A recent decision by the High Court considered whether an online directory operated as an employment agency. The court's analysis of the nature of these services provides a useful framework for determining when an entity is really operating as an intermediary.
According to its website, Spotlight, has been "connecting talented performers with exciting roles" for almost a century. But exactly how much of a matchmaker is it? Earlier this year Equity, the performing arts union, sought a declaration from the High Court that Talent Systems Europe (which trades as Spotlight) is an employment agency under s. 13(2) of the Employment Agencies Act 1973. The decision in Spotlight's favour is a useful clarification on the scope of the statutory definition.
What is the test?
The Act defines "employment agency" as "the business... of providing services....for the purposes of finding employment...". Despite the potential breadth of this definition, there has been little case law exploring its boundaries.
Why does the definition matter?
Entities deemed to be employment agencies are subject to a range of regulatory requirements and oversight by the Employment Agency Standards Inspectorate. These restrictions – set out, for these purposes in the Conduct of Employment Agencies and Employment Businesses Regulations 2003 - include when the agency may impose charges on work seekers.
How does Spotlight work?
Spotlight primarily operates as an online register for actors and other performers, allowing subscribers to create and manage their own profiles. These profiles can be viewed and searched by casting professionals and others in the industry. Importantly, Spotlight does not vet or edit profiles, nor does it participate in negotiations or take any commission from subsequent engagements. Its involvement ends after facilitating initial contact between performers and casting professionals.
Is Spotlight a "work finding service"?
Equity argued that Spotlight functioned as a 'middleman' - that the way casting directors contact performers through the platform brings it squarely within the definition of a 'work finding service'. They contended that, regardless of whether the work seeker was successful or not, the directory provided information for the purposes of finding employment.
Spotlight, by contrast, maintained that its role was not agent but a marketing tool. It argued that it did not 'find persons employment' – that may or may not happen - as it is one step removed from that process. Taking such a broad interpretation of employment agency, one that would catch many similar providers such as Yell (previously Yellow Pages) and other well known trade and employment directories, would "fly in the face of common sense", it argued.
The High Court's decision
The High Court had considerable sympathy for Spotlight's position and found firmly in its favour. They accepted that although the directory might enhance a performer's ability to find employment, its fundamental purpose was as a marketing and promotional tool for performers and not a service for finding employment. It was not operating as the go-between.
Notably, the court observed that although the phrase "work seekers" is used in the Conduct Regulations (and this does seem a fitting description of those uploading their profiles to the platform) this phrase is not part of the statutory definition of employment agency.
Key features considered by the court
The High Court identified several features that indicated the directory was "a number of steps away" from a service that finds employment:
- The service provided is narrow in scope and does involve vetting or improving the performers' profiles
- Spotlight does not handle the money if the performer is engaged
- Spotlight simply hosts the profiles; it does not pass on profiles or make recommendations
- The search functionality does not alter the fundamental purposes of the directory
All of these help understand how this definition might be applied to other business models.
Were the subscription fees lawful?
As the High Court found in favour of the defendants, they did not need to rule on this point. However, it addressed the issue for completeness.
The Conduct Regulations restrict upfront fees where a 'work finding service' is provided, which in this case it was not. However, the Court did consider the question of whether the fees represented a reasonable estimate of the cost of production and circulation of the directory (as required under Reg 26(5)(b)(i)) and was satisfied they would.
Welcome clarity
Outside of the rare examples of litigation, in most situations the Employment Agencies Standards Inspectorate adjudicates the definition of 'employment agency' for the purposes of enforcing the regulatory requirements set out in the Conduct Regulations. The Inspectorate has historically favoured a broad interpretation, including publications and websites which offer similar services to Spotlight. This decision provides welcome clarity where litigation is very rare and the judgement identifies features which should now be considered by the Inspectorate as not indicating a work-finding service.
Equity has indicated that it is considering appealing the decision, so this may not be the final word on the issue.
Equity and ors v Talent Systems Europe Ltd (trading as Spotlight) – full judgment available here.
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