Veitch Penny LLP - Exeter | Crediton, Devon

Case

Franks v Reuters Ltd and Anor

Issues

1. Employment relationship
2. Mutuality of obligation
3. Unfair dismissal

Facts

The Applicant went to work for the first Respondent by the Second Respondent who was an Employment Agency. He worked with them for a number of years and was eventually offered a full time position. Throughout his employment he was paid by the Second respondent (the Employment Agency).

In 1999 he was dismissed by the First Respondent and he applied to the Employment Tribunal on grounds of Unfair Dismissal contending that "to all intents and purposes" he was an employee of the First Respondent and his dismissal was unfair. The Employment dismissed his complaint and held that he was not an employee of theirs and he therefore appealed

Decision

The appeal was dismissed by the EAT.

The central question they had to ask themselves was whether there was a mutuality of obligation between the Applicant and the First Respondent. As a starting point to determine the existence of Contracts of Service they had to look at the guidelines laid in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance (1968) 2 QB 497.

This provided that the minimum required to create the contract of service was an obligation on each side to create a contract of service (ie mutuality of obligation) and an element of control by the employer over the employee. In this case the Employment Tribunal had correctly identified the importance of mutuality of obligation and on the facts had found the constituent elements to be missing. It was therefore entitled to come to the view that the applicant was not the employee of the First Respondent.

Comments

This case highlights the need to carefully vet contracts for services as opposed to contracts of service with the providers of services and the extent to which the employer will maintain control over the employees' working time and activities. It is important to ensure that contract for services maintains that independence in order that the employer is not in any way caught up by the mutuality of obligation provisions.