A recent employment tribunal decision could have significant implications for companies using agency workers
Companies using agency workers may be concerned to hear of a recent decision by the Scottish employment appeal tribunal. The tribunal's decision is potentially significant for the future relationship between employment agencies, their workers and their clients. It may mean that any company using agency workers needs to carefully examine the arrangements it has with employment agencies.

The case concerned employment agency Melville Craig Group, mobile phone company Motorola, and a Mr Davidson. Melville Craig supplied temporary agency workers to Motorola, of which Mr Davidson was one. As far as everyone was concerned, Davidson had signed a contract with the agency and was an employee of the agency, rather than of Motorola. The agency paid his salary, deducting tax and national insurance contributions as appropriate for an employee. Motorola had to pay fees to the agency, but it considered this to be worthwhile as its agency workers had less employment rights against it than its employees.

Davidson worked at Motorola for roughly two years, until, following disciplinary proceedings, it brought his assignment to an end. Feeling aggrieved, Davidson brought an unfair dismissal claim in the employment tribunal, which Motorola predictably defended on the basis that it was not his employer. However, both the employment tribunal and the employment appeal tribunal concluded that Motorola exercised a sufficient degree of control over Davidson so as to make it his employer.

This decision is potentially significant to the relationship between workers, agencies and their customers. Previously, a customer who no longer required the services of an agency worker could simply return him or her to the agency, without fear that the worker could have a claim against them. Now, where the customer exerts a high level of day-to-day control over the worker, they may, on the basis of this decision, unintentionally find themselves in the employer's shoes and therefore liable to claims by the worker/employee for breaches of his or her employment rights.

If a company has a similar relationship with its agency workers as Motorola was deemed to have here the same rights may apply to those workers. The tribunals concluded that Davidson was Motorola's employee because:

  • he was selected through tests which the agency had agreed with Motorola
  • he was required to complete a medical questionnaire supplied by Motorola, and to sign a confidentiality agreement and a computer software agreement on Motorola's terms
  • he was placed on a Motorola induction course, worked at the Motorola site, wore a Motorola uniform, used Motorola tools and was instructed by Motorola employees
  • if he wanted to take holiday or had a grievance he would liaise with his Motorola superior
  • his contract with the employment agency bound him to comply with all reasonable requests and instructions of Motorola
One of the conditions on the back of his timesheet was that he should afford Motorola 'faithful services of a standard such as would sustain a contract of employment.' Crucially, it was Motorola management that disciplined, suspended and finally made the decision to terminate his assignment with it.

If this resembles the way you manage your agency workers, you should be considering how to avoid finding yourself in Motorola's predicament. The best advice is to limit the amount of control that you exercise over them. You should review the way your contracts with agencies are drafted and implemented, to ensure that:

  • grievances, disciplinary proceedings and dismissals should all be dealt with by the agency
  • amendments to the working conditions of the worker are made by the agency
  • the worker is required to report all sickness and holiday absence to the agency
  • there is an express statement that nothing in terms or performance of the agreement shall render the worker an employee of the client company.
Generally you should try to limit the extent to which the features which weighed with the tribunal in the Motorola case are replicated in your arrangements. This may, of course, not always be practical. Companies will have to strike a balance between getting sufficient control so that the workers do the work that is required of them, but without assuming the role of employer. The difficulty is that most companies would consider some of the features of the arrangements that Motorola had in place to be no more than commercial common sense.

Summary

  • the trend is towards granting workers rights in the workplace
  • an agency worker may be classed as an employee of a customer company where that company has significant control over the worker
  • agency workers may be able to establish employee status and so claim unfair dismissal and other employment protection rights against customer companies
  • companies using agency workers should consider whether the level of control they have over agency workers could be reduced, and review arrangements accordingly