Where an individual works for an end user or client through an employment agency, the question arises as to whether the individual is an employee of the employment agency, the client, or of neither. In order for the individual to be an employee of the client, there must be a contract in place between the individual and the client. In agency worker situations there are usually two contracts: one between the employment agency and its client setting out the services to be provided, and one between the employment agency and the individual. This latter contract is not an employment contract, but merely a commercial contract between the individual and the employment agency. There is invariably no express contract between the individual and the client. It follows therefore that unless a contract of employment can be implied between the client and the individual, the individual will not have any employment rights against the client or the employment agency.
So to what extent can a contract of employment between the client and the individual be implied? Some years ago, in the case of James v London Borough of Greenwich , the Court of Appeal held that where an individual works for a client through an employment agency, a contract of employment will only be implied between the individual and the client where it was necessary to imply such a contract. The Court of Appeal said that this meant that the question was “whether the way in which the contract was in fact performed is inconsistent with the agency arrangement, or whether it is only consistent with a contract between the individual worker and the end user.” This is a very heavy burden indeed for the individual to overcome.
In the recent case of Smith v Carillion  the Court of Appeal again visited the question of whether an employment contract could be implied between Mr Smith and the end user, Carillion. Mr Smith was a ‘blacklisted’ agency worker in the construction industry. He argued that an employment contract could be implied between him and his end user, Carillion, and alleged unfair dismissal by them for trade union activities. The Court of Appeal rejected various grounds of appeal, and, refused to imply a contract between Mr Smith and Carillion. Various factors, such as his integration into their business and the fact that he had an interview with Carillion could not undermine the employment tribunal’s finding that there was no contract between the Claimant and Carillion.
The case therefore confirms the position that agency workers enjoy little protection in employment law terms. There is no employment contract between them and the end user, and unlikely to be one between them and the employment agency, although this will depend on the contract.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).
Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.