Those recruiters supplying agency workers / contractors / interims will know that 2 years ago the Court of Appeal (in Dacas ñv- Brook Street Bureau) stated that an agency worker could be the employee of the end user to which he/she is supplied. This despite the worker being signed on a contract for services and the written contracts stating that employment was excluded. But questions were left open as to whether the ruling was correct and/or effective. Those questions have now been answered.
In its judgment handed down today in the case of Cable and Wireless v Muscat, the Court of Appeal has robustly supported the statements and guidance made in Dacas in 2004, finding that Mr Muscat was an employee of Cable and Wireless under an implied unwritten employment contract. Mr Muscat was a 65,000 p.a. executive operating through a limited company and supplied by the agency Abraxas to Cable and Wireless, the contract he was hired on being a contract for services.
Almost as a lone voice, Lawspeed has long warned in its seminars about the dangers posed by the Dacas decision. This raised the prospect of increased employment claims by agency workers, and end users were bound to react to protect themselves against such claims. Dacas had already been supported and followed by decisions in the Employment Appeal Tribunal last year. The unambiguous and powerful judgment today makes the position very clear and surely will have considerable ramifications for the agency supply industry.
Any end user or hirer of agency staff will now wish to be certain that they will not be put in the same position as Cable and Wireless. Agencies can therefore expect end users to question the entire concept of agency supply, which end users have historically believed has protected them against employment claims. Agencies may well be increasingly asked to indemnify their clients against costs and awards arising from such claims even though it is clear that claims usually arise as a result of the clientís own actions in treating the worker as an employee. The principle of this indemnity is not new, but the decision today is likely to result not only in more claims but more robust demands from end users if they are to continue using agencies for supply purposes.
There are further ramifications, for example in relation to tax. Since Cable and Wireless is held to be the employer for the duration of Mr Muscatís engagement, it should have accounted for paye and national insurance payments, including the employerís national insurance. Will the Revenue seek this now?
The UK economy has thrived on a flexible workforce. As with Dacas, this decision attacks the very principles that allow for this flexibility, central to which is the ability to hire and fire at will. To reduce risk of a claim it is clear that agencies and end users alike should work together to ensure that agency workers are not treated as employees. As things stand unless government now legislates to change the position, every agency must take heed and take proactive steps to secure their business.
Adrian Marlowe
MD Lawspeed
Court of Appeal rules again that agency worker is an employee of the end user
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