Employment Update: Agency workers

13 May 2008


Another ‘triangular’ arrangement upheld by the Court of Appeal

On 29 April 2008, the Court of Appeal, in the case of Consistent Group v Kalwak, overturned decisions by the employment tribunal and the top judge in the EAT and allowed an employment agency's appeal. The case involved a triangular arrangement between immigrant Polish workers, the employment agency and its customer, a food packaging company. The original decision was that the contracts between the agency and the workers, although expressed to be contracts entered into by self-employed casual labourers, were in fact contracts of employment.

The Court of Appeal says this was wrong.

The tribunal had not given sufficient reasons for its decision that the terms of the contracts were a sham. There are principles that must be addressed when deciding if a document is a sham, the first of which is whether BOTH parties to the agreement intended to paint a false picture in the document. It is not enough to say that the parties operated differently in practice. In any event, in this case, there was disputed evidence as to what had happened in practice and the tribunal had not explained why it had accepted the evidence of the claimant but rejected the evidence of the respondent agency.

Points to note:

· This case follows on from Court of Appeal decision in James v London Borough of Greenwich earlier this year and is another reminder that courts are reluctant to go behind documentation and rewrite workers’ contracts to give them “employee” status and the benefits that go with that status – notably the right not to be unfairly dismissed.

· Unless or until agency workers are given separate statutory protection, it is very important to have all triangular agency arrangements properly documented, as the legal status of the agency workers may depend very heavily upon the wording of those documents.