This may be of interest to the unionists out there, oh and temp/ contract workers:)
Appeals court rules contractor was an employee
13 March 2006
The Court of Appeal has confirmed that a limited company contractor was an 'employee' of his client after it dismissed Cable and Wireless’ appeal in the case of Muscat v. Cable & Wireless.
In a long-awaited judgment, the Court found that Muscat was an employee of the client, even though he supplied services through his own limited company and a staffing company.
Muscat v. Cable & Wireless was one of the first employment tribunal rulings that did not involve a low paid temp - Muscat was a relatively well-paid telecoms contractor. He originally worked for Exodus Internet, who wanted to cut staff to make itself more attractive to its potential acquirer, Cable & Wireless. At the company's request Muscat left work on Friday as an employee and returned on Monday as a contractor. However the company then continued to treat him as an employee. For example, as a contractor Muscat still had an employee number and was still included in the Cable & Wireless departmental structure and headcount.
Legal experts said the decision, which strengthens temporary workers’ rights, reaffirms the principle that limited company agency workers contracted for services could be deemed employees under an “implied unwritten contract.”
Contract specialists at Lawspeed warned the resulting prospect of increased employment claims by freelance contractors may prompt industry hirers to “question the entire concept of using agency supply.”
Adrian Marlowe of Lawspeed commented:
“Historically [agency supply] has protected them against employment claims.
“The unambiguous and powerful judgment makes the position very clear and surely will have considerable ramifications for hirers using both direct staff engaged on contracts for services and agency workers, since most will not wish to be put in the same position as Cable & Wireless.”
”Most client companies will not want to lose the advantages intrinsic to agency workers, such as flexibility, skill sourcing and payroll function.”
However, it has been claimed that it would be wrong to assume that all contractors now have employment rights, and that Muscat v. Cable & Wireless was not a typical scenario.
Matthew Brown, Managing Director of contractor services Giant, said:
"This case is highly unusual because Mr Muscat was an employee of Cable & Wireless, but left work on a Friday as an employee to return on Monday as a limited company contractor. As a contractor he was still treated like an employee, hence he was still effectively an employee under the ‘guise’ of a contractor.
"End users have no reason to panic. The Muscat vs. Cable & Wireless type of scenario is highly unusual, so the outcome of this case gives no indication of how tribunals will rule on future ‘normal’ claims.
"End users and contractors who continue to operate in a professional manner have nothing to fear from this ruling."
European Court attack Working Time Directive
13 March 2006
The Federation of Small Businesses (FSB) has warned that a European Court judgement on the Working Time Directive will lead to a large increase in red tape for firms.
The European Commission, prompted by UK Trades Unions, has taken the UK Government to the ECJ to change the current interpretation of the Working Time Directive in UK law. The UK Government has transposed into law the section on breaks for workers (both between and during working days) and the official guidelines advised employers that they must ensure that workers “can” take their rest but they are not required to ensure that they “do” take their rest. It is therefore up to the employee to choose when to take their breaks. The FSB argues that if the worker can take their break but does not choose to do so (for example they do not have a lunch break so they can go home early) then there is no loser and no reason to change the current regime.
A preliminary judgement by the Advocate General of the European Court of Justice (ECJ) said the UK Government has not been properly enforcing all aspects of the Working Time Directive; it found that the Government’s official guidance to employers should have been much stronger in ensuring lunch and other breaks are taken up by staff.
The full Court will now consider the Advocate General’s Opinion.
Alan Tyrrell, FSB National Employment Chairman, said:
"This is a potentially disastrous judgement for British business and we fervently hope that the full Court will reject it in due course. For an employer to prove that all employees have taken all the breaks to which they are entitled will place a heavy burden on small firms. Our members already spend an average of 28 hours per month filling in forms and no doubt this will add further to the pile of paperwork to be waded through.
"The current guidance from the DTI is eminently sensible where employees can take their breaks and employers have to let them do so. But crucially workers in the UK are not forced to take their breaks if they do not wish to do so. To change this guidance, as this judgement would seek to do, will reduce flexible working options when the Government is encouraging our members to increase such practices.
"When the EU is committed to increasing economic activity and employment, such a decision flies in the face of reason. If the EU's goals on the Lisbon agenda are to be reached then the full ECJ has to reject this opinion. Flexible working practices allow small firms and their employees to work to best suit their situation. Removing this flexibility will undoubtedly restrict small business growth."