M I Mahmood v SMBC Nikko Capital Markets Ltd and Others: 2224001/2024 and 2224035/2024
EMPLOYMENT TRIBUNALS
Case No 2224001/2024, 2224035/2024
Between
Mian Imtiaz MahmoodClaimant(1) SMBC Nikko Capital Markets Ltd (2) JRI Europe Ltd (3) Dasa Umbrella Ltd (4) Harrington Starr LtdRespondent
Before
Employment Judge WattonKhalid Mahmood for claimantDate 21 May 2025
JUDGMENT
[1]The claims for unfair dismissal and wrongful dismissal against the First and Second Respondent are struck out under rule 38(1)(a) because they have no reasonable prospect of success. The Claimant was not an employee of either the First or Second Respondent. There was no express or implied contract between the Claimant and the First or Second Respondent.[2]The claims for unauthorised deductions of wages and holiday pay against the First and Second Respondent are struck out under rule 38(1)(a) because they have no reasonable prospect of success. The Claimant indicated he accepted these claims could only be brought against the Third Respondent.[3]The claims for unfair dismissal, wrongful dismissal, unauthorised deductions of wages and holiday pay against the Fourth Respondent are dismissed by consent pursuant to rule 62.[4]The claims for unfair dismissal and wrongful dismissal against the Third Respondent are struck out under rule 38(1)(a) because they have no reasonable prospects of success. There was no dismissal of the Claimant by the Third Respondent.[5]The remaining claim is for unpaid wages (including holiday pay) against the Third Respondent.
REASONS
[1]This preliminary hearing was listed to consider:a. The matter of who the correct respondent is;b. Any applications from any of the respondents to be removed as a party from the proceedings;c. To consider whether the claimant should be ordered to further particularise his claim;d. Any further case management.[2]The First, Second and Fourth Respondents made strike out and deposit order applications.
Factual background
[3]The Claimant is an IT services professional. The Claimant and his representative share a surname. To avoid confusion I will refer to the Claimant as ‘the Claimant’ throughout this decision and his representative as ‘Mr Mahmood’.[4]The First Respondent, SMBC Nikko Capital Markets Limited (‘SMBC’) is an investment banking business and part of the SMBC Group. The Second Respondent, JRI Europe Limited (‘JRIE’) provides IT consultancy services to and within the SMBC Group. The Third Respondent, Dasa Umbrella Limited (‘Dasa’) is an umbrella company. Harrington Starr Limited (‘Harrington Starr’) is an employment agency used by JRIE.[5]JRIE and Harrington Starr have an agreement dated 15 July 2020 for the supply of agency workers. Schedule 2 to that agreement is a standard form ‘Work Order’. In January 2021 SMBC required IT support. JRIE contacted Harrington Starr to source an individual to fulfil this need. The Claimant was identified by Harrington Starr and had to attend an interview with SMBC managers.[6]On 22 March 2021 Rebecca Walsh of Harrington Starr emailed the Claimant advising him that he had a choice of engagement options. First, he could be engaged via PAYE with Harrington Starr. Ms Walsh then broke down the arrangements for pay, holiday and pension if this option was chosen. The second option was engagement via an umbrella company. A choice of six approved umbrella suppliers was listed, including Dasa. Ms Walsh advised the Claimant to contact as many as possible to get the best options for him.[7]Later the same day the Claimant received a breakdown from Dasa enclosing an illustrative payslip, a brochure and setting out some of the benefits of using Dasa. On 24 March 2021 the Claimant signed a contract of employment with Dasa.[8]The Claimant’s first engagement at SMBC was for a six-month period between 12 April 2021 to 11 October 2021. This is set out in a ‘Work Order’. The parties to that order are JRIE and Harrington Starr. The Claimant is described as an agency worker and the financial compensation is recorded as a daily rate “Charge Rate (inclusive of Fees)”. The signatories are Nikky Sanwo for JRIE and Rebecca Walsh for Harrington Starr.[9]The ‘Work Order’ agreement was extended on several occasions, with the daily rate increasing over time. The final engagement was contracted to run from 1 January 2024 to 31 December 2024.[10]On 24 July 2024 an employee at SMBC raised a complaint about the Claimant’s behaviour. JRIE investigated the complaint and notified Harrington Starr that the Claimant’s assignment was terminated on 29 July 2024.[11]George Harris, an employee of Harrington Starr sent the Claimant a text message at 18:48 informing him that JRIE had terminated the assignment.[12]There was then a period of correspondence between the Claimant and Harrington Starr, and Harrington Starr and JRIE. The Claimant was seeking further clarification on the reasons for termination. Harrington Starr then passed those requests to JRIE. Mr Mahmood then became involved and asked for an explanation from SMBC on the Claimant’s behalf. SMBC denied being the Claimant’s employer.[13]Acas conciliation took place on the following dates:a. For SMBC Acas received the notification on 27 August 2024 and issued the notification the same day;b. For JRI and Dasa Acas received the notification on 3 August 2024 and the certificates were issued on 22 August 2024;c. For Harrington Starr Acas received the notification on 2 September 2024 and issued the certificate the same day.[14]The claim was issued against all four respondents on 22 August 2024. On 9 October 2024 EJ Khan directed that the claim form is to be treated as having been received on 2 September 2024.[15]On 9 December 2024 EJ Baty directed that the final hearing be converted to a one-day preliminary hearing in public to consider the matters set out at paragraph 1 of these reasons.[16]On 6 January 2025 the First and Second Respondents applied to have the claims against them struck out. In the alternative, they sought a deposit order of £1000 per claim. On 20 January 2025 the Fourth Respondent also applied to have the claims against it struck out, and a deposit order of £1000 per claim.
The hearing
[17]At the start of the hearing, all parties agreed that the Fourth Respondent was not a Respondent for any of the relevant claims. The Claimant agreed, Mr Mahmood appeared to suggest that the Fourth Respondent had been included for disclosure purposes. Accordingly, the claim against the Fourth Respondent was dismissed with the consent of all parties.[18]The main documents were a main bundle of 351 pages and an additional bundle of 75 pages, including all witness statements and skeleton arguments. I was taken to the relevant pages of the bundles by the parties and read them in their entirety after the hearing. I reserved my decision at the hearing. Evidence: Claimant[19]The Claimant’s witness statement was his evidence in chief. In that statement he characterised Dasa as his “payroll provider”. He set out how he had to fill out timesheets for SMBC, JRIE and Dasa. He also explained he was provided with office equipment and systems access with email addresses for both SMBC and JRIE.[20]The Claimant also gave evidence that his shifts were planned by his line manager at SMBC. He said that he was instructed to take 10 days of mandatory leave per year, which would be recorded on the timesheets and approved by his manager. However, those days were unpaid and included all the bank holidays within the year. He also gave examples of the kind of projects and tasks he undertook at SMBC.[21]Under cross-examination by Mr Francis the Claimant accepted there was no written contract between him and SMBC or JRIE. He said that he had no choice but to sign the contract with Dasa, or he would not be paid. When pressed, he agreed that it was his choice because that was the option that got him the best option as far as the day rate was concerned.[22]Ms Linton also cross-examined the Claimant. He accepted he considered Dasa to be his employer at the relevant time, but only for payroll services. He said he never applied for a job with Dasa. He said he only spoke to them a handful of times and used them as a means of getting paid. He repeated that he had only used Dasa as a payroll service. He accepted that clause 13.2 of his contract said that termination of a client assignment did not terminate his contract of employment but said that he had not been dismissed by Dasa.[23]I permitted Mr Mahmood to ask some additional questions with the caveat that Mr Francis and Ms Linton could ask further questions in cross-examination. The Claimant said that SMBC provided him with the work he needed to undertake and approved his breaks and holiday. The Claimant reiterated that he had never applied with a job with Dasa. He accepted that the Dasa had not dismissed him to date. Evidence: Nikky Sanwo[24]Ms Sanwo is employed by JRIE as Executive Director, Administration. Her witness statement set out the contractual arrangements between Harrington Starr and JRIE generally, and specifically in the Claimant’s case. She also set out the timesheet arrangements and how the Claimant’s engagement was extended. She also explained the circumstances of the termination of the Claimant’s engagement.[25]In cross-examination Ms Sanwo gave evidence that JRIE is not a recruitment company but is made up of IT specialists. If JRIE cannot source a role internally it sometimes needs to go to the market. She stated that the job description was provided by JRIE and JRIE had to sign off timesheets. She agreed that the end user was always SMBC and that JRIE was not involved in day-to-day tasks performed by the Claimant. She gave some additional evidence about the relationship between SMBC and JRIE.[26]Ms Sanwo stated that the final say in whether to accept a candidate was for SMBC to make. She reiterated that there was no contract between the Claimant and JRIE, but that JRIE had a contract for services with Harrington Starr, and it was JRIE who terminated that contract. Evidence: Naks Atheeq and Rebecca Walsh[27]There were two further witness statements in the bundle, one from Naks Atheeq and one from Rebecca Walsh.[28]Naks Atheeq is the Finance Director of Dasa and was unable to attend the hearing. In any event, the statement is very brief and simply sets out Dasa’s position, including that the Claimant was employed by Dasa. As that is a question I need to resolve for myself, I have not taken the statement into account in reaching this decision.[29]Rebecca Walsh is the Head of Operations, Contracts and Compliance Manager for Harrington Starr. As the claims against Harrington Starr were dismissed at the start of the hearing, I did not take Ms Walsh’s evidence into account. Submissions: Claimant[30]Mr Mahmood argued that SMBC had at all material times, control of and mutuality of obligation with the Claimant. He also argued that the Third Respondent failed the test of mutuality of obligation to be deemed the employer, irrespective of the document titled ‘Contract of Employment’. He argued that this was a triangular employment relationship and so I should apply Cable and Wireless v Muscat [2006] EWCA Civ 220. He argued I should consider all the evidence relating to the relationships between the parties including any written agreements, oral statements and the conduct of the parties. I should then consider whether the possibility that the worker had an implied contract of employment with the end user.[31]In support of there being an implied contract, Mr Mahmood submitted that the Claimant worked at SMBC’s premises and was part of the company culture. SMBC provided his equipment and controlled his breaks. The Claimant was under the direction, supervision and control of SMBC. Mr Mahmood referred to the contract with Dasa as “a bit of paper” signed to satisfy HMRC.[32]Mr Mahmood also pointed out that the Claimant had never been interviewed by Dasa and had no continuity of work from them. He relied on clause 1.3.10 of the contract between Dasa and the Claimant in support of the contention that there was no obligation for Dasa to provide work. That clause states: “You are obliged to work when we reasonably require you to do so. We do not guarantee that there will always be a suitable Client Assignment to which you can be allocated, and you acknowledge that there may be periods when no work is available for you. As a minimum we do however guarantee that you will be offered at least 336 hours of paid work over the course of any full 12-month period of employment commencing on the Start Date or an anniversary thereof.”[33]After hearing the other parties’ submissions, particularly Ms Linton’s, Mr Mahmood confirmed he agreed there had been no dismissal of the Claimant, but he was maintaining the pay claims against Dasa anyway. However, he asked why the Claimant’s wages had stopped, given that the assignment ending did not mean the contract ended.[34]Mr Mahmood also said that the contract between Dasa and the Claimant was not a contract of employment because there was no mutuality of obligation on Dasa to provide work and the Claimant to perform work. He argued that if the Respondents had it their way, a worker would have no statutory rights.[35]As to the timeliness of the claim, in Mr Mahmood’s skeleton argument he set out the following points “in mitigating the early submission”a. The Claimant submitted the claim in good faith, intending to ensure the claim was filed in time.b. The claim was filed protectively while the issues in dispute were being addressed.c. Procedural fairness allows for some flexibility, and no prejudice has been caused to the Respondents.d. The Tribunal has the discretion to exercise discretion where time limits have not been complied with. Submissions: First and Second Respondent[36]The First and Second Respondents’ position was:a. The Claimant was not an employee of SMBC or JRIE and so cannot bring an unfair dismissal claim against either of them.b. There can be no claim for wrongful dismissal against SMBC or JRIE as the Claimant had no contract of employment with either.c. Dasa was responsible for paying the Claimant’s wages and so his claims for unpaid wages and holiday pay lies against Dasa, if at all[37]Mr Francis cited James v Greenwich Council [2007[ ICR 577 as upheld by the Court of Appeal in James v London Borough of Greenwich [2008] EWCA Civ 35. Mr Francis relied on them for the proposition that there is a stringent test for whether an employment relationship will be found to exist between an agency worker like the Claimant and the ‘end user’ i.e. SMBC or JRIE. Mr Francis’ submission is that the contract can only be implied where it is necessary to give effect to the reality of the relationship.[38]Mr Francis argued that this is not a case where the arrangements with the Claimant are only consistent with an implied contract between the Claimant and SMBC or JRIE and would be inconsistent with there being no such contract. In addition, the express contractual terms are consistent with SMBC and JRIE’s clear business rationale for engaging contingent workers and no further implied contract is justified.[39]Mr Francis also argued there are no words or conduct alleged which would entitle the Tribunal to conclude the agency arrangements no longer dictate or adequately reflect how work is performed.[40]Mr Francis also argued that the Claimant’s integration into JRIE’s organisation is a factor of little or no weight in determining whether there is a contract in place: Tilson v Alstom Transport [2010] EWCA Civ 1308. JRIE was not paying directly for the Claimant’s work, but for the services supplied by Harrington Starr. The rate JRIE paid Harrington Starr included the latter’s fees. The passage of time is insufficient to imply the existence of a contract without more.[41]Mr Francis submitted that the Tribunal’s task is not to search for an employer; not all working relationships amount to a contract of employment. The Tribunal should not follow a process of elimination, i.e. if I do not find the Third Respondent was the Claimant’s employer, it does not necessarily follow that the First or Second Respondent was. Submissions: Third Respondent[42]Ms Linton stated that Dasa accepted it was the Claimant’s employer at all material times. She agreed with Mr Francis that there was no necessity to imply a contract between the Claimant and either SMBC or JRIE. She pointed out the contradiction in the Claimant’s position in asserting he was not employed by Dasa for the unfair and wrongful dismissal claims but claiming against Dasa for the unpaid wages and holiday pay matters.[43]Ms Linton submitted that there had been no dismissal, the ending of an assignment did not constitute a dismissal under the contract of employment. There was no evidence of any fundamental breach of contract so as to constitute a dismissal. An ongoing contractual relationship can persist despite gaps or breaks in work: Cornwall County Council v Prater [2006] EWCA Civ 102.[44]Ms Linton also said that the claims in relation to pay were unclear and asked the Tribunal to issue case management directions so that those could be clarified and particularised.
Legal framework
[45]The main legal dispute between the parties is when I am permitted to look beyond the written contracts to consider whether there is any implied contract of employment. Relying on Cable and Wireless, Mr Mahmood says I should consider all the evidence to identify whether there was an implied contract of employment between the Claimant and SMBC or JRIE. The Respondents say I should only look at the nature of the relationship if it is necessary to do so, to give effect to business reality, Mr Francis relied on James in support of this proposition.[46]There is no conflict in the case law cited by the parties. Unfortunately, the Claimant has relied on an incomplete reading of Cable and Wireless, missing out an important step. Cable and Wireless also requires that I assess whether it is necessary to imply the contract, for instance at paragraph 33 of that judgment. Cable and Wireless also had unusual facts that are not similar to the current case. In that case the individual had been employed by a company who had dismissed him and re-engaged him as a contractor. The company was then taken over. The individual was held to be an employee, and the Transfer of Undertakings (Protection of Employment) Regulations 1981 were held to apply.[47]At paragraph 48 of James the Court of Appeal described the importance of Cable and Wireless as in the “emphasis on the requirement that the implication of a contract of service must be necessary to give effect to the business reality of a relationship between the worker and the end user.”[48]At paragraph 50 of James the Court of Appeal expressly approved the Employment Appeal Tribunal’s reasoning (James v Greenwich Council [2007] ICR 577), including: “So the mere fact that the arrangements carry on for a long time may be wholly explicable by considerations of convenience for all parties; it is not necessary to imply a contract to explain the fact that the relationship has continued perhaps for a very extensive period of time. Effluxion of time does not of itself establish any mutual undertaking of legal obligations between the worker and end user. This is so even where the arrangement was initially expected to be temporary only but has in fact continued longer than expected. Something more is required to establish that the tripartite agency analysis no longer holds good.”[49]In Tilson v Alstom Transport [2010] EWCA Civ 1308 Elias LJ stated: “First, the mere fact that there is a significant degree of integration of the worker into the organisation is not at all inconsistent with the existence of an agency relationship in which there is no contract between worker and end user. Indeed, in most cases it is quite unrealistic for the worker to provide any satisfactory service to the employer without being integrated into the mainstream business, at least to some degree, and this will inevitably involve control over what is done and, to some extent, the manner in which it is done. The degree of integration may arguably be material to the issue whether, if there is a contract, it is a contract of service. But it is a factor of little, if any, weight when considering whether there is a contract in place at all.”[50]Section 94 of the Employment Rights Act 1996 sets out the right not to be unfairly dismissed by an employer. Section 230 of the Act states that an unfair dismissal claim may only be brought by an employee, which is defined as someone who works under a contract of employment. Section 95 of that Act sets out circumstances where an employee is dismissed for the purpose of an unfair dismissal claim.[51]The Employment Tribunal only has jurisdiction in wrongful dismissal claims brought by employees, per The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. My findings[52]These facts are agreed:a. There was no written contract between SMBC and the Claimant, nor between JRIE and the Claimant.b. The Claimant chose Dasa from a list of umbrella companies provided to him by Harrington Starr. The Claimant and Dasa Ltd signed a contract titled ‘Contract of Employment’.c. The contract between Dasa and the Claimant includes the following provisions: i. Clause 13.2: “Termination of a Client Assignment does not terminate your contract of employment.” ii. Clause 20.1. “Status: it is not the intention of either of us that you should be or become an employee of any Client for whom you may perform a client Assignment.”d. The contract also had an ‘Employee Assignment Schedule’, signed by the Claimant on 24 March 2021. That schedule stated, “In case of conflict between the terms of your Employment Contact and of this Assignment Schedule, the terms of your Employment Contract shall prevail, provided that(a) termination of an Assignment shall not terminate your Employment Contact, but(b) termination of your Employment Contact will automatically terminate this Assignment.” What were the Respondents’ relationships to the Claimant?[53]I find that the Claimant was an employee of Dasa at all material times. I find that the Claimant was not an employee of SMBC or JRIE at any time.[54]Applying James, I do not consider it necessary to infer the existence of any implied contract. The contractual arrangements are clear. JRIE contracted Harrington Starr’s services and paid them for this. Harrington Starr took a fee for this service. The Claimant accepts there was no written contract with SMBC. I was not provided with any contracts where SMBC was a party at all.[55]The Claimant chose for Dasa to be his employer, and signed a contract with Dasa that expressed it was an employment contract in clear terms.[56]While I accept Mr Francis’ submission that the Tribunal’s role is not to identify an employer by a process of elimination, this is also not a case where the Claimant will be left without an employer. Dasa accepts being the employer. The Claimant also accepts Dasa is responsible for his pay. An employment relationship with enforceable legal obligations has been created between Dasa and the Claimant. I was not provided with any other reason why it would be necessary to infer the existence of an implied contract, nor can I identify one from the pleadings and evidence.[57]If I am wrong about whether it is necessary to infer the existence of any employed contract, I have also considered what the reality of the situation was, outside of the written contracts.[58]I cannot accept Mr Mahmood’s submission that there was mutuality of obligation between SMBC and the Claimant. The evidence to support that conclusion is inadequate even on the balance of probabilities. There is little evidence of SMBC having control over the Claimant. He had to submit a timesheet for SMBC, but on his own evidence he also had to do this for JRIE. Working at SMBC’s premises on its equipment is also insufficient. The Claimant says that SMBC controlled his work but there was insufficient detail of the form that control took.[59]I have considered these factors in the round as well as individually. None of the factors, taken separately or together, are inconsistent with the contract of employment between Dasa and the Claimant. I also apply James and Tilson: the Claimant’s integration into the business over a period of time is of little weight when considering whether there is a contract in place at all.[60]Fundamentally, there cannot be said to be any obligation on SMBC to provide the Claimant with work. The Claimant did not adduce any evidence of this, or indeed that he ever believed this. The fact that there was no implied contract between SMBC and the Claimant is also supported by the reaction of SMBC when the Claimant’s assignment was terminated. On the Claimant’s own evidence, key personnel the Claimant worked with, including his line manager, did not know what had happened. Had he been an employee of SMBC I would have expected his line manager or other senior staff to have been consulted or at least informed of the decision before or at the same time as the Claimant. Unfair dismissal and wrongful dismissal claims[61]Because I have found there was no contract of employment between the Claimant and SMBC or JRIE, the Claimant cannot bring an unfair dismissal claim against them per section 230 of the 1996 Act. An unfair dismissal claim can only proceed against Dasa, the Claimant’s employer. Wrongful dismissal claims can only be pursued by an employee, so that claim cannot be brought against SMBC or JRIE either. Was there a dismissal?[62]The Claimant bears the burden of proving there was a dismissal. Mr Mahmood conceded in his submissions that there had been no dismissal by Dasa. Even if he had not made that concession, I would have found that there was no dismissal. None of the circumstances in section 95 of the 1996 Act apply: the contract was not time limited and neither Dasa nor the Claimant terminated it.[63]Clause 13.2 of the Claimant’s contract with Dasa states “Termination of a Client Assignment does not terminate your contract of employment.” In addition, the Employee Assignment Schedule includes the provision “termination of an Assignment shall not terminate your Employment Contact.” It was therefore a general principle of the contract between the Claimant and Dasa that termination of a client assignment would not terminate employment, and it was a specific principle of the assignment in question.[64]Moreover, the Claimant has not provided any evidence to show he was dismissed by Dasa by words, conduct or a mix of both. The Claimant has not claimed or demonstrated that Dasa committed any fundamental breach of contract.[65]There was therefore no dismissal of the Claimant by Dasa, and so his claims for unfair dismissal and wrongful dismissal against Dasa have no prospect of success.
Conclusions
[66]I am satisfied that none of the Claimant’s claims have no prospect of success against SMBC or JRIE. In respect of the unfair dismissal and wrongful dismissal claims this is because I have concluded that the Claimant was not an employee of SMBC or JRIE. In respect of the unpaid wages and holiday pay claims this is because Mr Mahmood indicated he accepted SMBC and JRIE were not the proper respondents to these claims.[67]The Claimant accepts there was no dismissal in respect of Dasa so the unfair dismissal and wrongful dismissal claims against Dasa also have no reasonable prospects of success.[68]I am satisfied that the Claimant had a reasonable opportunity to make representations as to whether the claims should be struck out during the hearing. The applications by the First and Second Respondent were made on 6 January, well in advance of the hearing.[69]I therefore strike out the unfair dismissal, wrongful dismissal and unpaid wages (including holiday pay) claims against the First and Second Respondent. I also strike out the unfair dismissal and wrongful dismissal claims against the Third Respondent.[70]The only ‘live’ claims are therefore the claims for unpaid wages and holiday pay against the Third Respondent, Dasa. The pleadings in relation to those are difficult to understand. In addition, they may be affected by my finding (and the Claimant’s concession) that there has been no dismissal by Dasa, and on that basis I decline to make a deposit order at this stage. I have issued separate directions to the Claimant and the Third Respondent so that the Claimant can properly particularise the claim and the Third Respondent can respond.