Test for establishing agency workers as end-users’ employees is as tough as ever
Establishing employment status is essential for accessing many employment rights, such as protection from unfair dismissal. Although, increasingly in recent years, the legal safety net that protects workers has widened, the distinction between agency worker status and employment has remained clear, even under the Agency Workers Regulations 2010, which introduced basic pay and conditions for agency workers comparable to those of employees.
But in 2011, a case appeared to call that distinction into question. In that case Autoclenz v Belcher, the court rejected the contracts of the claimants, who were car-valeters, even though they had been clearly written. The contracts stated that the claimants were self-employed. But the Supreme Court found that this did not reflect the true employment status of the individuals involved and that the car-valeters were in fact employees of the end-user. The decision appeared to fly in the face of earlier decisions in which the courts had made clear it would be extremely rare that a contractual relationship could be implied between agency workers and end-users. The decision also generated a degree of nervousness among organisations engaging agency staff, fearful that they might find these agency employees were actually their employees.
However, such nervousness among end-users will be largely assuaged by a recent EAT decision in the case Smith v Carillion.
Facts
Smith worked under a typical tripartite agency arrangement - he was placed by employment agencies to work on certain projects for businesses that had preceded Carillion. He had no written terms with the employment agencies which were engaging him. Once his assignments ended, Smith discovered that his name was included on an employment blacklist as a result of his trade union and health and safety activities. The law at the time protected employees from any detriment on these grounds. Smith brought a claim alleging that he should be protected by this legislation and that the courts should imply a contract of employment in the light of his working arrangements.
EAT
The law will only imply a contract between a worker and an end-user where it is necessary to explain the work undertaken. Significantly, in this case, the Employment Appeal Tribunal reasserted that legal test strongly. Despite evident sympathy with the way in which Smith had been treated, such as that he was interviewed before commencing work, was engaged on long-term projects and became integrated with the end-users business, his claims were found not to satisfy that test. None of these contentions demonstrated that, in reality, he had been an employee of Carillion - alternative explanations were available and were credible in the circumstances. Similarly, the court rejected his argument that the Human Rights Act 1998 and European Convention on Human Rights required an employment contract to be implied in this situation.
Comment
Importantly for organisations engaging agency staff, the EAT also clarified that the Autoclenz case did not indicate a change in legal approach. Accordingly, it continues to be the case that courts will only imply terms where this is strictly necessary. This presents an extremely high hurdle for agency workers to overcome. What Autoclenz made clear was that where an agency contract expressly seeks to exclude employment status, tribunals will look at the reality of the situation to determine whether or not that arrangement is a sham. The EAT found there was no evidence of a sham arrangement in Smith’s case.
Simon Rice-Birchall is an employment partner at Eversheds
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