Agency workers

Agency workers do not enjoy the employment rights enjoyed by those who can bring themselves within the legal definition of an ’employee’.

But as demonstrated by the February 2008 Court of Appeal ruling rejecting an agency worker’s unfair dismissal claim, agency workers face an uphill battle to convince a tribunal that they qualify for the same level of protection as permanent staff.

Solicitor Martin Warren answers legal questions on this page regarding agency workers’ rights and the effect on employers, employees and temporary staff, but we also link to a wealth of other information from here including:

  • temporary employment
  • the Agency Workers Directive
  • the abolition of VAT concessions for temping agencies
  • attempts in the UK parliament to improve agency workers’ rights, and
  • a proposed one-off commission designed for agreement to be reached between employers and unions on agency workers’ rights.

Why is the question of ’employment status’ important?

It is estimated that more than one million workers are temporary agency workers – 3% of the UK workforce. The legal status and rights of this group accordingly affects a significant number of businesses. These businesses are commonly termed the ‘end user’.

Because of the nature of agency working, end users are not obliged to ensure agency workers receive comparable pay and conditions to permanent staff. However, they can find themselves on the receiving end of tribunal claims if the worker alleges they are in reality an employee, and accordingly entitled to unfair dismissal rights.

Furthermore, identifying the ‘affected employees’ is critical to any downsizing or sale exercise. End users that fail to identify agency workers correctly as employees can face costly litigation, sizeable compensation and adverse precedent.

What legal protection do agency workers have?

As a minimum, agency staff benefit from health and safety protection, the national minimum wage, limits on working time, paid holidays and many anti-discrimination laws.

Our business has a contract with the agency, not the workers they supply. Doesn’t that demonstrate we don’t employ our agency workers?

Dacas v Brook Street Bureau (UK) Ltd caused confusion when the Court of Appeal held that, even where there is no express contract between the end user and the agency worker, there might still be an implied contract.

Last month, in the case ofJames v Greenwich County Council, the Court of Appeal clarified that it will rarely be appropriate to imply a contract between the worker and the end user where the agency arrangements are genuine and properly documented.

While your contract is a helpful indicator, it is not the end of the story. To minimise the risk of creating obligations where none were intended, the relationship must be managed in a way that is consistent with such arrangements.

Does the length of time for which an agency worker is engaged make a difference?

Previously, the Court of Appeal controversially suggested that a contractual relationship between the end user and agency worker would almost certainly arise after 12 months. The case of James has now dismissed any such thinking.

The first question you must ask in the context of agency workers is where any contractual relationship lies, if at all, with the end user, the agency, both or neither. Length of service is not a relevant factor in that analysis.

What can end users do to limit their exposure to claims from agency workers?

James certainly makes it easier for employers to defend claims from agency workers. End users should therefore avoid:

  • entering into any written or oral contract directly with the worker. There should, however, be comprehensive and mutually consistent contracts between the agency and the worker, and the end user and agency
  • negotiating changes to a workers’ terms of engagement, such as pay and benefits, directly with the worker
  • paying the agency worker any salary, expense claims, etc
  • doing anything that is inconsistent with the documented arrangements (depending on the agreed terms, this might cover accepting responsibility for holiday requests, absence, disciplinary action and performance appraisals).

Is James the last word on this issue?

For years, the UK has resisted attempts in Europe to introduce an agency workers directive that would give agency workers rights to the same terms and conditions as permanent staff in areas such as pay and holidays after just six weeks’ service.

But the government has come under mounting pressure from trade unions, and business groups are concerned that it may now be prepared to support legislation giving greater rights to agency workers.

In short, the James decision represents perhaps only short-term relief for employers.

Martin Warren, head of employment law, Eversheds

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