Get in Touch Menu

Who employs the agency worker?

01 April 2008

The question of agency workers and who actually employs them has rumbled on for many years.

The last milestone case on the issue was Brook Street Bureau v Dacas, which we reported in 2004. Now the outcome of James v London Borough of Greenwich has gone further and it is a significant decision for any business that uses agency staff.

The case was brought by Merana James, who worked through an agency for the council from 2001. She switched agencies two years later but remained in the same job. There was no express contract of employment between her and the council – just a written agreement with the agency, headed ‘Temporary worker agreement’. In 2004 she went on sick leave and, on returning, learned that the council no longer required her as the agency had sent a replacement. Arguing that the council in fact employed her, she brought a claim for unfair dismissal. The Tribunal decided there was no employment contract and their decision was upheld by the EAT and the appeal court.

It is common practice for a business to take on workers through the facilities of an agency, often for long periods. The risk is that, when the business ends the arrangement, some workers will try to claim they were employees of the business. Just as it is wrong to consider all agency workers to be outside the protection of the Employment Rights Act 1996 (and therefore unable to claim unfair dismissal), it is not possible for all agency workers to argue successfully that they are employees.

What flowed out of the earlier  Dacas case was that tribunals should consider whether there is an implied contract between the worker and the end user. A series of subsequent cases moved the goalposts a little in how to determine who employs a worker, and indeed whether they are employed at all. Now, at long last, the appeal court has provided a definition of what tests should be applied. In brief, these are:

  • is the way in which the work is undertaken consistent with the agency’s arrangements or does the worker simply attend like any other employee?
  • a tribunal will rarely be entitled to imply a contract between the worker and the end user when in fact the agency arrangements are genuine and represent the working relationship
  • the mere fact that the agency worker has worked for a considerable period does not, by itself, imply a contractual arrangement
  • tribunals should more readily imply an employment contract where the agency arrangements are superimposed on an existing contractual arrangement – in other words where the agency arrangement is a mere sham.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

Contact us

Disclaimer: All legal information is correct at the time of publication but please be aware that laws may change over time. This article contains general legal information but should not be relied upon as legal advice. Please seek professional legal advice about your specific situation - contact us; we’d be delighted to help.
Matthew Clayton MA LLM (Cantab), CIPP/E
View profile
Mathew Clayton
Related services
Share this article
Resources to help

Related articles

Autumn statement: Key financial changes for workers

Employment & business immigration

The government today outlined some key financial changes for workers in 2024 as part of this year’s autumn statement. National insurance Firstly, the 12% rate of employee national insurance contributions…

Hayley Ainsworth BA, MSc
Associate, solicitor

Webinar: Right to work checks guide 2023 for employers

Employment & business immigration

In this free webinar our experienced employment and business immigration lawyers guide you through the process for carrying out right to work checks in your organisation. Along with plenty of…


Reasonable adjustments in the recruitment process

Employment & business immigration

The Employment Appeal Tribunal (EAT) recently upheld a tribunal’s finding that a recruitment process solely relying on an online application put a job applicant with dyspraxia at a substantial disadvantage.…

Hayley Ainsworth BA, MSc
Associate, solicitor
Contact us