Consistent Group Ltd v Kalwak and others [2008] EWCA Civ 430 CA
employment status | agency worker
The Court of Appeal has overturned an Employment Appeal Tribunal (EAT) decision approving a tribunal ruling that an employment agency had entered into contracts of employment with workers.
A number of Polish workers were supplied by an employment agency to a food processing company, Welsh Country Foods Ltd. The workers entered into contracts with the agency headed 'Self employed sub-contractor's Contract for Services'. These agreements provided that:
- they were not employed by the agency;
- there was no obligation on the agency to provide work;
- there was no obligation on them to accept work offered by the agency; and
- when assigned to a job, they were to perform those services personally unless they could not, in which case they should find someone else to carry out the work in their place.
The agency deducted money from their wages to provide accommodation for them. It also provided transport. When one of the workers was refused time off, the workers sought to join the Transport & General Workers’ Union. They were discouraged from doing so and their employment was later terminated.
The workers claimed that they had been dismissed for proposed trade union membership or activities contrary to the Trade Union and Labour Relations (Consolidation) Act 1992, section 152. In order to bring a claim under this section, they had to show that they were engaged under contracts of employment.
The EAT agreed with an employment tribunal that, despite the agreements, the practical reality was that they were employees of the agency. The clause in the agreement stating that there were no obligations between the parties was a sham and terms making the relationship an employment one could be inferred between the parties. The EAT noted that the tribunal had not explained its reasons for its decision on this point, but upheld its decision in reliance on evidence as to how the contract had operated in practice.
The Court of Appeal overturned the EAT decision. The tribunal had not given sufficient reasons for its decision that the clause stating that there were no obligations between the parties was a sham.
There are issues that must be addressed when deciding if a document is a sham, the first being consideration of whether or not both parties to the agreement intended to paint a false picture in the document. It is not enough to say that the parties operated differently in practice. In any event, there was disputed evidence in this case as to what had happened in practice and the tribunal had not explained why it had accepted the evidence of the workers but rejected the evidence of the agency.
The Court of Appeal therefore ordered the issue to be reconsidered by a differently constituted tribunal.
Case transcript of Consistent Group Ltd v Kalwak and others (on the BAILII website)
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