Court of Appeal
Published July 27, 2007
Commissioners for Revenue and Customs v Thorn Baker Ltd, Paradise and Another interested parties
Before Lord Justice Auld, Lord Justice Moses and Lady Justice Hallett
Judgment June 27, 2007

An agency worker who had entered into a contract of service for a period of less than three months was not entitled to statutory sick pay.

The Court of Appeal so held dismissing an appeal by the Commissioners for Revenue and Customs from a decision of Mr Justice Lewison on July 14, 2006 that the respondent, Thorn Baker Ltd, was not liable to pay the interested parties, Gareth William Paradise and David Kenneth Middleton, statutory sick pay referable to their periods of incapacity for work under Part XI of the Social Security Contributions and Benefits Act 1992.

Schedule 11 of the 1992 Act provided: “A period of entitlement [to statutory sick pay] does not arise in relation to a particular period of incapacity for work [where] ... (2) ... (b) the employee’s contract of service was entered into for a specified period of not more than three months.”

Regulation 11 of Schedule 2 to the Fixed Term Employees (Prevention of Less Favoura-ble Treatment) Regulations (SI 2002 No 2034) repealed paragraph (2)(b) of Schedule 11, but paragraph 19 of that regulation provided: “(1) These regulations shall not have effect in relation to employment under a fixed-term contract where the employee is an agency worker. “(2) In this regulation ‘agency worker’ means any person who is supplied by an employment business to do work for another person under a contract or other arrangements made between the employment business and another person.”

Miss Ingrid Simler, QC, for the commissioners; Mr Gerard Clark for the respondent.

LORD JUSTICE MOSES said both interested parties were subject to deduction of class 1 National Insurance contributions.

The general commissioners and the judge had accepted that neither agency worker was entitled to statutory sick pay, but the Revenue, as the agency responsible for enforcing liability to pay statutory sick pay, had not.

The central issue was whether, as the Revenue contended, the exclusion of agency workers from entitlement to statutory sick pay was repealed by regulation 11 of the 2002 Regulations.

The judge had found that the clear terms of paragraph 19 meant that the repeal did not apply to agency workers as defined.

His Lordship dismissed Miss Simler’s argument from the wording of paragraph 19 that it had no effect in relation to employment under a fixed contract at all, and concluded that agency workers were excluded from scope of the repeal whatever the terms of their engagement with the employment business or to those to whom they were assigned.

Lord Justice Auld and Lady Justice Hallett agreed.

Solicitors: Solicitor, Revenue and Customs; Sharpe Pritchard.

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