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Agency Workers

28 February 2011

By definition, agency workers are workers who take on jobs that are short-term and temporary in nature. So far, so simple. But their status as workers has been anything but straightforward to determine. Little wonder, then, that employers have been left scratching their heads following a number of conflicting court decisions as to whether agency workers are employees or not.

The recent action by BMW raises the important issue of Agency Workers rights

By definition, agency workers are workers who take on jobs that are short-term and temporary in nature. So far, so simple. But their status as workers has been anything but straightforward to determine. Little wonder, then, that employers have been left scratching their heads following a number of conflicting court decisions as to whether agency workers are employees or not.

This is partly because, unlike other EU member states, the UK does not require agency workers to be treated as employees of the temporary work agency or by the client company. Unfortunately, the recently agreed Temporary Agency Workers Directive has not resolved the issue.

Court decisions
That leaves matters more or less in the hands of the courts which, it has to be said, have not helped much either. Indeed, they seem to have been in disarray with a recent crop of conflicting decisions (although the trend has currently been to confirm that they are not employed by anyone).
For a number of years, the courts seemed to be of the view that there was an implied contract between the agency worker and the end user (in other words, the employer).

Take the 2004 decision of Dacas v Brook Street Bureau as a good example. In this case, the Court of Appeal said that an end user could be the employer of an agency worker, due to an implied contract of employment between them and the agency worker. The Court came to a similar conclusion in Cable and Wireless plc v Muscat, and also confirmed that Dacas was correctly decided.

However, a number of Employment Appeal Tribunals have subsequently decided (James v Greenwich Council; Craigie v Haringey Council; Wood Green Engineering v Robertson) that tribunals should only imply contracts of employment when it was necessary to reflect "business reality".

This approach was confirmed last year when the Court of Appeal decided in Consistent Group Ltd v Kalwak that generally temps and agency workers were not employees of an employment agency nor of the end user.

This case concerned Polish workers hired by an employment agency on a self-employed basis. Their contracts (for services) stated that they were not obliged to accept work from the agency, nor was the agency obliged to give them work.
The tribunal said this clause was a sham, but the Court of Appeal disagreed, saying that to be rejected as a sham, both parties must have intended the term to misrepresent their true contractual relationship at the time the contract was entered into.

Temporary Agency Workers Directive
So will the Temporary Agency Workers Directive help to clarify matters? Probably not, at least as far as the employment status of agency workers is concerned.
The directive, agreed last year by EU member states after many years of negotiation, says that agency workers should be treated equally as of day one in terms of pay, maternity leave and holiday. However, the directive also allows member states to "derogate" or modify its terms through collective agreements or agreements between social partners at national level.

The UK Government has taken advantage of this to agree a deal with its social partners (unions and employers) whereby agency workers will only have the right to claim the same pay and holidays as those they work alongside after twelve weeks on the job (as opposed to day one under the directive itself).
Temporary staff will also have to work the same length of time as full-time workers to enjoy paid maternity leave. Although it covers pay, overtime and holidays, the UK agreement does not extend to rights such as occupational pensions and sick pay.

The directive will give temporary agency workers the right to be informed about permanent employment opportunities in the "user enterprise" and equal access to collective facilities (such as canteens, child care facilities, or transport services).
It also requires member states to improve the access that temporary agency workers have to training and child care facilities in the periods between their assignments so as to increase their employability, and ensure penalties for non-compliance by temporary agencies and enterprises.

Following the approval of the European Parliament in October last year, EU countries now have to incorporate the provisions of the directive in their national law. It will then come into effect within three years. The UK government anticipates that it will become law in either April or October 2010.