A number of employment tribunal cases have been put on hold
awaiting the judgment of an issue that has often been
contentious.
Louise Donaldson, an employment law specialist at Pinsent
Masons, the law firm behind OUT-LAW.COM, said that the ruling will
be welcomed by businesses. "This is a good ruling for employers, it
means that they can carry on using agency workers to fill gaps in
their staff and not be at risk of being found to be an employer and
liable for unfair dismissal claims when they don't need them any
more," she said.
Despite there being a number of apparently conflicting judgments
for lawyers and tribunals to rely on, the Court of Appeal has said
that the law is clear and that it is up to employment tribunals to
decide whether or not somebody has become an employee.
Merena James worked for three years for the London Borough of
Greenwich, which employed her through first one and then a second
agency. She fell ill in 2004 and was absent from work. When she
returned she found that her role had been filled by another worker
from her agency.
James took a case for unfair dismissal to an employment
tribunal. The Council argued that James was not an employee so was
not entitled to the rights of an employee, including the right to
take part in its disciplinary procedures.
Businesses increasingly rely on agency workers, and one of the
benefits to companies of agency workers is that their obligation to
them is less than it is to staff.
Some employment legislation, such as anti-discrimination laws,
applies to agency workers, but unfair dismissal protection is only
available to employees.
The employment tribunal and the Employment Appeals Tribunal
(EAT) which heard the case ruled that there was no contract of
employment between James and the local authority, and that the mere
passage of time was not enough to create one.
Lord Justice Mummery said in his ruling that the employment
tribunal had not erred in its application of the law when it found
that there was no implied contract between James and Greenwich, and
said that the only decision to be made was whether the ruling of
the tribunal was perverse.
He said that this was not a situation in which it was necessary
to imply a direct contract in order to explain why James was
working for Greenwich. "Her only express contractual relationship
was with the employment agency … the Council's only express
contractual relationship was also with the agency. There were no
grounds for treating the express contracts as other than genuine
contracts."
"The circumstances in which the Council received and paid for
work done by Ms James for the Council and the facts about the
working relationship between them did not lead irresistibly to the
result that they were only explicable by the necessary existence of
a contract of service between them," said the ruling.
Donaldson said that the ruling clears up a complicated area.
"Employment tribunals will now have to look at the facts of each
case and whether it is necessary to imply a contract of
employment," she said. "The Court of Appeal approved the guidelines
set down by the EAT which said that if there is a proper
tri-partite relationship then it is not necessary to imply a
contract of employment."
Lord Justice Mummery surprised some observers by saying that he
believed there not to be conflicts between a number of previous EAT
and court decisions. "There is no significant difference between
the law stated and applied in the decisions of this court and in
those of the EAT," he said. "It is apparently thought in some
quarters that they are in conflict. I do not think so."
He said that the status of a worker should be established by the
principles of implied contract. Though many agency workers will
have protection as employees against unfair dismissal under the
1996 Employment Rights Act after a landmark case, that did not mean
that every agency worker enjoyed those protections. If it is
possible to explain the work done by existing contracts there is no
need to imply one between the worker and the end user of the
worker's services, he said.
Lord Justice Mummery said that he was sensitive to the problems
faced by workers without employment contracts, but that it was not
the job of courts or tribunals to rewrite the law according to
their own views.
"Through their decisions adjudicating on legal disputes courts
and tribunals are builders in the law. They are not architects of
economic and social policy. As they must operate within the legal
architecture created by others, they cannot confer the right not to
be unfairly dismissed on a worker who is without a contract of
employment," he said.
"The courts and tribunals are well aware of the nature of the
arguments for and against a change in the law, but it is not for
them to express views about a change or to initiate change. This is
a matter of controversial social and economic policy for debate in
and decision by Parliament informed by discussions between the
interested parties," he said.
See: The
ruling
