Cable & Wireless v Muscat – Agency Clients Respond

Following the case of Dacas -v- Brook Street Bureau last year the Employment Appeal Tribunal (EAT) has upheld a decision of an Employment Tribunal that an agency worker, operating through a personal services company, is the employee of the end user.

In Dacas there was relief in the recruitment community that the agency Brook Street had not been held to be the employer. However the Court of Appeal gave a very strong indication that the end user in that case, Wandsworth Council, may have been an employer of the agency worker, Mrs. Dacas, under an implied contract of employment. The Dacas case therefore set an unhealthy precedent so far as recruiters are concerned for the likelihood that agency workers may actually be employees of the end users depending on the circumstances of the engagement.

The case of Cable and Wireless -v- Muscat has taken this one step further. Now the EAT has found that express terms in a contract between the agency and the worker cannot affect the existence of an implied employment relationship between the worker and the end user. This is because the terms between an agency worker and an end user are not set out in the agency and worker contract, but are instead implied from the circumstances and actions of the worker and the end user towards each other. Although the fact that the worker had previously been an employee of Cable and Wireless was relevant in this case, the principle that an agency worker could be an employee of the end user under an implied contract clearly now applies. The EAT has also held that the fact that the worker operated through a personal service company makes no difference, and it has ruled that it considers it must follow the precedent set in Dacas.

There are further relevant cases that affect the position of recruiters and agency workers, with serious costs ramifications for all concerned.

End users are already reacting in a variety of ways, are reviewing their arrangements with agencies and are likely to perceive the risk to them as substantial. There is little doubt that the consequences are clearly serious and go to the heart of the typical relationship between an end user, and agency and its worker.

Lawspeed recommends that recruiters should take a proactive approach to these issues in order to stay ahead of the difficulties. Lawspeed has a team of legal experts available to provide practical guidance and advice to both recruiters and end-users clients on how this can be achieved.

Lawspeed offer a number of services specifically dealing with these issues. See our seminar page for information on personal briefings and our managed service offering.

If you require further advice please contact Ravi Murphy of Lawspeed on 01273 236 236 or email [email protected].

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When is an agency worker an employee?
End User held to be the employer of agency worker