Dr Graeme Madden v Waracle Limited & Anor

The appellant works in the field of information technology. In 2021, the appellant worked on an IT contract that the first respondent (“Waracle”) was to perform for a bank. He was recruited for the job by a recruitment company (“Cathcart”), formerly a respondent (although no longer a party). The appellant entered into a contract with the second respondent in this appeal (“Paystream”), headed “Employment Contract”. Paystream is an “umbrella company”, a type of business sometimes used by recruitment agencies to employ and pay temporary workers recruited by them. After about two months, the appellant’s work came to an end. He brought a claim in the Employment Tribunal (the “ET”) in respect of notice pay, unfair dismissal, disability discrimination and harassment. The claim for unfair dismissal was struck out by the ET on 13 November 2023, but the notice pay and disability discrimination claims remained.

A preliminary issue arose about who employed the appellant. The appellant contends that he was employed by Waracle. The respondents both contend that he was employed by Paystream. There was a two day preliminary hearing at which evidence was heard and documentation considered. On 10 May 2024, the ET decided that the appellant was an employee of Paystream, and he was not entitled to notice pay from either respondent. The appellant appealed to the Employment Appeal Tribunal (“EAT”). Permission to appeal on two grounds was granted on 12 March 2025. Read short, these were whether the ET applied the correct legal tests to ascertain who was the employer, and whether the ET’s reasons were adequate for finding the employer was Paystream.

The work arrangements under consideration in this case are sometimes known as working through an umbrella company. Umbrella companies may become involved when recruitment agencies find temporary workers for a client. Because of the temporary nature of the work on offer, the client prefers to pay a fee for services of temporary workers supplied to them, rather than employ them. The recruitment company prefers the temporary worker to be employed by a different company, rather than itself becoming the employer of people it recruits to work for others. This allows the recruitment company to concentrate on its business of recruiting, and reduces potential liabilities. Accordingly, an umbrella company employs the temporary worker, in return for a fee from the recruitment company. The umbrella company becomes responsible for payroll, deduction of tax and national insurance, sick pay, and other statutory rights such as holiday, maternity and paternity pay in respect of the worker. The temporary worker or contractor is able to demonstrate that they are paying tax and national insurance, and may elect to use the contract with the umbrella company for subsequent temporary IT jobs (which may assist in showing continuity of employment where that is helpful).

The ET found that working for an umbrella company “is a relatively common arrangement in certain industries, which developed from the introduction of IR35 provisions”. IR35 is the name given to HMRC’s off-payroll rules, which aim to ensure that a contractor pays broadly the same income tax and national insurance as an employee. The rules have the effect of restricting a contractor’s ability to provide services through their own limited company, and being remunerated by the company paying them dividends (which may benefit a contractor, as expenses can be set off against income, and there may be a lower tax rate on dividends than some other forms of income). Where a contract is caught by IR35, an option sometimes used is for the contractor to become an employee of an umbrella company. The contractor then works as the employee of the umbrella company, but on an assignment to a client. In previous temporary jobs, the appellant had both worked through an umbrella company, and provided his services through his own limited company, where that route was available for a particular contract.

In this case, the arrangement of working through an umbrella company was effected by a series of contracts.

The permission to appeal granted in this case refers to the case of Autoclenz v Belcher [2011] UKSC 41. Tribunals will look beyond contracts in some contexts, particularly where contracts governing working arrangements seek to avoid access to statutory protections, and are based on an inequality of bargaining power. For example, in Autoclenz, the court was concerned about avoidance of minimum wage and working time regulations. The people who worked for a business cleaning cars were stated in contracts to be sub-contractors, not employees. The court found that it was necessary to focus on the reality of the relationship, and consider whether the terms of any written agreement in truth represented what was agreed. The true agreement might have to be gleaned from all the circumstances of the case, of which the written agreement was only part. It was found that the claimants were workers and entitled to minimum wage and working time protections. In Uber BV v Aslan and others [2021] UKSC 5 a similar underlying concern arose, of taxi drivers being able to benefit from statutory provisions governing minimum wages, working time and annual leave. Looking at the reality of the situation, the court found that Uber drivers were workers and entitled to the benefit of these statutory provisions. In Uber, Lord Leggatt JSC explained it is critical to understanding Autoclenzthat the rights asserted were not contractual rights, but created by legislation. The ultimate question is whether the relevant statutory provisions creating rights, construed purposively, were intended to apply to the transaction, viewed realistically (para 69-70).

The grounds of appeal in this case upon which leave has been granted are directed at whether the ET properly applied this strand of authority and adequately explained its decision, when deciding the appellant was employed by Paystream.

This decision confines itself to the two grounds of appeal upon which permission was granted. Towards the end of this judgment, there is a section headed “preliminary issues”, which explains why the EAT refused applications by the appellant relating to amendment of grounds of appeal and new evidence, and decided the appeal only on the grounds for which leave had been given.

It is convenient to address the two grounds of appeal upon which permission was granted in reverse order. The ground of appeal which is dealt with first is whether the ET applied the correct legal tests to determine the appellant’s employment status and the correct identity of his employer. As put in the grant of permission, this ground is about whether the ET failed to ask itself if the written documentation reflected the true agreement between the parties and/or whether, to make sense of the situation, it was necessary to imply a contract of employment between the appellant and Waracle, having regard to Autoclenz and James v Greenwich London Borough Council [2008] EWCA Civ 35.

The appellant’s claim is brought because his work terminated after two months, without him receiving four weeks’ notice pay, and without him receiving payment for the eighteen weeks left on the contract. He seeks to have a contract of employment implied between him and Waracle. Although the appellant has an express contract of employment with Paystream, he suggests it is fraudulent, designed so he can be dismissed with no repercussions. His claim is in respect of notice pay, disability discrimination, harassment and unfair dismissal. The appellant argued that a contract of employment should be implied to reflect the reality of the situation. Looking at the three tests in Ready Mixed Concrete (South East) Ltd v Minister of Pensions 1968 1 All ER 433 (provision of work and skill for payment, control, and consistency of other contractual provisions), the appellant submitted he was employed by Waracle. He was subject to the control of Waracle, not Paystream, and he was fully integrated into Waracle in terms of working hours and who he was working with. The written contract with Paystream had various problems in practice, in that clause 4.1 said Paystream would make reasonable endeavours to allocate him to suitable assignments, but Paystream (like other umbrella companies) did not provide work assignments. Clause 5.2 was structured so that a temporary employee would be regarded as having resigned, rather than the contract being designed for a longer period of employment.

The respondents on the other hand argue that the correct legal tests were applied by the tribunal. The ET had considered the terms of a contract between the appellant and Paystream, and all of the other evidence before it. An alleged breach of clause 4.1 of the contract between Paystream and the appellant by Paystream, or a deemed resignation under clause 5.2, did not mean the contract of employment was fraudulent or a sham. It just meant that there were potential remedies against Paystream. The ET had correctly applied the law. There were no grounds for treating the express contracts as anything other than genuine contracts, and so there was no basis for implying any other contracts.

The appellant was providing his work in connection with a temporary contract Waracle was carrying out for a client. Underlying the first ground of appeal is the issue of whether the appellant was doing so as an employee of Paystream supplied on an agency basis to Waracle, or as an employee of Waracle. Cases such as James and Tilson v Alston Transport [2010] EWCA Civ 1308, which were before the tribunal, establish that it is not necessary in all agency situations to imply a contract directly between an agency worker and the business in which they are working. Agency workers have the protection of various statutory provisions, such as the Agency Workers Regulations 2010 (which represent the decision of legislators about the appropriate balance between protection of agency workers and maintaining flexibility for employers), and health and safety and discrimination legislation. In James, in an agency worker situation, it was found that the relationship between the parties was fully explained by the contractual arrangements between the worker, agency and client, which were not a sham. It was not necessary to imply a contract directly between the worker and the agency’s client for whom she worked, to give business reality to what was happening. In Tilson, although a worker was found to be fully integrated in a business for which he was working, he was provided by a third party agency. The court, in finding there was no implied contract between the worker and the business in which he was working, set out well established principles for deciding if a contract should be implied. The onus is on the claimant. A contract can be implied only if it is necessary to do so. The court found that if the ET had properly directed itself in accordance with those principles, then provided there was a proper evidential foundation to justify the conclusion, it would not be interfered with on appeal.

In Ter-Berg v Simply Smile Manor House Ltd and Others [2023] EAT 2 (para 38-46), it was said that the quest in every case is to ascertain what was in truth and reality truly agreed between the parties. Written agreements may be relevant, but consideration has to be given to whether there are circumstances or features of the wider picture which indicate written terms may not reflect what was truly agreed. In an appeal from a decision of the tribunal, the EAT is looking to see from the decision, viewed as a whole, whether the ET has carried out a sufficiently wide-ranging inquiry.

The principal concern underlying cases such as Ter-Berg, Autoclenzand Uber, leading to courts looking behind agreed contractual arrangements, is the use of contractual arrangements to try to avoid statutory protections relating to employees and workers, as already discussed. However, the umbrella company arrangement under consideration in this particular case appears to be designed to assist compliance with HMRC’s IR35, and preserve various other statutory protections.

The appellant remains able to exercise his rights under the Equality Act 2010 to bring a disability discrimination claim against Waracle. Under the written employment contract with Paystream, there are rights to annual leave, other paid leave, and pension. The contract addresses the Working Time Regulations 1998 at paragraph 2.8, and while under the contract the appellant opts out of these, he is entitled to opt back in by giving 7 days’ notice (and in any event there are findings in fact that during the two months or so that the appellant worked on Waracle’s IT project with the bank, he worked 9am to 5.30pm generally). There is no attempt to avoid minimum wage provisions; they are preserved by clauses 1.4 and 7.1 of the contract between the appellant and Paystream, and in practice the appellant was paid at considerably higher rates than the minimum wage for hours worked. There is also no attempt in the contractual arrangements in this case to bypass statutory protection for agency workers. Clause 3 of the contract between the appellant and Paystream recognises that the Agency Workers Regulations 2010 apply in relation to the supply of the appellant to Waracle. It requests that the appellant notify it of any grounds for complaint under those regulations, so that Paystream may have a proper opportunity to investigate and make any necessary changes.

As far as statutory minimum notice periods are concerned, there is explicit provision in clause 5.1 of the contact between the appellant and Paystream for the employer to give the statutory minimum period of notice if terminating the contract. It is true that if the employee does not contact the employer weekly to notify of availability for assignments for four weeks, the employee will be deemed to have resigned under clause 5.2 of the contract. However, if the employee does contact Paystream weekly, even if to no avail in respect of further assignments, then the contract will continue, including the contractual entitlement to be paid at the basic pay rate in accordance with provisions in clause 7, subject to clause 4.2. If Paystream wished to put an end to that entitlement, it would be required to give the employee the statutory minimum notice period. Further, section 86(3) of the Employment Rights Act 1996 (“ERA”) guarantees the statutory notice period even if there is “any provision for shorter notice in any contract of employment”. Waracle suggests that if the appellant wishes to contend that clause 5.2 breaches the right to statutory minimum notice from Paystream, he could seek to amend in a claim against Paystream relying on section 86(3) before the ET. Paystream and the appellant have not stated a position on that argument, because it was not before the ET.

The decision of the ET has to be approached against this background. It is not necessary for the decision to set out and refer to authority not put before the tribunal, or quote at length from cases cited to it. What is required is that the decision of the tribunal, read as a whole, demonstrates that it has properly applied the law, in this case by carrying out an inquiry that looks beyond the terms of the written agreement to ascertain what was the true agreement between the parties (Ter-berg), and whether it was necessary to imply a contract of employment with Waracle (Tilson).

Approached in this way, that is what the ET did. The ET recognised it must not look only at the written employment contract. It found that the case centred round the appropriate interpretation of the contractual documentation and analysis of the relationship between the parties (para 10, emphasis added). It then made findings in fact about the reality of the situation. The appellant was an experienced IT professional, working in a role of scrum master that involves a degree of management of others (paras 12 and 13). He knew about working through an umbrella company as he had done it before (paras 12 and 29). He agreed to doing so again, having selected Paystream from two alternatives suggested (paras 17 and 19). He signed a contract with Paystream headed “Employment Contract”. He worked 9am to 5.30pm after that on Waracle’s IT project for a bank, filling in timesheets (para 20). His work on the project was relatively short, under two months, and it was terminated when he was told by Waracle and then Cathcart that his services were no longer required (para 24). Paystream and the appellant did not communicate about termination of their contract (para 24). The appellant made no further contact with Paystream, which treated him as having resigned from his employment under clause 5.2 of the contract between them (para 25). The ET noted the claimant’s evidence that he could earn a six figure salary and had other potential job opportunities (para 29). The ET found there was government guidance on working for an umbrella company, it was a relatively common arrangement in that industry, and the appellant had done it before (paras 29-30).

The tribunal’s decision about who was the employer was made in the light of those findings. While the ET accepted there was a complex agency relationship, it rejected that the appellant had been forced into the arrangements, finding they had been freely entered into. It found the appellant was free to reject the role if he had not wanted to enter those arrangements (para 29). In the final part of the judgement the ET expressly considered the claim that was before it, the appellant’s claim for breach of contract in his claim form for four weeks’ notice pay. The ET noted that an email sent to the appellant by Cathcart, prior to the appellant entering into the contract with Paystream, suggested the appellant would have a four week notice period (para 33). Despite this situation, the ET found that the notice provisions in the contract between the appellant and Paystream were clear. The ET considered that if the appellant had an issue with the shorter notice period in the contract with Paystream, that was something he ought to have raised before entering the contract (para 34). He had freely entered into the arrangements and was bound by them. There was no contract between the appellant and Waracle. The ET was therefore aware that the outcome was that the appellant would not have a four week notice period as suggested in an email to the appellant prior to the contract of employment being entered, but considered that was simply the outcome of the contractual arrangements, including deemed resignation, freely entered into.

In circumstances in which the job had lasted less than two months, the ET carried out a sufficiently wide ranging inquiry to demonstrate that it properly applied the law when deciding that Paystream was the employer, not Waracle. From the way it went about its task, it is evident that it was endeavouring to ascertain what the true agreement was between the parties, by looking beyond the written contract of employment. Its findings in fact show it was aware that Waracle had interviewed the appellant, that the appellant was working on a Waracle project for a Waracle client, and that a Waracle employee had told him his services were no longer required before Cathcart did (paras 13, 14, 20 and 24). It therefore knew and took into account the close association between the appellant and Waracle. However, those were not the only matters before it, and it was for the ET to consider all relevant factors and make a judgement in the light of them. The ET was aware of the contractual agreements entered into in writing by all involved. The tribunal’s findings show that it rejected the idea that there was such an imbalance of bargaining power that the written documents did not document the true agreement. Ultimately, the ET found the appellant was employed by Paystream. Having made that finding, it is a clear inference from the tribunal’s decision, read as a whole, that it did not find that the contract of employment with Paystream was fraudulent, and nor was it necessary to imply a contract of employment with Waracle.

The ET did not decide the issue of whether section 86 of the ERA operated to ensure Paystream was obliged to pay statutory notice of one week. That basis of claim was not before it, because the argument before the ET was that contractual notice pay of four weeks was due. However, should the ET now permit a claim for notice pay based on section 86 to be amended into the appellant’s claim, it would not follow that the contract between Paystream and the appellant was fraudulent or invalid and that Waracle was the employer. The consequence would be that Paystream may be liable as employer to pay statutory notice pursuant to the provisions of section 86 of the ERA.

The approach suggested by the appellant, under reference to Ready Mixed Concrete, of finding that the appellant was employed by Waracle, is not accepted. The wide ranging inquiry suggested in Ter-Bergis capable of encompassing consideration of the three features mentioned in Ready Mixed Concrete: provision of work for remuneration, control over work, and other provisions of a contract. Indeed, the ET in this case made findings bearing on all three matters. However, Ready Mixed Concrete was decided in a different context of trying to decide whether there was an employer at all, not which of two potential businesses was the employer, or if a contract should be implied with a second business when there is already a contract of employment with another one. In Tilson, it was recognised that absent an agency arrangement, even if there were no express contract of employment, one would readily be implied where an agency worker had been working for a business, because the relationship had all the hallmarks of employment. Yet such a contract was not implied where there was an agency arrangement, because it was not necessary to do so to give business reality to what was happening. It is important to remember the third criterion in Ready Mixed Concrete, which requires consideration of other contractual provisions. In this case the contractual arrangements set up a situation where the appellant was employed by Paystream and supplied on an agency basis to Waracle. Even although an agency worker may be integrated within a business for which they are working, and subject to control of that business in the job they are doing, the law permits agency arrangements. It does not follow from integration with a business for whom an agency worker is temporarily working, or control by that business, that it is necessary to imply separate contracts of employment with that business.

The appellant, in his claim form to the tribunal, expressed the belief that the contract with Paystream was so that Waracle could mistreat or dismiss him with no repercussions. But in law that was not the position. The fact that a person is contracted through an umbrella company does not prevent them from being within the scope of the Agency Workers Regulations 2010 or the Equality Act 2010. The appellant remained subject to other statutory protections under his contract of employment, such as minimum wage, sickpay, holiday pay, statutory notice, and the ability to claim under section 86 of the ERA and for disability discrimination. Although in this particular case those protections may not provide the appellant with the outcome he desires, it does not follow that the employment contract with Paystream was fraudulent or a sham.

The decision of the ET demonstrates that it properly directed itself in accordance with the correct principles. From its decision, it can be seen that it carried out an appropriately wide ranging enquiry. There being a proper evidential basis for its conclusion, the EAT cannot interfere with it (Tilson para 9, Ter-berg para 45).

The other ground of appeal upon which permission was granted concerns whether the ET engaged properly with two contentions of the appellant. The first contention was that the contract of employment with the second respondent was a sham (having regard to Autoclenz). The second contention was that it was necessary to imply a contract of employment between the appellant and the first respondent.

The role of the EAT is not to look subjectively into the mind of the ET judge to see if particular contentions were considered, but to consider the written decision issued. The underlying legal issue for this ground of appeal is whether the written decision of the ET was adequately reasoned.

The appellant criticised the ET’s reasons in respect of the deemed resignation clause under clause 5.2 of the contract between the appellant and Paystream. He considered those reasons to be circular and nonsensical, because having expressed some reservations about how the provision regarding deemed resignation could be implemented, the ET judge nevertheless found the appellant was deemed to have resigned and that contractual notice pay was not due (para 34). The appellant also criticised the reasons for failing sufficiently to address clause 4 of the contract between him and Paystream. In particular, clause 4.1 contained an undertaking by Paystream to use reasonable endeavours to secure assignments, but umbrella companies did not do that. Clause 4.2 (which provided, in summary, that Paystream did not guarantee assignments, there might be periods of no work and no corresponding obligation to pay, and that the employee was obliged to work when required by Paystream) was contradicted by clause 4.3 (normal hours of work were 9am to 5.30pm).

The respondents argued that it was not necessary for the ET to refer expressly to Autoclenz, which had not been cited to the ET. The decision of the ET was that the appellant was employed by Paystream, on the basis that the contracts which said so were genuine. That was sufficient to show that the ET did not find the contract with Paystream to be a sham. Given the finding that there was an employment contract with Paystream, it was not necessary to consider if there was an implied contract with the first respondent. The ET’s reasons were short but adequate.

The principles governing the adequacy of reasons for a decision are well established. Decisions of the ET must be read fairly and as a whole, without being hypercritical. The ET must give proper and adequate reasons for its decision, or it will have erred in law. Adequacy is required, not perfection. Tribunals are not required to identify all evidence relied on in reaching conclusions of fact. Simple, clear and concise findings and reasons are to be encouraged. If the decision demonstrates that the correct principles were in the tribunal’s mind, the ET can be expected to have been seeking faithfully to apply them, and to have done so unless the contrary is clear from the language of its decision (DPP Law Ltd v Greenberg [2021] EWCA Civ 672 paras 57-58, Sullivan v Bury Street Capital Ltd [2021] EWCA Civ 1694 para 42, Seyi Omooba v Michael Garrett Associates Ltd and another [2024] EAT 30). Wordie, the classic case for adequacy of reasons in Scotland, explains that reasons have to be given on the “substantial questions in issue” between the parties, as opposed to every possible issue raised, or every piece of material in evidence. The decision maker:

“must give proper and adequate reasons for [their] decision which deal with the substantial questions in issue in an intelligible way. The decision must, in short, leave the informed reader and the court in no real and substantial doubt as to what the reasons for it were and what were the material considerations which were taken into account in reaching it”. 

When considering whether the tribunal erred in law by failing to provide proper and adequate reasons, the decision should be looked at in the light of the issues that were before the ET at the time it made its decision. The substantial questions in issue before the ET of relevance to the grounds of appeal was who employed the appellant, and whether it was Waracle or Paystream (para 1 of the ET’s decision). Although Autoclenz is mentioned in both of the grounds of appeal, that was not a case cited to the tribunal, and the ET cannot be faulted for not having referred to it expressly in its decision. Nor was it necessary expressly to use the word “sham”, provided the ET addressed the issue of validity adequately. What is important is that it can be understood from the decision why the ET concluded that Paystream was the employer, and Waracle was not.

The essence of the ET’s decision is that the contract with Paystream was not fraudulent; rather, it was a common arrangement in that industry and was entered into freely by all parties. As a result, parties were bound by those arrangements, which included that Paystream was the appellant’s employer, not Waracle. Those conclusions were supported by findings and reasons within the ET’s decision. The ET found that the appellant is an experienced IT professional who has worked in the industry for over 15 years, including providing his services previously through an umbrella company (para 12). The appellant was asked whether he was willing to go through Paystream (para 17), rather than being told to. At the time he was willing, because he signed a contract with Paystream on 14 July 2021 (para 19). The appellant had other potential job offers or opportunities, could earn a six figure salary, and was free to reject the role if he did not wish to provide his services through an umbrella company, so the ET rejected the contention he had no choice (para 29). The ET was aware of and took into account the terms of the contract between the appellant and Paystream (para 19), which included clauses 4 and 5.2. The ET made explicit findings about the deemed resignation clause (para 19). It then found that the contract with Paystream was not terminated after the appellant’s work with Waracle ended (para 24). The appellant made no further contact with Paystream, and Paystream treated the appellant as having resigned from his employment (paras 33 to 35). The ET expressly considered clause 5.2 and deemed resignation, expressing some reservations about its operation (paras 19 and 29). However, the ET found that Paystream was entitled to rely on the deemed resignation clause, because they were the contractual arrangements freely entered into by the parties. The ET took into account that Cathcart told the appellant he would be entitled to 4 weeks’ notice, but found in essence that later different arrangements in clear terms had been entered into freely by the appellant with Paystream, including the deemed resignation clause which was expressly referred to (paras 33-34).

The informed reader can understand from the ET’s judgment that it decided the contract between the appellant and Paystream was freely entered into and was valid (paras 29-31). It follows that the ET did not consider that the contractual arrangements between the appellant and Paystream were a sham. The ET took into account and addressed deemed resignation in clause 5.2, because an argument about that clause had been made before it. Nevertheless, the ET found that the existence of that clause did not undermine the arrangements, because it was freely entered into (paras 17, 19, 29, 33-34). The reasons given about clause 5.2 do not become unintelligible just because the ET expressed reservations over the extent to which the provision regarding deemed resignation may be implemented. The ET found on the facts of this particular case that clause 5.2 operated so that the appellant was treated as having resigned; the terms of the contract were clear, the appellant did not make any contact with Paystream after the termination of the assignment with Waracle, so after four weeks Paystream was entitled to treat the appellant as having resigned (paras 24, 25 and 34). That reasoning is neither nonsensical nor circular, even if the appellant disagrees with it.

There was no need for the ET to address expressly the argument the appellant now seeks to advance based on clause 4, because that was not a substantial question in issue between the parties before it at the hearing. In any event, its failure to do so does not disclose an error of law, because the underlying issue with which Autoclenz, Uber and Ter-berg is concerned is evasion of statutory protections, and there was no argument before the ET that clause 4 had that effect. The ET expressly mentioned James and Tilson, cases about agency arrangements in which it was found that employment contracts should not be implied with the business for whom the agency worker was working, because such contracts were not necessary (para 27). The worker already had an employer. The ET found that the contract of employment between the appellant and Paystream was valid, and the appellant was an employee of Paystream (paras 28, 29 and 31). It follows from those findings that the ET did not consider it was necessary to imply a contract between the appellant and Waracle in this case.

It is true that the decision of the ET is succinct. But keeping decisions simple, clear and concise is to be encouraged. The informed reader is left in no real and substantial doubt why the ET decided that Paystream was the appellant’s employer, and not Waracle. The reasons of the ET do not demonstrate any failure to engage adequately with the issue of whether the contract between the appellant and Paystream was valid or a sham, or whether it was necessary to imply a contract between the appellant and Waracle. The nature of the findings made by the ET and the reasons that it gave made it clear why it considered the appellant was employed by Paystream. The ground of appeal concerning adequacy of reasons does not succeed.

This appeal concerns a preliminary point only, about the identity of the appellant’s employer. The EAT has found that the ET did not err in law when it reached the conclusion that the appellant was employed by PayStream, not Waracle. The appeal falls to be refused.

There remain various matters for determination by the ET. One is the outstanding disability discrimination claim against Waracle. There is also a potential further issue about notice pay against Paystream as employer. The effect of the ET’s decision on the facts is that the contract between Paystream and the appellant was freely entered into, and the appellant is bound by it. That is so, even if the notice period in that contract differed from the four week notice mentioned in an email to the appellant from Cathcart (and the four week notice periods as between Waracle and Cathcart, and Cathcart and Paystream). The principles of freedom of contract mean that Paystream and the appellant were free to agree whatever terms they wished. What the appellant agreed, by signing the contract of employment with Paystream, was statutory notice, in clause 5.1. Because of the existence of that express term governing the period of notice, the scope to imply a term for a more generous four week notice period is restricted. That is so even though, on the face of the contracts between Waracle, Cathcart and Paystream, Waracle may have had to pay four weeks’ notice to Cathcart, and similarly Cathcart to Paystream, and Paystream might potentially receive a windfall not passed on to the employee. It is understandable why the appellant may feel aggrieved at not receiving four weeks’ notice pay. But in this case, that is the consequence of generally applicable principles of freedom of contract, developed to respect (among other things) individual autonomy and commercial certainty.

However, the matter does not end there, because legislation aims to provide a degree of protection when employment is terminated. The intention of section 86 of the ERA is that all employees who have been continuously employed for one month or more should be given a minimum period of notice. After a two month period of work, the statutory minimum would be one week of notice. Section 86(3) provides that “any provision” for shorter notice in a contract of employment has effect subject to section 86(1) and (2). Absent termination for reasons of conduct, section 86(3) restricts the ability to contract out of statutory notice. Returning to the dicta of Lord Leggatt in the Uber case, quoted in paragraph 6 of this judgment, the ultimate question is whether the relevant statutory provisions creating rights, construed purposively, were intended to apply to the transaction, viewed realistically (para 69-70). If it be the case that the deemed resignation clause in the umbrella company contract (clause 5.2) is operating de facto to remove statutory notice for contractors working for umbrella companies - even if umbrella companies do not in practice offer the further assignments referred to in clause 5.2 or alternatively continue pay for the four weeks leading up to the deemed resignation - that may be the type of situation struck at by the ERA section 86(3).

However, this issue was not focussed in the appellant’s claim form, so has not yet been the subject of evidence or argument before the ET. It would not be appropriate for the EAT to determine it at this stage. It is open to the appellant, once the case is remitted to the ET, to seek to amend his claim so it includes statutory notice pay on the basis of the ERA section 86(3). The ET, in determining any such application, ought to take into account that the case is still at a preliminary stage, that a claim for notice pay (albeit one based on express terms) has been part of the case from the outset, the unusual circumstances in which the issue of section 86(3) arises, what is said in paragraphs 6, 12-16 and 21 above, and the wider interests of justice. The finding of the ET about notice pay (ET judgment para 2 and paras 34-35) may be regarded as applying only to Waracle, and to Paystream only insofar as it deals with terms of the employment contract on its face, prior to any consideration of section 86(3), because that is all the ET dealt with.

The final part of this judgment explains why the EAT has confined itself to the two grounds of appeal before it, despite the wide ranging submissions by the appellant.

The appellant initially sought to appeal the case to the EAT on the basis of three grounds, which in short were new evidence, error in not digging deep enough to discover other fraudulent terms in the contract, and bias on the part of the ET judge. After a hearing on 12 March 2025 at which the appellant was represented by SEALAS, permission to appeal was not granted on any of those grounds, because they were not found to be reasonably arguable. However, there were two other grounds of appeal identified by the representative. These were found to be arguable and proceeded to a full hearing on 16 October 2025. They have been dealt with above.

At the full hearing of the appeal before the EAT, the appellant was unrepresented. He had sought to postpone the hearing the previous day, because of difficulties with representation, and health problems. That application for postponement was refused, essentially because there had been ample time to secure representation, and although there was some evidence the appellant was currently certified as unfit to work, there was no sworn medical certificate from a medical practitioner certifying the appellant’s unfitness to attend before the EAT and represent himself. By way of reasonable adjustments and with the agreement of parties, the procedure adopted at the hybrid full hearing was for the appellant to attend remotely, the respondents (who attended in person) to make submissions first, the appellant to have two weeks thereafter to submit written submissions, and the respondents two weeks to respond. After the EAT heard from the respondents at the hearing, the appellant then elected to make a short oral submission, and did so ably. During that submission he shared his screen briefly to show two emails. The order of the EAT following the oral hearing directed written submissions “that are confined to matters relevant to the grounds of appeal” and that they “should address the extent to which the EAT is entitled to have regard to the two emails shared by the appellant”.

Thereafter, both parties submitted written representations to the EAT. The appellant’s submissions are lengthy. They seek to introduce a number of new arguments and new evidence which were not before the ET. Within those submissions there is an application to allow the grounds of appeal to be amended; the appellant states “I would like everything I mentioned in my written submissions to be added as grounds of appeal”. Towards the end of the written submission the appellant focusses nine alleged errors, some of which seek to reintroduce grounds upon which permission was already refused (for example ground 5 “compelling new evidence” and ground 9 “judicial bias”), and others which rely on further new evidence and arguments. There are also submissions in relation to the EAT allowing new evidence not before the ET. The written submissions for the respondents maintained the position adopted by them at the oral hearing - that Paystream was the employer of the appellant - and made further arguments about the approach of the appellant.

The jurisdiction of the EAT is limited by legislation. Under section 21 of the Employment Tribunals Act 1996, appeals from decisions of the ET lie only on a question of law. Section 21 reflects a policy choice of the legislature to restrict appeals in the EAT to questions of law, and takes into account principles of finality and certainty, resources, and the wider interests of justice. At the first instance hearing before the tribunal, parties have an opportunity to produce relevant documents, lead evidence, and make arguments. An appeal before the EAT is not a second opportunity to challenge employment matters on the facts, or a rehearing; an appeal to the EAT is only permitted on questions of law.

Because many people without legal qualifications appear before the EAT, procedures have been developed to ensure that only appeals on arguable questions of law go to full hearing before the EAT. The procedures aim to ensure that what is argued before the EAT is within its jurisdiction to decide, in part to avoid the waste of time and resources of both parties and the EAT. In this case, the ET’s decision was issued on 10 May 2024. The appeal was brought on 28 May 2024. The appellant had an opportunity to provide grounds of appeal on points of law at the outset of the appeal to the EAT, and provided seven numbered grounds. After initial consideration of those grounds by a judge of the EAT on 1 July 2024, the case was allowed to proceed to a preliminary hearing to determine what grounds of appeal were arguable. The appellant had a further opportunity to focus his grounds of appeal in submissions prior to and then at that preliminary hearing. After the preliminary hearing on 12 March 2025, permission was not granted on the appellant’s original grounds, but on two grounds reformulated with the assistance of SEALAS, then representing the appellant. Those two grounds proceeded to full hearing on 16 October 2025. The respondents prepared for the hearing on the basis of grounds upon which permission had been granted, submitting skeleton arguments and making oral submissions. Written submissions by parties following the oral hearing were permitted as part of reasonable adjustments for the appellant, but on the grounds of appeal that were before the EAT; the case of Wordie Property Co Ltd v Secretary of State 1984 SLT 345 at p348; and how it was envisaged under the umbrella company contract that statutory minimum notice periods were observed (italics added). The umbrella contract was before the ET and discussed by it.

The appellant lists seven reasons why he considers the grounds of appeal should be amended. Two contend that matters raised by him are in response to lines of enquiry raised by the EAT judge. That is not correct. The order of the EAT was clear that written submissions following the oral hearing were invited only on matters relevant to the grounds of appeal, and the question about statutory minimum notice periods upon which written submissions was invited was a question specifically tied, in its wording, to the umbrella company contract in the case. It was not an invitation to adduce new matters of fact.

Even assuming (without deciding) that all new grounds in the written submissions meet the requirement that they be reasonably arguable errors on points of law, it would not be just and fair to allow the appeal to be expanded as the appellant seeks at this late stage. It is not appropriate for the appellant to seek to bypass the judicial decision about arguable grounds of appeal made on 12 March 2025, by seeking to reintroduce grounds upon which permission was refused. As for other new grounds, it is accepted that if the EAT does not allow the grounds of appeal to be expanded, the appellant will not be able to rely on everything he wishes to, and this may cause him prejudice. However, the appellant was already afforded considerable time and opportunity between the decision of the ET on 10 May 2024 and the preliminary hearing on 12 March 2025 to focus his grounds of appeal. While the appellant has serious health problems, that was ample time in which to prepare arguable grounds. The case concerns a temporary job which was terminated after approximately two months, and although it also raises issues about umbrella companies which might be of wider application, has already been the subject of very considerable procedure in both in the ET and the EAT. It is not proportionate to allow the extensive expansion of the grounds of appeal sought at this late stage. It would also be unfair to the respondents, who have prepared in good faith for an appeal on grounds for which the EAT has granted permission, under the EAT’s usual procedures. Addressing all matters in the written submissions as part of this appeal would add expense and cause delay. Balancing all the various considerations, it is not just and fair to allow introduction of new grounds of appeal at this stage, and the application is refused.

As well as the two emails shared by the appellant on his screen at the hearing, the appellant’s written submissions contained a number of links and embedded items of evidence, including emails of 9 July 2021, and 1, 5 and 7 October 2021, Companies House records for Paystream, Paystream accounts, extracts from Paystream’s website about outsourced payroll, a link to a video on Facebook, and payslips. Many of these were not before the ET, and various of the appellant’s arguments were not made before the ET. Although the names of the Autoclenz and Jamescases are listed, the submissions do not discuss them further, or address the grounds of appeal upon which permission was granted in a focussed way. Rather, the written submission gives the strong impression of an attempt to re-argue the case before the ET, on the basis of new as well as some existing evidence.

The appellant requests the EAT to take into account these new matters. He contends that the new matters are very relevant and could impact the outcome of the case. He had not realised that he might need to rely on the new matters until after the ET’s decision. He further argues that there is no disadvantage to the respondents because his submissions are essentially clarification. He also relies on health problems and effects of medication to argue that he should not be expected to learn and practise the technicalities of law, so it is in the interests of justice to allow new matters. The respondents on the other hand object to new matters being considered by the EAT, because they were not before the ET. The issues they relate to had been raised by the appellant at the outset, as he had alleged the Paystream contract was fraudulent in his claim form to the ET. Websites and other documents the appellant now relies on were available at the time of the ET hearing. There was no good reason for him to fail to produce relevant documents for the ET hearing.

At the outset of the appeal, the appellant was provided by the EAT with a letter dated 28 May 2024 which referred him to the EAT’s Practice Direction. The current Practice Direction states at paragraph 8.12.1 that the EAT generally will not consider evidence that was not before the tribunal. If an appellant wishes to rely on fresh evidence, the Practice Direction sets out a procedure, not all of which has been followed in this case. The Practice Direction also sets out at paragraph 8.12.6 the test the EAT will apply in deciding whether or not to admit fresh evidence at the appeal stage (which is consistent with Chowdhury v General Medical Council2023 SLT 404 paras [27] to [28]). That test includes whether the evidence now sought to be relied on could have been obtained with reasonable diligence for use in the ET. Further, the Practice Direction also states at paragraph 8.13.1 that the EAT generally will not consider an argument that was not advanced before the ET.

The new materials sought to be introduced before the EAT were in principle available as at 22 and 23 April 2024 when the hearing was held in the ET. They go beyond clarification of matters already before the ET. There had already been considerable procedure and delays in the case since the appellant submitted his claim on 12 November 2021, so there had been a long time when documents could have been lodged and arguments formulated. Even though no issue is taken with the apparent credibility of the new documents, and it is not possible to say they would have had no influence if they had been before the ET, it is not just or fair to allow those documents now to be introduced for the first time on appeal. The EAT declines to admit them for the purposes of this appeal.

This decision about the identity of the appellant’s employer turns on the particular facts and findings made by the ET about the parties and the arrangements in this case, and is not a general endorsement of all working arrangements involving working through umbrella companies. The grounds of appeal are refused. The case will now be remitted to the ET to consider two matters. The first is whether, should the appellant apply to add a claim for statutory notice pay against Paystream pursuant to section 86(3) of the ERA, that application should be allowed and decided. The second is the appellant’s outstanding claims against Waracle, including disability discrimination.