Agency workers – the end of the line or the start of the fight?

by Hazel Phillips

On the 5th February 2008 the Court of Appeal handed down its much awaited decision in the case of James v Greenwich Borough Council. This decision comes at a time when proposed legislation to provide further protection to agency workers is being debated both in Parliament and in the wider world of work.

The issue for the Courts was when should an agency worker be classed as an employee of the end user as opposed to an employee of the agency.  The previous position was that agency workers were often just workers with no employment relationship with either the agency or the user of the agency’s services and therefore little employment law protection.

But clarification of the legal status of agency staff was badly needed after a number of conflicting authorities on this matter, with the prominent cases of Dacas v Brook Street Bureau and Cable & Wireless v Muscat showing an increasing trend of holding that the agency workers were employees of the end user.

The James Decision

The background to the James case is that the Claimant, Ms Merana James, initially began to work for Greenwich Borough Council as an employee in 1997. She stopped working for the Council for a short time while she went travelling, but in September 2001 started working for the Council again: this time through an agency. In 2003, although she continued to do the same work for the Council, she transferred to another agency as the hourly rate of pay was better.

Then in August 2004 Mrs James became unable to work due to ill health. When she tried to return to the Council after her recovery she found that another agency worker had taken her place and she was informed that there was no longer any work for her.

Mrs James’ only express contract was with the employment agency and this contract stated that she was self employed. Ms James submitted hourly time sheets to the agency so that they could arrange her payment and she received no sick pay or holiday pay from the Council. She was not subject to the disciplinary or grievance procedures that applied to the employees of the Council either.

However, her day to day tasks were controlled by the Council and they provided her with any equipment that she required. She also wore a badge that incorporated the logo of the Council whilst she was at work. Whilst working she followed the Council’s procedures with regards to how tasks were to be completed and she claimed that they exerted control over her in the way they would over an employee.

The Employment Tribunal held that there was no reason to imply a contract of employment between the Mrs James and the Council. This decision was upheld by the EAT and has now been upheld again by the Court of Appeal which said that whether there was a contract of employment between Mrs James and the Council was dependent on the facts of the situation.

Mutuality of obligation was held to be important if there was a contract in place and could be used to decide whether the contract was a contract of employment. However, in this case Lord Justice Mummery held that there was no contract at all between the worker and the end user and that passage of time in itself was not enough to imply that there was a contract between them. The fact that a worker, such as Mrs James had been working for the Council for many years did not mean that the Council were under an obligation to provide her with work.

In coming to this conclusion the Court of Appeal did not clarify the situation with regards to agency workers to the degree that many would have liked. The Court of Appeal dealt with the previous apparently conflicting authorities on this matter by explaining that the previous decisions did not in fact conflict. Therefore, some of the issues concerning agency workers that could have been explored in this case were not dealt with, leaving us perhaps no better off.

The Wider Debate

This judgement does provide employers with some relief in that the Court of Appeal held that a contract of employment would only be implied if it was deemed to be ‘necessary’ in the circumstances. This means that, employers are still free to use agency workers, without the fear that they will be held to be employees, so long as the relationship between the parties is properly managed and documented to make it clear that the individual is in fact a worker and nothing more.

Many business leaders believe that the continued ability to use agency workers as ‘workers’ is vital if the UK is going to remain competitive. David Frost, the Director General of the British Chamber of Commerce, comments that: ‘A flexible UK labour market is clearly of national importance as the economy faces difficult times ahead. This country has benefited from the flexibility provided by temporary workers in the past and it has been one of the main reasons the economy has created so many jobs. This flexibility must be maintained’. (View the full story here.)

Although the James decision has been welcomed by businesses, it has added further fuel to the fire of the trade unions who are lobbying for reform to the laws that regulate agency workers, in an effort to provide them with rights on a par with those now offered to fixed term and part time workers. Indeed, in his judgement in James Lord Justice Mummery commented that:

‘Some litigants and their advisers…appear to have unrealistic expectations about what the courts and tribunals can legitimately do to remedy their grievance that the statutory right not to be unfairly dismissed was confined by Parliament to workers who have a contract of service with the Respondent. The increasing amounts of money, time and effort spent on litigating this issue in tribunals and on appeals might in some cases be invested more productively in making representations to and through bodies which pursue the debate on policy or even reform the law.’

This issue has become somewhat of a political hot potato. Prior to the last election the unions and the Labour government came to an agreement known as the ‘Warwick Agreement’ in which (the unions contend) the government made a number of promises in return for union support in the election. One of these promises was that the government would tackle the issue of agency workers and that if EU legislation could not be passed to protect agency workers, then the UK would ‘go it alone’ and pass domestic legislation to protect this group of workers.

Since then, draft EU legislation designed to protect agency workers has been blocked by the UK and a previous attempt to get a Bill through Parliament to introduce this protection into domestic law has failed. Another attempt is being made to get this legislation through Parliament by way of the Temporary and Agency Workers (Equal Treatment) Bill 2008 which is due back before the House of Commons for further debate in early March.

The Bill is being tabled by Labour back bencher Andrew Miller and is heavily backed by the unions.  The unions are of the opinion that manifesto pledges have not been honoured and they see this Bill as the last change for reform in the law prior to the end of this government. Tony Woodley, Joint General Secretary of Unite, is quoted in the Times as saying that ‘failing to deliver on this manifesto pledge is to condemn well over a million workers to exploitation and discrimination.’

The case of James may have provided temporary respite for employers who use agency staff and it has provided some legal guidance on when a contract of employment can be implied, but the wider debate about the rights of agency workers still rages on and the situation is liable to change in the near future.

The key question for now appears to be not whether an agency worker is ‘employed’, but whether all agency workers will be given further protection through increased legislative protection.  Watch this space.

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