Ms James had been working for the Council – through an agency – for three years when the Council decided to replace her with another person from the same agency. Ms James then claimed unfair dismissal.
The issue at hand was whether, in the absence of an express contract of employment, it’s actually necessary to imply a contract of employment between an agency worker and the employer.
The Court of Appeal decided that Ms James was not an employee of the Council because there was no express or implied contractual relationship between her and the Council. Her only express contractual relationship was with the employment agency, as she recognised when changing agencies – rather than employers – to obtain a higher wage. The Council’s only express contractual relationship was also with the agency.
To an onlooker, Merena James would have been indistinguishable from a Council employee. Not only did the Council dictate and direct her duties, they also organised the procedures to be followed by her and provided her with the necessary materials to carry out her work. Ms James even wore a staff badge displaying the Council’s logo.
However, despite the similarities between Ms James and a Council employee, the Court of Appeal (and the Employment Appeals Tribunal) refused to find that she was a Council employee and, therefore, Ms James had limited statutory employment rights. In determining whether or not a worker is an employee, the Court of Appeal confirmed that the correct method is to analyse the contracts governing the parties’ working relationship before considering the surrounding circumstances. It also confirmed that the ordinary principles of common law apply in determining whether a contract should be implied between a worker and an agency client in each individual case.
A contract should only be implied if it’s reasonably necessary to give business reality to a working relationship. If in the absence of an implied contract both parties would have acted in the same way, a contract shouldn’t be implied. In this case, although the Council had treated Ms James like an employee for over three years, that was of limited significance as it was fully in accordance with the services she provided through the agency.
Where a contract between an agency and their client contains provisions which allow the client a greater degree of control over the agency worker, a contract of employment between the worker and the end user client is more likely to be implied.
If any of the following provisions are contained within the agency-client contract, an Employment Tribunal will be more likely to imply a contract between the worker and the agency client:
Such provisions, of course, may well serve to transform the end user client and worker relationship into one better characterised as that existing between employer and employee. In real terms, then, this scenario effectively means that an employment contract is far more likely to be implied.
It’s worth noting that the Temporary and Agency Workers (Equal Treatment) Bill is currently going through Parliament. The Bill seeks to widen protection for agency workers. However, without the support of the Government, the Bill has little or no realistic chance of becoming law. Therefore, the Court of Appeal’s guidance in this case will continue to govern the position of agency workers for the immediate future.
Longer term, their position is likely to improve. The Prime Minister has suggested that an independent commission be formed to consider the limited protection afforded to agency workers.
Furthermore, commentators have suggested that when France takes over the European Union (EU) presidency later on this year, it’s likely to revive the proposed EU Directive granting agency workers rights to equal treatment after just six weeks of employment with their chosen company.
