Agency Workers Law in Disarray

Agency Worker - No Contract of Employment With Agency Client

James v Greenwich London Borough Council

EAT: Elias J (President), Mrs A Gallico and Mr D Jenkins: 21 December 2006

The claimant was employed by the respondent council as an asylum support worker until 1997, when she ceased working for a short time. She subsequently began working again for the council through an employment agency.  Unlike those working directly for the council, the claimant was not entitled to sick pay or holiday pay and arrangements in respect of sickness and holiday were made by the agency. The claimant was absent from work due to sickness in August and September 2004 and the agency provided another worker in her absence. When she returned she was told that she was no longer required as the agency had replaced her. On the claimant's claim against the council for unfair dismissal, the employment tribunal found that, as there was no obligation on the claimant to provide her services to the council, or on the council to provide her with work, sick pay or holiday pay, there was no irreducible minimum of mutuality of obligation necessary to create a contract of service.
The claimant appealed.
The Employment Appeal Tribunal held:
It was not particularly helpful to focus on the existence of the irreducible minimum of mutual obligation when the issue was whether a contract could be implied between an agency worker and the end-user.  Since there was no necessity to imply a contract, given that there was an agency relationship regulating the position of the parties, and the mere passage of time was not sufficient to require any such implication, the appeal was dismissed.

Here is Daniel Barnett's commentary from 22 December 2006:
Agency Workers: Implied Contracts of Employment

At last: a case curtailing the recent (and, dare I say, ridiculous) tendency of the courts to imply contracts of employment at the drop of a juducial hat. Elias P., sitting in the EAT, has handed down a judgment containing important guidance on when a tribunal should find the existence of an implied contract of employment when dealing with agency workers. This is welcome guidance, given the vague appellate decisions existing to date which merely state that such a contract can exist, without saying whether it did, on the facts of the case, exist.

In James v Greenwich Council, Mrs James was an agency worker who worked for Greenwich for five years. She argued an implied contract had arisen. The EAT upheld the tribunal's decision that there was no implied contract as no mutuality of obligation existed. Elias P. went further and, obiter, gave the following guidance (at paras. 53-61) on when it is appropriate to imply a contract between worker and end-user:

• it is not appropriate to imply a contract where the end-user cannot insist on the agency supplying a particular worker.
  
  
• "where the arrangements are genuine and when implemented accurately represented the actual relationship between the parties - as is likely to be the case where there was no pre-existing contract between worker and end user - then we suspect that it will be a rare case where there will be evidence entitling the Tribunal to imply a contract between the worker and the end user. If any such a contract is to be inferred, there must subsequent to the relationship commencing be some words or conduct which entitle the Tribunal to conclude that the agency arrangements no longer dictate or adequately reflect how the work is actually being performed, and that the reality of the relationship is only consistent with the implication of the contract. It will be necessary to show that the worker is working not pursuant to the agency arrangements but because of mutual obligations binding worker and end user which are incompatible with those arrangements." (para 58)
  
  
• the passage of time does not justify the implication of a contract - and Sedley LJ's judgment in Dacas is wrong (para. 59) (note: it is still binding on tribunals!)

Anyone who advises in cases involving agency workers must read paras 53-61 of this decision.

James v Greenwich Counsel

But here is a more recent case reported by Daniel:

Agency Workers

Hot on the heels of the EAT's decision in James v Greenwich Council (see bulletin 22/12/06) comes another decision on agency workers from a differently constituted division of the EAT.

In Craigie v Haringey, Bean J. declines to follow the Court of Appeal's decision in Dacas v Brook Street Bureau on the grounds he preferred to focus on the more traditional 'necessity' test for implying a contract. He upheld a tribunal's decision that there was no 'necessity' to imply a contract of employment between agency worker and end-user.

The EAT commented that the law on agency workers is unsatisfactory, but that it needs legislation to change it (para. 17).