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Agency workers: Relief for employers or calm before the storm?
11 February 2008
The Court of Appeal has rejected an agency worker’s claim that
she was an ‘employee’ of the end user. Her complaint of unfair
dismissal therefore failed.
Agency worker relationships
Agency workers register with an employment agency to provide
their services to end users. There is no direct contractual
relationship between workers and the end user, so you might think
there is no possibility of agency workers being regarded as
'employed' by the end user.
However, the Court of Appeal decided in Dacas v Brook Street
Bureau (UK) Ltd [2004] ICR 1437 that it was possible for a
contract of employment to be implied where the worker has worked
for one end user continuously over a long period. The decision
resulted in a stream of tribunal cases brought by agency
workers.
Conflicting authorities since then have resulted in uncertainty
for employers and agencies. The position has to some extent been
clarified by the Court of Appeal, in the case of James v London
Borough of Greenwich [2007] ICR 577.
The decision in James
Mrs James had worked for seven years at Greenwich Council. She
brought a claim for unfair dismissal when she was told she was no
longer required. Mrs James claimed she had an implied contract of
employment with the council. Her claim failed in the Employment
Appeal Tribunal last year and this week her appeal was rejected by
the Court of Appeal.
The Court of Appeal suggested that a tribunal will rarely imply
an employment relationship between a worker and an end user where
the agency arrangement accurately reflects the nature of the
relationship. Where there is no written contract (as was the case
between Mrs James and the council) the test is simple – an
employment contract will only be implied where it is “necessary” in
the circumstances for a tribunal to do so.
The Court of Appeal recognised that “it is not always
possible to predict with certainty how this question will be
answered by the tribunal”. This test presents a significant
hurdle for potential claimants. In effect, an agency worker will
have to show that the manner in which the agency arrangement was
conducted could only have been consistent with their being engaged
on a contract of employment. Such a claim would verge on asserting
that the entire tripartite relationship was, in fact, a sham.
What can end users do/not do to ensure there is no
contract of employment?
Do
- Maintain a periodical dialogue with the agency about its
workers
- Ensure arrangements for sick pay and holiday pay are made by
the agency
Don't
- Give agency workers an employee handbook unless you clarify
that it is given for information only and does not apply to
them
- In documentation, refer to agency workers as employees
- Apply company sick pay schemes to agency workers
- Apply company holiday arrangements to agency workers
False hope for employers?
The ruling in James has been welcomed by agencies and
employers, who had feared judicial expansion of the rights of
Britain’s 1.4 million agency workers and subsequent undermining of
the flexible labour market. Trade unions, however, argue that the
current legal position creates a two-tier workforce. The
James decision is unlikely to be the end of the matter.
The Court of Appeal noted that, whilst courts are “not
architects of economic and social policy”, there is nothing to
prevent Parliament from introducing changes to the law in this
area.
The United Kingdom has been under pressure from Europe to
introduce laws that would give agency workers the same rights as
permanent employees after only six weeks of continuous working for
the same end user. Reports suggest that more than 100 Labour MPs
have now pledged to back a private members’ bill introduced by
Andrew Miller MP on 6 February. Operating under the title of the
‘Temporary and Agency Workers (Equal Treatment) Bill’, this draft
legislation is due to be debated on 22 February and could
ultimately force ministers to confront the conflicting demands from
business and unions.
The decision in James may only provide brief respite
for employers.
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