The Court of Appeal's decision in James v Greenwich Borough Council was widely expected to give guidelines on whether and when agency workers become employees of an end-user and a large number of tribunal cases were stayed pending this decision.
The Court of Appeal has asserted that the existing authorities all point the same way. The correct approach, according to the Court, is for an employment tribunal to decide - as a question of fact - whether it is necessary to imply a contractual relationship between agency worker and end-user.
In James v Greenwich Borough Council, the EAT stated that if any such contract is to be inferred, there must, subsequent to a relationship commencing, be some words or conduct which entitle the Employment Tribunal to conclude that the agency arrangements no longer dictate or adequately reflect how the work is actually being performed, and that the reality of the relationship is only consistent with the implication of the contract. The assumption was that the circumstances in which a contract of employment between an agency worker and the end-user can be implied will be rare.
More recently, however, two further cases illustrated that if the conduct of the parties involved is such that a contractual relationship with the end-user must be implied in order to reflect the reality of the situation, the courts will rule accordingly.
In Harlow District Council v O'Mahoney, the EAT upheld the decision of the ET that Mr O'Mahoney was employed by Harlow District Council and that he had been unfairly dismissed. He had registered with APS Recruitment Ltd. and was sent for an interview with the Council, which was seeking the services of a plasterer. He worked there from January 2005 until May 2006, reporting directly to the Council. He wore a Council identity badge and was provided with a vehicle, tools and a mobile phone. During this period he transferred to a higher paid job without any involvement on the part of the recruitment agency. His holidays were regulated by the Council and he had been disciplined by and raised a grievance with its management. The only involvement the agency had was to pay Mr O'Mahoney's wages.
The EAT held that the fact that the agency paid wages to the worker on behalf of the end-user was not fatal to the existence of an implied contract of service between the worker and the end-user. Based on the finding of facts in this case, the reality of the relationship between Mr O'Mahoney and the Council was consistent only with a contract between them.
In a second unfair dismissal case (National Grid Electricity Transmission Plc v Wood) the EAT held that Mr Wood, who worked as an operations manager for the electricity company, was a 'wholly integrated member of staff', even though he had been put forward for an interview for the post by a recruitment agency which continued to pay his wages.
In this case also, the EAT found that the reality of the working relationship was such that a contract of employment between the worker and the end-user must be implied as the express terms of the contract between Mr Wood and the agency no longer reflected the actual arrangements. Mr Wood had to carry out the duties of the post personally – the agency could not provide a substitute – and he had direct negotiations with the company over classic features of an employment contract – such as pay, when he could take his holiday and his notice period.
To date, there have been several failed attempts by the European Union Council of Ministers to agree on proposals to improve the employment rights of agency workers. In the UK, whilst the recent Employment Bill contains measures to crack down on rogue employment agencies, the Government has announced that it has no plans to introduce domestic legislation giving agency workers equality of treatment with permanent employees independently of any European measures.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
