Over recent years there has been a significant increase in the number of workers engaged through agencies and also an increasing number unfair dismissal claims in which agency workers allege that they are employees of the client end user.

Normally there will be no express contractual relationship between the agency worker and the end user. However, in 2004, the Court of Appeal held (in Dacas v Brook Street Bureau) that Tribunals need to consider whether it may be necessary to imply a contract of employment between those two parties where the agency worker claims unfair dismissal .

The Court of Appeal has now again given its views on the issue.

The facts

The Claimant was a Housing Support Worker who worked for the Respondent Council through two agencies from 2001 to 2004. Her day to day instructions came from the Council and, while at work, she was under the control of the Council. However, she was paid through the agencies and was not entitled to employee benefits such as annual leave or sick pay.

In 2004, the Claimant took two months off work due to illness. During this period, the agency supplied another worker to the Council. When the Claimant returned to work the other worker also turned up for her shift and the Claimant was told that her services were no longer required by the Council.

The decision

The Court of Appeal upheld the Tribunal’s finding that the Claimant was not an employee of the Council.

It held that the essential question to ask in cases like these is whether, having regard to the way that the parties have conducted themselves, it is necessary to imply a contract between the worker and the end user.

The Court of Appeal also approved the general guidance in respect of agency worker relationships previously set out by the EAT:

In genuine tri-partite arrangements, the end user will be paying the agency for the service it provides, not paying the worker for the work performed (there will usually be a premium charged and the end user may not know what the worker earns);

  • The end user will not generally be able to insist on the agency supplying a particular worker;
  • Relationships may change over time, so in some cases, it will only be once the arrangements change that implication of a contract is necessary;
  • The passage of time, of itself, does not give rise to a necessity to imply a contract;
  • Where an employee has become an agency worker with nothing else changing in practice, this may indicate that the original employment contract has not in fact come to an end.

What this means for end users

This decision offers further comfort to end users of agency workers. In general, where the contractual documentation sets out a genuine tri-partite relationship between the end user and the agency and the agency and the worker, it will not be necessary to imply a further contract of employment between the worker and the end user.

However, end users of agency workers will still need to ensure that the arrangements in place between them and the agency (and between the agency and the worker) are a true reflection of what is happening in practice.

It looks likely that any changes to increase the protection offered to agency workers will now need to be instigated by legislators (either in the UK or through a European Directive) rather than through the courts.