Is the Employer Named in an Employment Contract Really the Employer?

...including the identity of the employer.

The Facts

In 2011 the Claimant accepted a job as an electrician and entered into an employment contract with Dynasystems for Trade and General Consulting, a Jordanian company. On the same day, he was given a letter setting out a pre-employment requirement for him to obtain a second passport. This letter was sent by a UK company, Dynasystems Ltd.

The Claimant's contract was terminated and he brought claims of unfair and wrongful dismissal against, amongst others, the Jordanian company and the UK company.

The ET Decision

The claims were upheld, however the Employment Tribunal (ET) also had to determine which of the multiple potential employers was the correct employer.

In deciding this, the ET considered whether the written contract of employment, identifying the Jordanian company, accurately reflected the reality of what had been agreed between the parties.

The Claimant was directly line-managed by Mr Gaston, a Director of the UK company. Mr Gaston agreed salary and employment terms with the Claimant and decided where and when he would be deployed to work. Further, the Claimant had been held out to third parties to work for the UK Company on occasions, but had never been held out to be a representative of the Jordanian company.

In all the circumstances, the ET found that the UK company carried out all of the functions of employer and was therefore held to be the correct employer. Dynasystems Ltd appealed.

The EAT Decision

The EAT dismissed the appeal. They held that the ET had correctly applied the law and were not bound to limit their enquiries into the true nature of the agreement between the parties to events which took place in 2011, when the contract was signed.

The EAT held that the subsequent behaviour of parties after an agreement has been entered into can serve as evidence of what was in fact agreed, although it will not be conclusive. On this basis, the EAT agreed with the ET that the contract did not reflect the reality of the agreement.

Best Practice

This case illustrates that a written contract of employment will not necessarily be conclusive evidence of what has been agreed between parties and that a Tribunal will be willing to look beyond the words themselves to what is actually happening in reality. Employers should therefore ensure that all documents are sufficiently clear so as to reflect the reality of an employment arrangement.

For more information, please contact Nick Murrell in our Employment Law team on 0117 314 5672.