Employment Alert No. 137: Agency workers: Who does employ them?
April, 24, 2007
Background
Following the trend of recent cases, in Heatherwood and Wexham Park Hospitals NHS Trust v Kulubowlia the EAT resisted the suggestion that an individual supplied to an end user via an agency was employed by the end user under an implied contract of employment.
The Facts
K entered into an agreement with an employment agency for the supply of his services (although the agency was not obliged to provide him with any assignments under this arrangement). K was offered an assignment with the Trust which he accepted. The agency entered into a contract for the supply of services with the Trust and supplied K. This agreement set out K’s hours and pay. K was trained by the Trust and was given directions by one of its managers. When the assignment ended K claimed that he was employed by the Trust and so could bring an unfair dismissal claim against it.
The Employment Tribunal held that K was an employee of the Trust and that an implied contract of employment existed between them. The Trust appealed.
What did the EAT decide?
The EAT upheld the appeal. The Tribunal had been in error by finding that an implied contract existed between the Trust and K. For a contract to be implied it must be reasonably necessary to do so to give business reality to the situation. This is a high hurdle for a claimant to surmount.
The EAT stated “it is not enough…that because the Claimant looked like an employee of the Trust, acted like an employee and was treated like an employee” for business reality to dictate that he was an employee and a contract of employment must be implied.
The Tribunal should have looked at the reality of the situation. If it had, it would have found that all three parties behaved consistently with the express arrangements between them (K agreed to provide his services to the agency and the agency agreed to provide K’s services to the Trust). It was not necessary to imply a contract between K and the Trust. The Trust’s case was also assisted by the fact that K had applied, unsuccessfully, for a job with it.
What this means for employers
The facts of this case are typical of such triangular arrangements. The EAT’s analysis and reliance on what happened in reality will assist end-users in resisting claims that an agency worker is actually its employee.
It is a timely reminder for end users to revisit their arrangements and assess whether the agreements in place match (or continue to match) what actually happens.
The day before this case was heard the same judge presided over another agency case. In that case the individual claimed that the agency not only acted as agent for the individual in finding him work but also acted as agent for the end user, to create a contract of employment between the end user and the individual. This was rejected. Had Parliament wanted to give unfair dismissal rights to workers it would have done so – to date it has not.
A Private Members’ Bill – Agency Workers (Prevention of Less Favourable Treatment) Bill – has been introduced but this will not have its second reading until the Autumn and appears to be losing momentum.
