Legal Q & A: Agency workers

By Charlotte Grocott, solicitor in the employment team at Wragge and Co LLP

Q I thought it was clear that agency workers were not employees of the
client company. How has this changed?

A A string of recent cases in the EAT suggested that workers supplied
through agencies would not be employees of the client company. If there was no
contractual relationship between the worker and the client company, then there
was no need to look at any other circumstances.

However, the recent case of Franks v Reuters casts doubt on this position.
Franks began working for Reuters in 1993, when he was hired through an
employment agency.

In 1999, he was told his services were no longer required. The tribunal
found that he was employed neither by Reuters nor the agency.

Franks appealed, arguing that the tribunal had not considered whether there
could be an implied employment contract with Reuters.

The Court of Appeal (CA) agreed and sent the case back to be considered by a
fresh tribunal. The CA said that dealings between parties over a number of
years could create an implied contractual relationship between an agency worker
and an end-user company. It said tribunals should consider all of the relevant
evidence about the working relationship.

The CA has opened a door for tribunals to look beyond the formal contractual
position. Now, tribunals must consider all of the circumstances to determine
whether an oral or implied contract of employment exists. This means that
agency workers could now be found to be the employees of a client company.

Q So how can I tell if an agency worker could be seen by the courts to be
my employee?

A Unfortunately, this is still very difficult. In Franks, the court
did not set down any definitive guidelines but merely referred to "all the

Likely questions to look at are:

– Is the worker fully integrated with the rest of the workforce; does he
wear the same uniform or clock in and out with the other staff?

– Is the worker managed by the client company on a day-to-day basis?

– Does the client company deal with disciplinary and grievance issues
relating to the worker?

– Is the worker performing a specific service for the client company?

If the answer to these questions is yes, then there is a real possibility
that a tribunal could find that an agency worker is actually employed by the
client company.

This is particularly likely if there is no written documentation stating
otherwise and if the worker has been providing a service for the client company
for a number of years. However, it will always depend on the individual facts.

Q What is the Government planning to do about all this?

A The Government has been looking at this issue for a while. The
draft Conduct of Employment Agencies and Employment Business Regulations were
first issued in 1999, with a revised draft in July 2002.

They state that where workers are employed by an agency and seconded to a
client company, the nature of the employment relationship between the agency
and the worker must be agreed and set out in a single document at the start.

This document will state whether the worker is employed by the agency and,
if so, will set out the terms and conditions of employment. This will make it
much clearer who employs agency workers.

Q When will this happen?

A The regulations were planned for 2003. In the meantime, the
European Commission produced a draft directive on temporary agency work. This
aims to apply the equal treatment principle to agency workers.

At the moment, it is still under scrutiny. The Government has therefore
delayed implementing the regulations until the European position is clarified.

Unfortunately, this means the employment status of agency workers will
remain a grey area for the near future. Companies will remain at risk of temps
being found to be their employees and not those of the agency.

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