Many businesses make use of workers provided by a recruitment company (the agency). In the traditional triangular arrangement, the company will contract with the agency and the agency will contract with the individual worker whose services are being provided to the company. There will be no direct written contract between the company and the individual. In the absence of any contract at all between the worker and the company, it might be assumed therefore that the individual could not be an employee of the company. The position is not, however, so simple.
Readers may be aware of the long running series of employment cases which have dealt with this issue. Many of these decisions have seemed to be contradictory and despite the involvement of the Court of Appeal, the position remains unclear. The courts have given little practical guidance on how to implement and apply the legal test, which is accepted to be as follows:
- An individual who has been provided to a company by an agency may seek to argue that in reality they are an employee of the company (not of the agency).
- In such a case, a Tribunal is required to consider the whole circumstances of the case and look at whether it is necessary to imply that there is a contract of employment in existence between the company and the employee in order to reflect the reality of the situation.
- This will involve looking at all the contractual documentation, the reasons behind it and whether the contracts were observed in practice.
- Also, the Tribunal must look at the reality of the relationship between the various parties.
There is a clear risk that a Tribunal may decide that an agency worker was actually an employee of the business, granting the normal employment rights to that employee. In order to minimise the risks of this, businesses who make use of agency staff should address the following points:
- Ensure that a review of documentation is carried out, i.e. the contracts entered into with the agency and preferably also the agency’s contract with the individuals in question.
- Agency workers should not be used for prolonged periods of time, as after a year they will have acquired the right not to be unfairly dismissed.
- So far as possible, there should be a clear distinction between the business’s relationship with its employees and its relationship with the agency workers.
Contact
Caroline Carr or David Hoey