Clarify arrangements before you employ agency workers

The employment status of agency workers is far from clear. Individuals providing services under contracts in which they are expressly stated to be self-employed or agency workers have been found by tribunals to, in fact, be employees, as occurred in a recent case.

Mrs Bushaway began providing services to the Royal National Lifeboat Institution (RNLI) as an agency worker. Five months later, it offered her a permanent post, but she was found to have been an employee right from the start. This was despite the fact that the RNLI had ensured that, in all documents governing the agency arrangement, Bushaway had agreed that she was not employed by the RNLI or the agency.

Accurate documents

The RNLI should have been able to argue that the tribunal could only look at the documentation that had been in place between the parties. On previous occasions, tribunals have decided not to look beyond what the parties have agreed and written down where they have agreed that the documents include the total agreement. This is usually indicated by the inclusion of an ‘entire agreement’ clause – which the RNLI had.

The tribunal found that the documentation did not contain all the relevant terms of the relationship, and there was inconsistency between what the documents said and what had actually happened.

The tribunal concluded that it could therefore look beyond the written agreement at what had happened in practice, when making its decision.

It was particularly struck by the fact that the RNLI had always intended to make Bushaway an employee as soon as it had the room to do so and, when it did, she did exactly the same job that she had done as an agency worker.

Forward planning

If an employer decides to take an agency worker on as a permanent employee, there is a risk that they will have continuous service from day one as an agency worker – particularly if there is no difference between the roles. However, with some forward planning, there are steps that can be taken to reduce the risk.

Before an agency worker starts, HR should work with the business to be absolutely clear on what arrangements will apply. These should then be reflected in the agreement between the business and the agency, and in any agreement there may be between the business and the agency worker. Any changes should be immediately reported to the HR department so that the documentation can be amended, with the consent of everyone involved, to reflect the change.

All documentation relating to ‘non-employees’ should include a statement that there is no employment relationship and, ideally, an indemnity from the individual covering any liability the business may suffer if they were ever found to be an employee.

Ensure there is a break between the end of the agency, or other, arrangement, and the employment relationship beginning. The business would then be able to argue that, even if there was an employment relationship from day one, there had been a break in the continuity of that employment.

But this is not a fail-safe. A period of time in which there is a temporary cessation of work will not break continuity of employment. However, the business will have a better chance if it can show that there was work available for the individual to do during the break – they just were not asked to do it at that time.

To be effective, a break in continuity should last for at least one week, but two is always safer.

Be sure of where you stand

  • Make sure that documentation relating to ‘non-employees’ fully describes the relevant arrangements
  • Ensure that any such documentation contains an ‘entire agreement’ clause
  • Include statements and indemnities to confirm that there is no employment relationship
  • If possible, make sure there is a break between the termination of an agency, or other, relationship and the commencement of employment

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