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K had entered into a contract for services with an employment agency (S), and was paid by S on an hourly rate. He had been directed by S to report for work at a hospital maintained by H, his services having been provided by S to H under a contract for the supply of services. K received some training from H. Some time after starting work, K unsuccessfully applied for a permanent post at the hospital. Thereafter, H ran short of money and failed to pay S for K's services. S withdrew K's services and his assignment came to an end.
H submitted that the tribunal had misapplied the test for determining whether a contract of employment existed between H and K. It submitted that the correct test was whether the reality of the relationship was consistent only with the implication of a contract of employment and whether, therefore, it was necessary to imply such a contract between itself and K.
HELD: There was no reason to depart from the formulation of the test as put forward by H, according as it did with the approach of the court in Aramis, The  1 Lloyd's Rep. 213 and in Cable & Wireless Plc v Muscat  EWCA Civ 220,  I.C.R. 975, Aramis applied and Muscat followed. It was not enough to form the view that because K looked like an employee of H, acted like an employee, and was treated like an employee, then the business reality was that he was an employee and that a contract of employment had to be implied. The position on the facts was at least as consistent with there being no contract between K and H as it was with there being a contract, and their affairs were equally as consistent with the express arrangements, namely the contract for services between K and S and the contract between S and H for the supply of K's services. It could not be said that it was necessary to infer a contract of employment between H and K in circumstances where K had applied for a permanent post and had been rejected by H. That was wholly inconsistent with an inferred intention by H to contract with K. Moreover, there was no mutuality of obligation. K had agreed to provide his services to S, and S had agreed with H to provide it with K's services. Such an arrangement did not give rise to the necessary implication of a contract between H and K, and the parties would have acted in exactly the same way in the absence of a contract between H and K.
For the appellant: L Chudleigh.
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