The issue of agency staff often arises on an outsourcing. In particular, what will happen to staff who have been assigned to the service. Will these staff transfer to the service provider? How should the risk of any claims from such staff be allocated? and in practice, what should happen?
Can agency staff be regarded as employees of the client/existing service provider?
Subject to caveats generally no. The first caveat is that agency staff have a direct contract with the agency rather than the client/existing service provider. The second is that they are not found in reality to be employees of the end user. The practical risk of this has been reduced, following the indication of the Court of Appeal, in James v LB Greenwich, that a contract between an end user and an agency worker should only be implied when necessary and where the relationship is only consistent with an employment relationship.
As a result of not being employees of the client/existing service provider, agency staff would not transfer under TUPE from the client/existing service provider to the new service provider.
Could there be a separate transfer from the agency to the new service provider?
Unless the agency is providing very specialist staff in relation to a discrete part of the service, so that it is possible to argue that the agency itself has been providing part of the service, the answer should be no.
What will happen to agency staff?
Ordinarily;
- either the new service provider will continue to use the agency, agency staff will continue to be provided through the agency and there will be no transfer;
- or, the client or existing service provider will serve notice to the agency, and the new service provider will make its own arrangements in relation to any additional staff required. As explained above, there should be no transfer.
How to allocate the risk of claims from agency staff
The incoming service provider will want certainty regarding the staff it inherits under TUPE. Ideally, this being through an agreed list of "Transferring Employees" backed up by a "wrong pocket" indemnity (see Indemnity Spotlight below), which would include the risk of claims from agency staff.
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.