Employers can treat agency staff as their own

The Court of Appeal has once again had to consider the issue of whether an agency worker was employed by the end user – this time in this case brought by Mr Tilson against Alstom Transport. The case was heard on October 5th this year.

Mr Tilson, the agency worker in question, was well integrated into day-to-day life at Alstom. He was a manager who had employees reporting to him; had the power to recruit staff, sign timesheets, order materials, and also had a mobile phone, computer and network access provided by Alstom. He had an obligation to turn up to work, and was unable to substitute somebody else in his place to undertake his duties on his behalf.

To all intents and purposes, therefore, Mr Tilson did work just in the same way as any other employee would, and he had all the hallmarks of being an employee of Alstom.
However, and importantly, there were a number of agreements in place, but not one between Mr Tilson and Alstom. Furthermore, Alstom had on one occasion even offered Mr Tilson a permanent position as an employee. He did not take it up, however, ostensibly because he would be paid better as an agency worker.

So was Mr Tilson Alstom’s employee? He brought an unfair dismissal claim when Alstom no longer had a need for him – however, without being their employee, he had no ability to bring such a claim against the company.

It is well established now that just because somebody looks like an employee, and acts like an employee, and is even treated as an employee, that a contract of employment will be implied between the worker and an end user. The fundamental question is whether it is necessary to imply such a contract.

In this case, Mr Tilson entered into a contract with a company called Silversun, albeit a verbal contract, to pay them 3% of his salary, and in turn they would pass his pay on to him less the 3% service charge – a payment mechanism in effect.

Silversun in turn contracted with a human resources company which stated that neither it, nor Silversun, would exercise any supervision, direction or control over Mr Tilson; although importantly Alstom was not a party to that contract. Alstom also contracted with the human resources company principally to provide individual workers, amongst other things.

There was, therefore, no express contract between Mr Tilson and Alstom – but was it necessary to imply one?

The Court of Appeal remarked that it is perfectly normal for an agency worker to be integrated into a business, even to a significant degree as in this case, but that does not necessarily give rise to an employment relationship. It said that is unrealistic for Mr Tilson to be able to do his job properly without some sort of direction or control over what he did, as is the case with all agency workers. But the exercise of such direction and control does not automatically convert a worker into the end user’s employee.

Notwithstanding the fact that the contract between Silversun and the human resources business said there would be no employment relationship arising, Alstom itself never made any agreement that it would not look to control Mr Tilson, or even integrate him into its business. There were no express provisions between them.

Indeed, Mr Tilson had strongly resisted entering into a contract of employment with Alstom direct, despite having the opportunity to do so. Accordingly, the Court of Appeal felt that there was no need, therefore, to imply a contract between Mr Tilson and Alstom, particularly because he had expressly decided not to enter into contractual relations with each other.

So what does this all mean for businesses? It is good news for companies engaging agency workers, and furthers the previous line of thinking that as long as there is contractual documentation in place setting out the respective relationships between the parties, the courts will be reluctant to go behind this and imply a contract between a contractor and the end user. Furthermore, as this case demonstrated, it seems that the end user can go as far as to treat the agency workers as one of their own but not convert the worker into an employee of theirs.

Clearly, best practice is to make sure that there is sufficient documentation in place between the workers, the agency, and the end user expressly setting out what their respective relationships are. Provided this documentation is clear, there appears to be little scope for the courts to interfere and find that those parties were in fact operating on an employment basis.

By James Tait, associate and employment specialist at legal firm Browne Jacobson LLP.

Monday 6th Dec 2010