Employment Update Agency workers- 0608

18 June 2008

In deciding whether an agency arrangement creates a contract of employment between worker and end-user, a tribunal will ask specific questions. The parties’ own perceptions of the arrangement are not decisive.

In February this year, the Court of Appeal, in the case of James v London Borough of Greenwich, decided that an agency worker had no contract of employment with the end user of her services. It warned claimants not to have ‘unrealistic expectations’ of employment tribunals and indicated that tribunals will only ‘go behind’ agency contract documents where, on the facts, it is necessary to do so.

However now, in the case of Cave v Portsmouth City Council, the EAT has reminded tribunals that, in each case, they must examine all the evidence carefully.

An employment tribunal had decided that Mr Cave, an agency worker, did not have any implied contract with the customer (whether as a 'worker' or an employee) because the documents showed a tripartite arrangement between him and an employment agency and between the agency and the customer. The tribunal noted that, although in practice, he was treated like an employee, he called himself an agency worker (in fact he said 'agency riff-raff') and only sought to claim employee status after the arrangement had been terminated.

The EAT has allowed his appeal. The tribunal's thinking was muddled. It had not asked two key questions - should any contract necessarily be implied between the customer and the agency worker? And, if so, would that contract be a contract of employment?

The perception of the parties at the time that he was an agency worker was not decisive.

The case was remitted for rehearing.

Points to note –

  • Tribunals have been warned that they cannot just say (as they did in this case) 'This case looks like a James v Greenwich Council case'. They have to be far more analytical in their approach to the tricky question of the legal status of an agency worker. However, clear contract documentation will always make it easier for businesses to handle such claims.
  • The EAT confirms that the fact that the claimant himself said that he was an agency worker does not prevent him later from claiming that he was actually an employee.
  • On 20 May the UK ‘social partners’ - employers’ organisations and trade unions - agreed in priniciple that, after 12 weeks in post, agency workers should be given equal treatment in terms of ‘basic working conditions’ with permanent staff. The government is seeing what can be agreed at EU level and may then bring in new legislation in the next session of parliament. We shall keep you informed of any changes in the law.

Employment Group

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