Over the past few years, it has been unclear when an agency worker could be working under an implied contract of employment with the end-user, rather than under any agreement with the recruitment agency.  In 2004, the Court of Appeal held in the case of Dacas v Brook Street Bureau that the relationship need not necessarily be that set out in the written documents between the parties. Instead, tribunals must look at the circumstances of the working relationship, and in particular its duration, to decide whether an employment relationship between the worker and the end-user existed.  Dacas  created much uncertainty for end-users, but the decision of the Court of Appeal last month in the case of James v Greenwich London Borough Council is good news for end-users – although this could be short-lived as pressure is placed on the government to address the inequality faced by agency workers.


Mrs James was supplied by an employment agency to provide work for Greenwich Council.  She had no express contract with the Council, but did sign a “Temporary Worker Agreement” with the employment agency. In addition, the employment agency and the Council also entered into an agreement, pursuant to which the agency assumed responsibility for James’s remuneration upon completion of weekly timesheets.

After three years of working for the Council, Mrs James was absent from work due to sickness. On her return to work, Mrs James discovered that another agency worker had replaced her, and she brought a claim for unfair dismissal against the Council.

Tribunal and EAT

The tribunal decided that there was no mutuality of obligation between Mrs James and the Council: she was not obliged to work for the Council (she could work for any of the employment agency’s clients) and the Council was not obliged to offer work to Mrs James.  The Tribunal decided that, on this basis, she was not the Council’s employee and her unfair dismissal claim was rejected.

Mrs James’s appeal to the Employment Appeal Tribunal was similarly rejected.  The EAT decided that the focus should not merely be on whether or not there was mutuality of obligation when the issue was whether it is necessary to imply a contract between the worker and the end-user (i.e. the Council).

Court of Appeal

The Court of Appeal upheld the EAT’s decision. It agreed that it was not necessary to imply a contract of service into Mrs James’s relationship with the Council because a tripartite agreement was in place and the parties’ respective obligations were explained by the separate express contracts that existed. The Court held that the mere passage of time did not inevitably alter this situation (thus disagreeing with the earlier Court of Appeal in Dacas v Brook Street Bureau); something more would be required to alter the situation. Therefore Mrs James was not employed by the end-user and fell outside the statutory protection for unfair dismissal.

While the Court was aware of the controversial issues at hand, they regarded that such issues were “outside their province and competence” due to the fact that any change would have to come from Parliament.  The Court recommended that money would be better spent pursuing the debate on reform of the law. While that may be effective in theory, this has proved unsuccessful in practice.

Temporary Workers Directive (“TWD”) and The Temporary and Agency Workers (Equal Treatment) Bill (“the Private Members’ Bill”)

After being overlooked for years, the TWD has received spotlight attention after continuous opposition from the British government to support it. The government’s lack of support has come at a time when the TWD has received overwhelming backing by the other Member States. The TWD provides a platform to which temporary workers can have equal employment rights to their counterparts after just six weeks of working. These rights include equal pay and benefits (e.g. sick pay, holiday entitlements and pensions), which potentially creates a significant additional burden on employers – both financially and administratively.

The Private Members’ Bill, which is being at committee stage by the House of Commons, echoes the same sentiments as the TWD of supporting the rights of agency workers. Its provisions ensure that agency workers are entitled to the same terms and conditions as directly employed colleagues.


With such attention on the rights of agency workers, its seems that the drive for change has never been more prominent.  Workers argue that providing EU-wide standards considering the staggering rise of arrangements with employment agencies would be desirable: individuals like Mrs James will not be protected if the government do not support the TWD and with no redress in the UK courts, agency workers could be found without a job at any time, with no references and no access to substantive employment rights.  However, many companies claim that the proposed changes will inhibit job creation and reduce the pool of flexible labour for the end-user.

So what does this mean for the end-user? While end-users are currently benefiting from the delay in recognising the rights of agency workers, should the situation change end-users would suffer from increased costs of recruiting temporary/agency workers and possibly face increased threats for claims of unfair dismissal.

With the TWD firmly on Member States’ agendas and the Private Members’ Bill having received the backing of MPs on 22 February 2008, it appears that the rights of agency workers will not be forgotten for much longer.

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