribunal in order to allow the case to be considered on its merits. One way of doing this would have been to construe the statute so as to treat Mr Tansell as Abbey Life's employee. The EAT (rightly in our view) rejects this approach, given the express contract by which MHC were providing Mr Tansell's services to Abbey Life and Abbey Life were accepting the services under that contract.

Instead, the EAT treats the statutory definition of a "principal" - "a person ('A') who makes work available for doing by individuals who are employed by another person who supplies them under a contract made with 'A''" - as covering a case where the end-user (Abbey Life) makes work available for doing by individuals (Mr Tansell) who are employed by another person (Intelligents) who indirectly supplies them under a contract made with the end-user. This construction is necessary because Abbey Life's supply contract was not with Intelligents, but with the employment agency, MHC.

This case is going to the Court of Appeal, where it will be argued that the statute cannot bear this interpretation and that the supply of the contract worker to the principal must be pursuant to a contractual obligation existing directly between the supplier and the principal. The applicant is likely to cross-appeal, on the basis that the EAT did not have good grounds for finding that a discrimination could not also be brought against the employment agency.

Key extracts

"Mr Tansell was employed by another person, namely Intelligents. Intelligents supplied his services, ultimately, to Abbey Life through MHC under a contract between MHC and Abbey Life. Therefore, whenever there is an unbroken chain of contracts between the individual and the end-user, the end-user is, by definition, the 'principal'. It seems to us that this construction of s.12(6) gives effect to the general principle which applies in social legislation of this kind, namely that the statute should be construed purposively, and with a bias towards conferring statutory protection rather than excluding it. Such a construction does not strain the language of s.12(6). It seems to us a possible construction which we are prepared to adopt."