Long-awaited Court of Appeal judgment on the status of agency workers
The Court of Appeal this week handed down its much-anticipated judgment in James v London Borough of Greenwich [2008] EWCA Civ 35, confirming the EAT’s decision that an agency-supplied and contracted worker was not the employee of the end-user. The judgment emphasised that every case of this type will depend on its own facts, but the principles of the decision should still be of great comfort to end-users who do not hold direct contracts with their agency workers.
This case was concerned with so-called “tripartite relationships”. In such arrangements, as was the case in James, there is a contract between the agency and the worker and a separate contract between the end-user and the agency, but no contract between the agency worker and the end-user. A worker can only be an employee if there is a contract of employment, so the absence of a contract is fatal to an agency worker’s claim to be an employee of the end-user. The decision turned therefore on whether a contract could be implied to fill the gap between the worker and the end-user. The ordinary legal principles that a contract can only be implied where it is necessary to do so apply to employment law as much as to any other branch of the law. For that necessity to exist there must be something in the conduct of the parties which indicates that the business reality of their relationship can only be consistent with the existence of a contract between them. Further, the mere passage of time would be very unlikely to justify the implication of a contract as a matter of necessity.
In this case, the end-user’s provision of work for the agency worker to complete, the performance of that work by the worker, and the end-user’s payments to the agency were all covered by the existence of the two separate contracts. Therefore, regardless of the length of time over which the worker had been supplying her services, it was not necessary to imply the existence of a third contract between her and the end-user, and so she could not be the end-user’s employee.
This decision is likely to add fuel to the ongoing political debate on the limitations on job protection for agency workers. A private member’s bill, aiming to provide protection and ensure equal treatment for temporary and agency workers, is scheduled for its second reading before Parliament on 22 February. It remains to be seen whether the legislative framework will be altered, but it will be for Parliament rather than the judiciary to make any changes to the law. As Mummery LJ stated in James, while adjudicating on disputes the courts are “builders in the law”, but must avoid becoming “architects of economic and social policy”.
Co-authors Simon Jeffreys, Anthony Fincham and Tom Cloke. Please find contact details for Simon and Anthony below. Tom can be contacted at tom.cloke@cms-cmck.com or at +44 (0)20 7367 3150.
