Equal triangle?

Employers need to make small but significant changes to internal processes surrounding discipline, illness and annual leave for temporary workers. If they do not, a tribunal may decide that a long-term temp is under the control of the firm and therefore an employee.

The question of who does and does not have responsibility for a temporary worker has been debated in legal circles for decades. Now, thanks to the Brook Street Bureau v Dacas, Court of Appeal (CA) case, the saga has taken yet another unexpected twist.

Although Dacas was a Brook Street temp and had signed a contract for services with it, the CA reasoned that she was actually an employee of the client – Wandsworth Council – because it had controlled her day-to-day duties for more than four years and asked her to comply with internal discipline.

In essence, the CA ruled that Dacas was an employee in all but contract, and as a result, Employment Appeal Tribunals will now look for similar circumstances whenever a long-term temp appears in front of them.

Jonathan Exten-Wright, a partner with law firm DLA says: “It sends a very clear signal to the courts below the Court of Appeal. If there’s a lack of clarity within the triangular relationship, or a lack of a clear paper trail, courts are being asked to look for an implied contract.”

For employers, this means numerous things. First, consider the position taken by the Recruitment and Employment Confederation (REC). The REC says that drastic surgery is not required by its members – largely, because in similar cases it will be their clients who will bear the brunt of any litigation. However, as good practice they also believe that agencies should now warn their clients of any potential difficulties that may arise.

REC head of legal services Fiona Coombe explains: “Recruitment businesses should ask clients to refer any problems with a temp to them since certain actions like disciplining workers may now lead to that temp acquiring the rights of a permanent employee.”

But while the REC advocates a position that effectively hands responsibility over to the clients, there are alternatives for employers.

Thanks to market analysis that pre-dates  Dacas, Adecco issues employment contracts to all of its associates, or temporary workers being assigned from that agency. This protects its temps against such things as unfair dismissal and redundancy and has built-in flexibility for people who want to change jobs or simply take a day off during the week. Certain associates are also eligible for employment protection.

The idea is simply to clarify the position so that everyone in the triangle knows where they stand. That way there should never be any confusion about who the employer is – the agency. Adecco UK and Ireland managing director Richard Macmillan says: “As far as we can see, everyone benefits because it clarifies the situation for all parties.”

Adecco started using the contracts six months ago. Along with being a far more inclusive policy than the REC-recommended stance, they have been implemented with commercial goals in mind.

“It’s basically managing the associate as an employee rather than someone who can come and go as they please. It helps us to retain good associates, which has obvious benefits for the business. The feedback we’ve had shows that people are happy we’ve made the step,” Macmillan says.

But while agencies such as Adecco have changed their philosophy in the wake of Dacas, it is likely to be clients that are most affected by the new rules. Whereas firms could once use temps with relative impunity, they now have to be far more careful about how they treat them and, particularly, how long they use them for.

In some cases, the decision may even have triggered an about-face when it comes to using temps. Bill Dykes, HR director of Select Appointments, explains: “Big clients that use lots of temps for a significant amount of time are now looking if that is the way forward, and whether they need to have them at all.”

Sue Nickson, head of employment at law firm Hammonds, agrees. “Clients with a large amount of temps will definitely cut back from now on as one of the main advantages of taking them on in the first place has disappeared.”

Firms that use long-term temps now need to decide what practical steps to take. But do they bring the temps in as full-time staff, or maintain the status quo while keeping an eye out for potential hazards? Or even simply let the temps go, lose valuable skills and put themselves at risk of legal action?

Most likely the answer will be all three – and many more permutations besides. However, the key would seem to be to work with the change rather than fight against it.

The only problem is that this can only realistically be achieved by looking at the wider marketplace and assessing the potential dangers of using long-term temps. As this takes time, firms may need to consider a stop-gap policy that protects its interests until a coherent long-term strategy is formulated (see below).

In the long run, however, both firms and agencies will have to work together to deal with the new position. “It may be the case that agencies ask clients to look at what the best solution is while putting in place something that they don’t want – which is an employed status responsibility,” explains Dykes.

“It may also encourage some clients to review how they employ staff as some clients might be looking to contract out whole pieces of work, or contract all of a function.”

By taking measures like these, firms can avoid immediate danger with EATs. However, for long-term safety most will have to make small but significant changes to internal processes surrounding discipline, illness and annual leave. If they do not, an EAT may well decide that a long-term temp is under the control of the firm and therefore an employee.

Elaine Aarons, employment partner at Eversheds, says: “Instead of a disciplinary process, firms could develop something that is far more like an audit where there is a completely different process for temps than full-time employees.”

The Office of National Statistics says there are 1.48 million temporary workers in the UK, and each one has the potential to cause problems if they are not handled correctly. With so much at stake it is vital that agencies and clients creatively deal with the changed circumstances for the welfare of everyone involved.

Nickson says: “It’s a big wake-up call for large users as they’ve had this uncertainty for six years and suddenly the legislation is not in favour of employers. It’ll be a big mistake to ignore the decision. It effectively said that in this situation, this is what’s going to happen.”

Stipulate the relationship before it is too late

Long-term measures are needed to cope with the effects of the Dacas case. These take time to create so firms need to put something in place that protects them now.

One option is to create a set of contracts that stipulate the precise nature of the triangular relationship. Line managers can then refer to the document and be more certain of their actions when they are dealing with temps and, hopefully, not cross the line.

As the courts will now be looking for evidence of an employer-employee relationship it may also be useful to creatively sidestep tricky issues like discipline, sickness and annual leave.

Elaine Aarons, employment partner at Eversheds, says: “Firms are going to have to try and clarify under a contract where people stand. At the same time, efforts need to be made to try and give as much flexibility to the end user as possible. This can include such things as creating some blue water between the end user and the individuals, through something simple like handing over management of the worker to the agency and creating a number of specified get-out clauses in the contract.

“The important part is to specify precisely who is responsible for the areas that an EAT will now look at,” Aarons says.

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