If an agency worker is issued with a permanent contract of employment with an umbrella company or their own service company, this can avoid the Regulations. It will be a question of fact in each individual case as to whether the arrangements amount to an employment relationship and are not merely a device to avoid equal pay under the Regulations.
If a temporary work agency or an umbrella company wishes to argue that it is a true employer, then it will need to satisfy the employment tests referred to in the related Q: How do breaks between assignments and the Swedish derogation affect the legal protection of agency workers? To prevent companies from terminating a worker's assignment just before the 12 weeks is up and then immediately re-engaging them, there are break period provisions in the Regulations.
They provide that, for the purposes of calculating the week qualifying period, continuity will normally be broken by:. Breaks between assignments due to a number of specified reasons, such as illness, maternity or pre-determined closure periods do not break the qualifying period. The following points should help hirers to determine if the week period has accrued:. Special rules also govern pregnancy, childbirth or maternity so that basically the 12 weeks will continue to accrue up to the originally intended length of the assignment, if the break is due to maternity, adoption or paternity leave.
Some case law suggests that an employee could have more than one employer namely both the agency and the end user- but this would be very rare. Following James v Greenwich LBC CA the position is that where there is a valid tripartite contractual relationship between agency and the worker and the agency and the end-user, the courts will rarely imply a contract between the worker and end-user. The issue of whether agency staff can become employees of the end user is governed by case law and arose in the following cases.
The cases have different results due to subtle differences in the cases:. This case found that there was a contract of employment with the agency. The case addressed whether dual contracts of employment can exist both between agency and worker as well as worker and end user.
An administrative assistant worked for a company for seven years but half way through this time her services were provided via a contract of employment with an agency. After allegations of falsifying time sheets for which she was exonerated the company refused her services. In the absence of other work she was dismissed and claimed unfair dismissal initially against the agency and then the company too. The EAT held no contract of employment was implied between the assistant and Visteon Ltd because a contract of employment already existed between her and the agency.
This was plainly a relevant factor in determining whether it was necessary to imply a second contract of employment. However, the judges agreed in certain circumstances an employee could have more than one employer. Autoclenz v Belcher and others July SC. In this case, the result was there was a contract of employment with the end user. It involved car-valeters who had contracts stating that they were self-employed, but the Supreme Court said this did not reflect their true employment status and found that they were in fact employees of the end-user.
This decision suggested that those with agency staff were at risk of being found that they were actually employees. Autoclenz confirms that tribunals will look at the reality of the situation to decide if arrangements are fake, but if there is no evidence of a sham arrangement as in the Smith case then it is not necessary to imply a contract.
Most other case law demonstrates that courts will only imply terms where this is strictly necessary. The result in this case was that there was found to be a contract for services provided to the agency, and no contract of employment with the agency or the end user.
Muschett brought employment tribunal claims for unfair dismissal, wrongful dismissal, and sex, racial and religious discrimination against both Brook Street and the prison. The Courts found he was not an employee of either Brook Street or the prison.
He worked in accordance with a contract for services for temporary work between him and Brook Street. He was paid by Brook Street and he had no contractual obligation to provide services personally to the prison. Accordingly, all his claims failed. The Court of Appeal held there was no implied contract for services with the prison as there was nothing in the evidence that necessitated the implication of such an agreement, and, following the case of James v Greenwich Borough Council only necessity will lead to a contract being implied.
The approach of looking to see if it is necessary to imply a contract has now been applied in many cases. However, a contract of employment will not be implied simply because the parties' conduct could be consistent with such a contract.
An agency worker alleged that the contract of employment with the agency was fictitious and that there should be an implied contract between him and the company. The EAT said a contract of employment will only be implied where this is necessary and this will only occur in exceptional cases. An implied contract of employment will not arise if there is a contract of employment between the agency worker and the agency. The Court of Appeal confirmed that the court would not imply a contract. The Conduct of Employment Agencies and Employment Businesses Regulations ensure that the precise contractual position between agency, end user client and worker must be agreed and set out in a single document before the hiring starts.
However, tribunals will continue to examine all factors when trying to ascertain an agency worker's employment status. What is contained in the documentation is one factor to take into account see for example Royal National Lifeboat Institution v Bushaway, Yes, but the courts are now cautious about finding an employment relationship between an agency worker and an end user.
The main issue is whether the reality of the relationship gives rise to the implication of an employment contract. A contract will only be implied when it is necessary to explain the work undertaken, not merely when it is desirable, and where this reflects the reality of the relationship. Where the contractual terms are clear regarding the elements of control, personal performance and mutuality of obligation, there is no need to imply a contract of employment see Muschett v HM Prison Service , CA.
In Smith v Carillion JM Ltd , CA , a construction worker discovered his name was blacklisted and brought claims of detrimental treatment on grounds of trade union activities, and activities as a health and safety representative. He had to establish an implied contract that he was employed directly as a worker by the end user, even though he was placed through employment agencies with no written terms with those agencies. The Court of Appeal CA held that no contract could be implied between the agency worker and the end-users, as it was not necessary to do so.
In both these cases agency workers were held not to be employees of the end-user. The CA guidance summarised the main features that would point away from employment status. They were:. The passage of time on its own is not a reliable indicator of when an agency worker becomes an employee, and the passing of, say, a year or more does not, by itself, justify the implication of a contract.
Generally, if there is a contract in place between the worker and the agency, it is less likely there will be a contract of employment with the end-user. Two previous important Court of Appeal judgments on this issue were Franks v Reuters , CA and Dacas v Brook Street Bureau UK Ltd , CA which outlined the circumstances in which a contract of employment could be implied between the agency worker and the company.
Whilst this case law may have suggested the period of one year is significant this is no longer the case. The qualifying period for unfair dismissal has increased from one year to two years in any case. Employers should also give agencies they use agency current information on their terms and conditions to ensure that an agency worker receives the correct treatment.
If an employer operates pay scales and standard terms and conditions then an agency worker's entitlement will in most cases be established with reference to those pay scales and terms and conditions. This will particularly affect workers on variable hours or zero hours contracts. The right is simply a right to request a fixed working pattern; there is no obligation on the employer to agree.
The right is expected to operate in a similar way to flexible working. Currently, different approaches are taken to considering whether an individual is an employee, a worker or self-employed for employment law and tax purposes.
An individual can be a worker for employment law purposes but self-employed for tax purposes. The Taylor review recommended that the same test is used for employment law and tax purposes and the government has agreed that these tests will be 'streamlined'. Visit our Brexit hub for a range of regular updates relevant and resources. Log in to view more. What are the key provisions in the Agency Workers Regulations ? An agency worker is someone who: is supplied by a temporary work agency to work temporarily for, and under the supervision and direction of, a hirer has a contract of employment with the agency, or any other contract, requiring them to perform work or services personally for the agency.
The key provisions are: Equal treatment for agency workers when they have been in an assignment with the same hiring company for 12 weeks. Entitlement to the same access to job vacancies as permanent staff from day one. This means that vacancies made available to permanent staff through email, internet, intranet, a company newsletter or on notice boards should be made available to agency workers too. The only exception arises where an employer makes available opportunities for staff at risk of redundancy.
Use of collective facilities, such as staff canteens, childcare facilities and transport services, from day one. Do agency workers accrue rights as employees against the employer or the agency?
Employers should also remember the following: The Agency Workers Regulations give some rights once 12 weeks have gone by, but do not affect the ability of agency workers to claim rights as employees and to lodge unfair dismissal claims. Workers do not automatically accrue some employment rights after a set period of time. Some employment rights apply to workers, regardless of whether or not they can show an implied employment contract.
Employment status Agency workers who are supplied to an employer by an agency or employment business may be: employed by the employer, or employed by the agency, or self-employed. Case law The lessons from the cases summarised below are that: As long as proper arrangements are in place for agency workers, and there is a clear contractual relationship and behaviour consistent with that relationship, it will not be necessary to imply a contract of employment with the employer or the agency.
Sometimes agency workers will be employees, but not always. In some rare situations an agency worker will be found to have employment rights against the organisation where they have been working. Where there has been a breach of the Agency Workers Regulations the employer and or the agency can be individually or jointly liable. Case: London Underground v Amissah Compensation for a breach of the Agency Workers Regulations can be apportioned between the agency and the employer, for example on a basis.
Case: Muschett v HM Prison Service This case confirmed that where there is a valid three-way contractual relationship between an agency, a worker and an end-user, the courts will rarely imply a contract between the worker and end-user. To decide if agency workers are employees, numerous cases have now followed the James decision and in many a three-stage approach is used: Do the express contractual arrangements adequately explain the actual relationship of the three parties involved at the outset?
Have any subsequent words or conduct of the parties changed matters? Is it necessary to imply a contract of employment? Case: Smith v Carillion JM Ltd Here the Court of Appeal decided that it was not necessary to imply a contract for a blacklisted agency worker who had had management jobs in the construction industry.
Case: Tilson v Alstom Transport The Court of Appeal also followed the James decision in this case and confirmed the principle that an employment relationship should be implied only if it is necessary to do so. The mere fact that the worker is significantly integrated into the organisation is not inconsistent with the existence of an agency relationship The court emphasised that it is an error to think that because someone looks and acts like an employee, it follows that he or she is always an employee in law.
Agency employees Where individuals are unable to claim unfair dismissal against the end-user, they may claim that the umbrella agreement which covers the relationship generally between themselves and the agency gives rise to employee status with the agency. Other rights Workers who cannot establish employee status may still be protected by the Agency Worker Regulations What is the difference between an employment agency and an employment business?
Employment agency Workers supplied by an employment agency are introduced by the agency to the employer. Employment business Workers supplied by an employment business are employees of the agency, temporarily seconded or supplied to a client end-user. Protections for work-seekers Both employment agencies and employment businesses cannot: Charge a fee to a work-seeker to find them work.
Non-work finding services like CV writing is permissible but must be explained in a separate document beforehand. Prevent someone from working somewhere else or ending their employment with the agency or business.
Withhold payments or wages due to temporary work-seekers. Supply a temporary worker to replace someone taking part in industrial action at the hiring company. Make unlawful deductions from pay. What is the legal status of agency workers? It is a complex issue. Two main issues arise: whether temporary agency workers are employees if they are employees, whether they are engaged by the business or agency or the end user.
The most recent guidance suggests that as a general rule the legal status of a temporary agency worker will depend on: whether an implied contract has arisen between the worker and the end user an implied contract will only arise when it is necessary. Can an employer avoid employment rights by using temporary agency workers who supply services through their own limited companies? Employee status Many temporary agency workers have their own limited company and supply their services through that company either through an agency or directly to the end user.
The Agency Workers Regulations A temporary agency worker placed by an agency may put their earnings through a limited company for tax reasons. How do the Swedish derogation and breaks between assignments affect the legal protection of agency workers? You might have been dismissed for a fair reason. Possible fair reasons for dismissal include:. Check if you can challenge your dismissal. You can read more about dismissals which are automatically unfair.
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