Case: Cable &amp; Wireless plc v Muscat [2006] IRLR 354
Outcome: discussed
The applicants next drew attention to the decision of the United Kingdom Court of Appeal in Cable &amp; Wireless plc v Muscat [2006] IRLR 354 handed down subsequently to Brook Street , where it was found by majority that a labour hire worker was employed by the host rather than by the agency through which the host had directed that he be engaged. Whilst the applicants acknowledged the facts in Cable and Wireless were distinguishable from Brook Street , the applicants placed reliance upon the acknowledgment by the Court of Appeal in Cable &amp; Wireless upon the majority's views in Brook Street , which they submitted to be seemingly to the effect that so long as remuneration is being provided in reality by the employer, it matters not that it is not paid directly by that employer but by a third party pursuant to another arrangement made by the employer with that third party. Quoting from Cable &amp; Wireless , the applicants asserted that a person who would otherwise be the worker's employer did not cease to be his employer by arranging for the wages to be paid per medium of a third party, and further that '[t]he essentials of a contract of employment are the obligation to provide work for remuneration and the obligation to perform it, coupled with control', whether the arrangements for payment are made directly or indirectly. I will later return to a further discussion of Cable &amp; Wireless in the context of CAO's submissions. 157 I have taken the course of reviewing the United Kingdom Court of Appeal authorities of Brook Street and Cable &amp; Wireless in some detail because of the extent to which the applicants sought to place reliance upon the approach and findings apparent in the respective reasons for judgment, in the case of Brook Street referrable to the reasoning of Mummery and Selby LJJ, and in the case of Cable &amp; Wireless referrable to the approach taken generally in the joint judgment of all members of the Court of Appeal. CAO's submission was to the effect that the reasons in both decisions, other than that of Munby J in Brook Street , should not be accorded any effective, much less decisive, operation in relation at least to the relevant circumstances of the present case which CAO has outlined. I will first address CAO's submissions relating to Brook Street. 169 I would next move to a consideration of the detailed attention afforded by the parties to Cable &amp; Wireless , which I have earlier foreshadowed that I would do more extensively in the context of my recitation of CAO's submissions than did the applicants, CAO having given perhaps more extensive attention to Cable &amp; Wireless . That case was decided by the United Kingdom Court of Appeal subsequently of course to Brook Street by a different bench being Sir Anthony Clarke MR and Smith and Kay LJJ. The joint judgment of their Lordships at [35] expressed the opinion that '... the view of the majority in Dacas was correct'. It was submitted by CAO nevertheless that the decision in Cable &amp; Wireless was 'not compelling', in that the United Kingdom Court of Appeal once more did not address 'the fundamental problem of intention to create legal relations as a threshold question', or more precisely, to create a contractual relationship. In that latter regard, it was submitted by CAO that the Court of Appeal's reasoning in Cable &amp; Wireless was 'out of step with the law in Australia', exemplifying in that regard Ermogenous and Teen Ranch , and in any event, that the decision in Cable &amp; Wireless was of little relevance to the present case because of what was described as its vastly different factual circumstances. 170 The factual context to Cable &amp; Wireless was different and more complex than in Brook Street , and needs to be explained in some detail in order to provide an adequate understanding of the nature and extent of the issue which there arose for resolution, and any conceivably comparable context to that involved in the present case. The respondent Mr Muscat had been engaged as an employee of a telecommunications specialist with a company called Exodus Internet Ltd ('EIL'), when the company decided to reduce the number of its employees in order to facilitate a potential buy-out, but which nevertheless wanted to retain that worker's services. EIL informed Mr Muscat that he would have to become a so-called contractor, and to provide his services through a limited company. His employment was thereupon terminated and a company named E-Nuff Comms Ltd ('E-Nuff') was set up to receive his pay and car allowance. About three months later, EIL was effectively taken over corporately by Cable &amp; Wireless. Mr Muscat was described by Cable &amp; Wireless within the context of its organisational structure nevertheless as an employee, and he was given accordingly an employee number. The cost of all of the equipment upon or with which he worked was paid by Cable &amp; Wireless. Mr Muscat continued to submit invoices for his services provided in the name of E-Nuff. Since however Cable &amp; Wireless considered Mr Muscat to have remained associated with it, though by then as a contractor, Cable &amp; Wireless informed him that it would not deal with him directly, but that as in the case of all other contractors seeking to make arrangements for the provision of their services to Cable &amp; Wireless, he would have to engage with Cable &amp; Wireless through an agency entity called Abraxas plc, which had been retained to supply contracted personnel to Cable &amp; Wireless. On 13 August 2002, E-Nuff (at least implicitly at Mr Muscat's direction) entered into a contract for services in favour of Abraxas, which included as a retrospective element the period of time up to when Mr Muscat became aware of the requirement for him to deal with Cable &amp; Wireless per medium of Abraxas. It was that contract for services which was described as crucial to the resolution of the Cable &amp; Wireless proceedings, in that it was the case of Cable &amp; Wireless that such contract for services changed the status of Mr Muscat from that of its employee. Subsequently in late November 2002 Cable &amp; Wireless informed Mr Muscat that it would no longer require his services and on 31 December 2002 he ceased work directly or indirectly (that is, purportedly per medium of E-Nuff and no longer by himself directly) for Cable &amp; Wireless. In March 2003 Mr Muscat made a claim for compensation upon Cable &amp; Wireless for unfair dismissal. Cable &amp; Wireless contended in response that Mr Muscat was not its employee, but that contention was rejected, it being found that Mr Muscat held an implied contract of employment with Cable &amp; Wireless. The notion of implied contract of employment had been postulated by Mummery and Sedley LJJ in Brook Street . 171 The unanimous judgment of the United Kingdom Court of Appeal in Cable &amp; Wireless was acknowledged by CAO to have established, on the facts of that case, that the contention of Cable &amp; Wireless that Mr Muscat was not its employee was not sufficiently compelling, in the light of the circumstances that: (i) Mr Muscat had been told by Cable &amp; Wireless, after having subsequently worked for it per medium of his company E-Nuff under what was accepted by the Court of Appeal to be an employment contract, that Cable &amp; Wireless did not deal with contractors, and that he would therefore have to deal with it in the future through Abraxas; (ii) Mr Muscat was given no choice other than to deal with Cable &amp; Wireless through Abraxas, or else submit to the termination of the relationship which had been more recently brought into existence, and to sue for the monies he was by then owed; (iii) Cable &amp; Wireless was obliged to provide Mr Muscat with work and he in turn was obliged to attend the premises of Cable &amp; Wireless and to do the work of a telecommunications specialist, subject to the direction and control of its management; (iv) Mr Muscat arranged with the Cable &amp; Wireless management for the taking of his leave, and that company provided equipment to him and paid his telephone accounts; Cable &amp; Wireless also provided him with an employee number; before the agreement with Abraxas was entered into, Cable &amp; Wireless had been under an obligation to make payment to Mr Muscat, but that it had imposed the arrangements under which Mr Muscat became thereafter required to deal with Cable &amp; Wireless per medium of Abraxas; (v) in relation to the formation of the Abraxas contract, the only change thereby effected was that Mr Muscat became 'paid' by Abraxas; otherwise there was no express or implied termination of the arrangement between Mr Muscat and Cable &amp; Wireless. 172 CAO submitted that '[it] is obvious that the case presented by Cable &amp; Wireless was unattractive and even contained elements essential to the company's success but which were plainly unsupportable'. CAO contended however that nothing said in Cable &amp; Wireless would suggest the result in the present case that each of the applicants were CAO's employees. There was no factual similarity of relevance between the circumstances of the present litigants and those of the parties to the Cable &amp; Wireless restructured relationships. So much at least would seem to be correct, in that putting aside debate concerning the notion of implied contract of employment, the present circumstances did not involve any endeavour to restructure an existing employment relationship into a framework of labour hire which would no longer supposedly have the formal characteristics of any prior existing employment. 173 The concluding observations of the United Kingdom Court of Appeal in Cable &amp; Wireless at [54] may therefore be conceivably pertinent to the approach which the courts may take in Australia in circumstances involving an employer's endeavour to alter an originally established relationship from that of a conventional contract of employment of a natural person to that of some form of principal and agent, such as was sought unsuccessfully to be achieved in Damevski ( ante ), but they have no sufficient connection to the circumstances of the present case, which involve no such alteration to the status quo of an employment relationship in favour of a natural person established in the conventional way, but rather the structure of genuine labour hire arrangements undertaken from the outset at arm's length.