In Smith v Carillion (JM) Ltd & Another UKEAT/0081/13, the Employment Appeal Tribunal considered whether an agency worker was an employee for the purposes of English law.

Mr Smith was an engineer who provided services to Carillion (JM) Ltd ("Carillion") via an agency. He was paid an hourly rate by the agency according to the number of hours he worked for Carillion. Carillion terminated his engagement following which he brought employment claims alleging that his termination was linked to his trade union activities. These were claims that were only open to employees, and not workers, so the first question to be decided was whether Mr Smith was an employee of Carillion. The Employment Appeal Tribunal found that he was not. An employment relationship would only exist between an agency worker and the ultimate entity to which they were providing services where it was necessary to give effect to the reality of the relationship. The EAT did not think it was necessary to do so in the case of Mr Smith, even though some elements of his working arrangements bore similarities to those of an employee, including that he was subject to a significant degree of control from Carillion in the performance of his duties. The EAT also added that in most cases involving an agency, an agency worker and an ultimate entity to which they are providing services, it was unlikely to be necessary to imply an employment relationship.

This decision is helpful to companies which use agency workers as it reinforces the view that there is a reasonably high threshold to be met before a genuine agency worker will be deemed an employee. It is still important, however, to have appropriate protections (including warranties and indemnities) in the agreement between the company and the agency because the issue of employment status as between the worker and the end user will be scrutinised closely by the courts.