This was what happened recently to one unfortunate organisation in the case of Montgomery vs Johnson Underwood and it demonstrates one of the difficult areas of modern employment law namely the employment rights of agency workers. Trouble arises where an individual is hired out to one organisation by another for a long period of time and then there is dissatisfaction with that persons work. Who is the individuals employer?
The first point to note is the distinction between an employment agency and an employment business. An employment agency finds employment for workers with another employer. At this point, the agencys relationship with the worker ends. An employment business supplies labour to businesses for particular jobs or periods of time. The relationship between the employment business and the worker continues.
This distinction is important because of new regulations which are due to come into effect this summer. The regulations The Conduct of Employment Agencies and Employment Businesses Regulations 2001 have been produced in draft following an extensive consultation exercise.
In future, organisations will have to make it clear whether they are employment agencies or employment businesses or, if they offer both services, whether they are acting as an agency or a business at the particular time. Employment businesses will be subject to stricter controls than agencies.
For example, employment businesses dont want their workers to be poached by the hiring organisation and will often include in their contracts with hirers a clause which requires the payment of a transfer fee if the latter wishes to employ the worker on a permanent basis. In future employment businesses will not be able to charge such fees unless the organisation concerned has been given the option of hiring the worker for an extended period on the employment businesss terms. When this period has ended, the hiring organisation will be free to employ the individual without having to pay a fee.
The regulations, which will affect more than 500,000 temporary workers, were issued in draft form for comment and represent the first reform in the area of agency workers in more than 20 years.
One of the advantages of the new regime will be to ensure that contracts are clearer and temporary workers know who their employers are. Whether the new regulations would have helped Montgomery in the Johnson Underwood case is debatable. The employment business had sent Montgomery a letter of confirmation and printed terms and conditions and she had sent the employment business her P45 and bank details. The employment business had arranged payment for hours worked in accordance with time-sheets approved by the organisation receiving her work.
The tribunal that heard Montgomerys claim concluded that she was an employee of the employment business. The Court of Appeal disagreed because the employment business had little or no control, direction or supervision of Montgomery. The court also noted that there were no review or grievance procedures between Montgomery and the employment business. The fact that the offer of work had come from the latter and had been accepted in return for remuneration to be paid by the business did not make it a contract of employment.
While both organisations involved in the case escaped liability, the individual was left without any employer a result which led the Court of Appeal to suggest that the remedy for the situation lay with Parliament. We shall have to wait to see whether Parliament really has the answer.
In the meantime, further information is available at www.dti.gov.uk/er/agency.htm.
Email address:
janet.gaymer@haynet.com
Janet Gaymer is senior partner at Simmons & Simmons
