Legal experts have pointed to the significance to recruiters of the decision by the Court of Appeal, ruling against Cable & Wireless (C&W) in an unfair dismissal case.

C&W had argued that Mr P Muscat could not bring an unfair dismissal case because he supplied his services though a limited company and through the agency Abraxas.

C&W had a contract with Abraxas for the provision of personnel. Abraxas entered into a contract with service company E-Nuff, who paid Mr Muscat. There was a 'quadrangular' relationship between C&W, Abraxas, E-Nuff and Mr Muscat. On 31 December 2002 Mr Muscat's contract was terminated by C&W and he claimed unfair dismissal.

The Court of Appeal has upheld the decision of the Employment Appeal that Muscat was a C&W employee.

Adrian Marlowe, managing director of Lawspeed Limited, said: “Any end user or hirer of agency staff will now wish to be certain that they will not be put in the same position as Cable & Wireless.

“Agencies can therefore expect end users to question the entire concept of agency supply, which end users have historically believed has protected them against employment claims. Agencies may well be increasingly asked to indemnify their clients against costs and awards arising from such claims even though it is clear that such claims usually arise as a result of the client’s own actions in treating the worker as an employee.”