Employment Update: AgencyWorkers

17 March 2008

An employment contract may be implied between an agency worker and the end user ­­- but it is not inevitable.

The Court of Appeal has now given its decision in the important case of James v London Borough of Greenwich. It has upheld the decisions of the EAT and the original Employment Tribunal. The agency worker in this case was not an employee.

The decision acknowledges that the distinction between a worker and an employee is crucial for the determination of their statutory rights but says that the EAT in this case was right to say that the mere passage of time (i.e. a long time working for the same end-user) cannot of itself turn an agency worker into an employee.

It must be necessary on the facts for a contract of employment to be implied between worker and end-user for a worker to be treated in law as the employee of the end-user even though they have signed a contract with an agency as a worker.

On the facts of this case - the worker was simply replaced by another agency worker when she was off sick and had in the past changed agency in order to improve her level of pay - there was nothing to say that the Tribunal was wrong to treat her as an agency worker not an employee.

The Court of Appeal goes out of its way to declare that there is no conflict between the earlier cases - Dacas and Muscat- it is possible for a contract of employment to be implied between worker and end-user in a triangular agency arrangement, but not inevitable.

Points to note:

  • This decision confirms the distinction in status, so far as statutory rights are concerned, between agency workers and employees. End-users of agency workers need to take care, both as to the wording of the documentation of any triangular arrangement under which they are hired from an agency and as to how agency workers are managed in practice, if they wish to maintain that distinction. We shall be happy to advise.


  • The Court of Appeal sums up by stressing that it will be 'unusual' for an appeal from any Tribunal decision on this issue to succeed and that Claimants who are agency workers are 'unrealistic' if they expect Tribunals to come to their aid and give them the status of employees. Tribunals can only interpret the law not change it. This reinforces the need for all parties in a triangular agency arrangement for there to be clear and appropriately worded documentation covering their relationship from the outset.

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