Agency Workers and the EU Directive - Legal Q&A

With BMW’s recent sacking of 850 agency workers at its Oxford plant, the ongoing debate about the use of agency workers in the UK has been grabbing the headlines.

While businesses argue that agency workers are necessary to absorb changes in demand without dismissing employees, agency workers have less protection and tend to receive lower pay and fewer benefits of employment than the full time employees they work alongside. .

Q What is an agency worker?

A An agency worker is an individual engaged by an employment agency to perform work for the agency’s clients. The worker has a contract with the agency, but not with any client for whom they work.

Q What rights do agency workers have?

A An agency worker’s rights are determined by their status (i.e. employee, worker or self-employed individual) and determining status is notoriously difficult. While agency workers who are not employees benefit from some protection, for example in relation to discrimination, national minimum wage and the Working Time Regulations, they do not have the right not to be unfairly dismissed, to receive a redundancy payment or to receive statutory minimum notice of termination. Agency staff at BMW were sacked with an hour’s notice presumably on the basis that BMW considered that the workers were not their employees and could not bring these types of claim.

Q When is an agency worker an employee?

A An agency worker could be an employee of the agency or of the client or of neither – in which case they could be a worker or self-employed. Unsurprisingly there has been considerable litigation by agency workers seeking to establish that they were employed by the agency or the client in order to benefit from an employee’s rights.

In the most recent relevant case of James – v – Greenwich Council, the EAT stated that it will be rare for a worker to be an employee of the agency, because the agency does not have day–to–day control of the worker, does not gain direct benefit of the work being done by the individual, and because there is no obligation on the agency to find work for the worker or on the worker to accept it.

The EAT in James also stated that a contract of employment between an agency worker and the client will only be implied where it is necessary to do so. In determining whether such a contract is necessary, a number of factors should be considered including how the contract is performed, whether the client is paying for work done by the worker or for services of the agency and whether the client can insist on a particular worker being provided. It is important to note that the passage of time by itself does not establish any mutual obligations between a worker and a client.

The case of James has made it more difficult for agency workers to argue that they are the employees of agencies or clients, with the result that redundancy payments remain to be secured by agency workers.

Q What protection will agency workers have in the future?

A On 5 December 2008, the European Directive on Temporary Agency Work was passed with the aim of providing increased protection for agency workers. The UK government now has until 5 December 2011 to implement the directive, although the unions have been pushing for early implementation, particularly following the BMW sackings.

The directive provides that the “basic working and employment conditions” of temporary agency workers shall be at least those of an employee in the same undertaking occupying the same job. While there are likely to be arguments as to who the appropriate comparator is, the directive does clarify that basic working and employment conditions means conditions relating to the duration of working time, overtime, breaks, rests, night work, holidays and public holidays, and pay.

Q Will the BMW sackings change anything?

A The most likely consequence is that the directive is implemented by the government well before 5 December 2011. However, as the directive does not give the agency workers any protection in terms of unfair dismissal, notice period or the right to a redundancy payment, actions such as those taken by BMW in relation to agency workers are likely to remain lawful.

Huw Cooke, associate, Burges Salmon

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