Lack of contract is key in employee status case

Most employment rights can only be pursued by individuals who are defined in law as "employees" that is where they are working under a contract of employment and there are mutual obligations, on the part of the employee to work and on the part of the employer to pay.

Where individuals are hired by third parties, the question arises as to whether or not they are employees of the third party. There is an increasing number of cases where individuals set themselves up as companies hiring their services through agencies to a third party. There are significant tax advantages in doing this.

However, in a recent case the Employment Appeal Tribunal ruled that this is unlikely to confer employee status. The main reason for this was that there was no contract of any kind between the worker and the company where he went to work.

* Hewlett Packard v O'Murphy 612/01