![[Basket]](images/basket.png){kind=small}
Your order![[cover image]](images/issue/BK201406.jpg)
Can an agency worker claim unfair dismissal?
[ch 2: pages 66-68]No. Only employees can claim unfair dismissal. A decade ago, a Court of Appeal decision, Brook Street Bureau (UK) Ltd v Dacas [2004] IRLR 358, suggested that some agency workers could be employees of the hirer. In this case, a Brook Street agency cleaner, Mrs Dacas, had worked for a local authority for four years until she was replaced while on sick leave. The Court of Appeal said Mrs Dacas could be an employee of the council, on the basis of an “implied” contract of employment.
However, this suggestion was not taken up in later cases. Instead, it is now well established that a contract of employment will only be implied between the agency worker and the hirer where this is “necessary”, which will very rarely be the case. In James v London Borough of Greenwich [2008] EWCA Civ 35, the Court of Appeal confirmed that where clear contract terms have been agreed between a worker and an agency, the parties’ intentions will be clear, and there is no need to imply a term making the hirer into the employer.
The same result was reached in Tilson v Alstom Transport [2011] IRLR 169. In this case, Mr Tilson, an agency worker, worked for years for the same hirer, and was treated every day just like his directly employed colleagues. Even so, he was not an employee. There was no need to imply a contract of employment, because there was nothing ambiguous about the parties’ intentions. They never intended to create an employment relationship between the agency worker and the hirer. In Smith v Carillion (JM) Limited [2014] UKEAT 0081/13/1701, the EAT confirmed that the narrow test of “necessity” applies even in cases where a worker’s human rights have been infringed:
Dave Smith was an active UCATT shop steward blacklisted for his union and health and safety activities. He was an agency worker but he was fully integrated into the hirer’s operation and under its supervisory control. Smith lost his tribunal claim because he was a worker not an employee, even though, as the tribunal noted, he had suffered a “genuine injustice” for which “we greatly regret that the law provides him with no remedy”.
In the EAT, Smith asserted his human rights to freedom of association and privacy (see Chapter 5), and argued that the Human Rights Act required the tribunal to imply a contract between agency worker and end user to protect those rights.
He also relied on Autoclenz v Belcher [2011] ICR 1157 and argued that the tribunal must take a broader, more purposive approach to interpreting the agency/worker/hirer relationship, taking into account the parties’ unequal bargaining power (see page 48).
The EAT agreed that, to establish whether an agency relationship is genuine, you need to look at all the evidence, not just the documents. However, there was no suggestion in this case that the contract documents did not reflect the parties’ true intention, which was to create an agency relationship. It remains the law, said the EAT, that an employment contract between agency worker and end user will only be implied where it is necessary to do so. The need to take account of rights under the European Convention of Human Rights does not allow for a contract of employment to be implied between the agency worker and the end user in circumstances where domestic law does not allow this.
Smith v Carillion (JM) Limited [2014] UKEAT 0081/13/1701
These cases show that in a genuine three-way agency relationship involving hirer, worker and agency, a contract of employment will not be implied between the worker and hirer, even if the agency worker goes to work every day for years, sitting alongside a permanent employee doing exactly the same job.
The only circumstance in which a tribunal is likely to reach a different conclusion is where there is evidence that the documents do not reflect the parties’ true intentions. This could be, for example, because they are designed to avoid employment rights or PAYE tax, or for some other reason, as in this case:
Patrick Muscat was dismissed to cut the number of staff who appeared on the books in order to facilitate a buy out and then re-engaged as a contractor. The Court of Appeal held that, on the facts, he was still an employee.
Cable & Wireless v Muscat 2006 IRLR 354