An employment relationship will only be implied between an agency worker and end-user if it is necessary to explain the work undertaken. This will not usually be necessary simply because the relationship has continued for a number of years.

The Court of Appeal upheld the EAT's decision in James v Greenwich Council (reported here) and endorsed its comment that there will rarely be sufficient evidence to justify a finding that an agency worker is the end-user's employee, except where the agency arrangement is a sham or the worker was previously the end-user's employee. However, provided a tribunal applies the correct necessity test, its decision will be difficult to overturn on appeal.

Companies who have limited their use of agency workers to short-term assignments in order to avoid this problem may now consider relaxing their approach. It will be more important to ensure agency workers are not treated like employees. For example, the end-user should not provide them with sick pay or holiday pay and should not deal with performance or discipline issues directly with the worker. If negotiable, indemnities from the agency to cover employment claims remain a wise precaution. (James v Greenwich Council, CA).