21 March 2006

A contractor can be considered an employee, a case heard in the Court of Appeal has found.

Judgment in the case of Cable & Wireless v Muscat, which was handed down this month, found in favour of Patrick Muscat even though he supplied services through his own limited company and a recruitment agency.

Law firm Tarlo Lyons said the landmark ruling on the status of limited contractors has far-reaching implications for companies that employ them - even if it is done through a staffing firm.

It said the judgement could impact on employment rights such as redundancy, unfair dismissal claims and long serving contractors may start applying for pensions.

However the firm did stress that Muscat's particular circumstances played a key part in him being considered an employee of Cable & Wireless. He was at one time directly employed by the company Cable & Wireless took over, he was provided with equipment by the telecoms firm and liaised with them directly to organise holiday and claim expenses.

Partner Bridget Wood told www.supplymanagement.com that while there may not be many people in exactly the same situation as Muscat, a large number of firms make the same mistakes.

"They need to educate themselves and stop treating people as employees when they are not," she said.

Muscat lodged a claim of unfair dismissal in March 2003. In order for that claim to be taken forward the courts first had to find that he was an employee of Cable & Wireless. That decision has now been made and Muscat is able to take his claim forward.

SMmar2006