Responsibility for staff comes down to control

Recent cases illustrate the need for employers to be aware of who has responsibility for staff hired through agencies. A recent case highlights the difficulties companies face in their relationship with temporary staff hired through employment agencies. When considering how to manage such staff, particularly when the decision is taken to dispense with their services, is it safe to say “they’re not our employees, so we don’t need to worry”?

Agency workers suffer the unenviable problem of being caught between two stools. Agencies rarely bear the traditional hallmarks of an employer – they do not control the manner in which the worker works, they simply find work for their staff and then pay them. Clients, on the other hand, usually feel that because they are merely contracting with the agency to provide labour, rather than specified individuals, they should not take on the responsibility as employer of the workers supplied to them.

But problems can arise for client companies, particularly where an individual has been working through an agency for them for months, even years. The agency worker may claim to have rights against the client when he or she is told that their services are no longer required. This will usually take the shape of an unfair dismissal claim.

In Motorola v Davidson and Melville Craig Group, Davidson was hired by Motorola on the terms and conditions of an employment agency, Melville Craig.

Almost two years later, Motorola terminated the relationship on disciplinary grounds. Davidson claimed unfair dismissal against Motorola, despite the fact that, on paper, he was not employed by them.

The EAT held that Davidson was assigned to work for Motorola on a full-time basis and Motorola exercised a sufficiently high degree of control over him on a day-to-day basis to mean that it, rather than the agency, was his employer. The control was exemplified by the fact that:

  • It had a power of veto over the initial posting of Davidson.

  • Davidson wore the Motorola company uniform.

  • He received instructions from Motorola staff and used Motorola tools to carry out his duties.

  • He had to book holiday and raise any grievances through a Motorola employee.

  • Motorola staff were involved in the disciplinary procedure applied to Davidson, taking the decision to suspend him and terminate his assignment.

Even though Davidson’s contract was with the agency and there was no contract between him and Motorola, this did not affect the fact that it was Motorola which was in control.

But in another decision, Johnson Underwood v Montgomery, the EAT held that a contract between the parties is an essential element of an employment relationship. Here, although the agency worker had been working for the same company for more than two years and was under the control of its staff, that was not enough to make her its employee.

In assessing the importance of the Motorola decision, it should be borne in mind that the EAT was asked to consider only the issue of control. This is not the only test to be applied in determining if an employment relationship exists. A key ingredient is that the individual agrees to provide services and that there is a mutuality of obligation between the parties, the employer agreeing to provide work and the employee agreeing to do it.

The EAT did not look at this issue. If it had, it may well have decided that there was insufficient mutuality of obligation between Davidson and Motorola to make him its employee.

Key points

  • Agency workers may be employees of clients if the client exercises a high degree of control over them.

  • The Motorola case was decided on a narrow point.

  • It is advisable for companies to review agency contracts to see if it is possible to minimise the control client staff have over agency workers.

By Alastair Brunker, a solicitor specialising in employment law at Shell International

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