In Shrewsbury & Telford Hospital NHS Trust v Lairikyengbam, the EAT held that a contract of employment can still exist even where the contract itself is outwith the employer's legal powers. Contrary to legislation which prohibited the Trust from appointing locum consultants for more than 12 months, the Trust employed Dr L on a series of 6 and 12 month fixed term contracts over a period of almost four years. After being informed that his final fixed term contract could not be renewed, as the Trust was not permitted to continue to employ him, Dr L brought a claim for unfair dismissal.

There was no suggestion that the parties considered their relationship to be one other than of employment. Therefore, despite the fact that his contract was contrary to the Trust's legal powers, the EAT held that Dr L was still working under a contract of employment.