Draft bill threatens worker status and agency supply

One of the key advantages of hiring an agency worker is the very low risk of a claim for employment rights by the worker against the hirer. This position has been challenged many times over the years, but remains legally secure as things stand. Now however there is a new challenge, the Status of Workers Bill, which has recently been proposed by the House of Lords to create a single status for workers as employees, in effect demolishing worker status altogether.

To the extent that rights for individuals arise they are almost invariably down to the agency supplying the worker and the arrangements it has put in place with the worker. Whether engaged directly by the agency or indirectly via an umbrella company, the hirer is protected because of the tripartite contractual setup, hirer to agency, agency to worker or umbrella.

The bill proposes that this should change. 

If enacted the bill will mean that the default position is that all workers will be regarded as employees unless they are genuinely in business on their own account, and the ‘putative’ employer can demonstrate that this is the case. In addition, the employer will be regarded not only as the party who contracts with the worker but also any person for whom the worker provides the services. This would include the agency supplying the worker. 

Comment: If this bill is enacted, employment status tests as we know them could largely be a thing of the past, as the bill would obviate concepts such as personal service, substitution and so on. Whilst in one sense this could be a good thing as it would simplify the whole question of status, it’s not difficult to see that it could result in the end of agency worker supply, not least that the existence of a personal service company will make little difference the way the bill is drafted.

In the recent Deliveroo case in the Supreme Court, the decision was that individuals doing the Deliveroo deliveries were not regarded as employees of Deliveroo for the purposes of that case because there was no obligation on the individuals to provide personal service due to an effective substitution clause in the contract. This was a victory for Deliveroo. The bill has apparently been drafted by the barrister who represented the trade union that lost that case, and so is possibly as a result of that case. Whilst understandably there may be concern about Deliveroo’s contract and the role of personal service in assessing employment status, to make all workers automatically employees in the way proposed would seem to be a sledgehammer to crack a nut. And very bad for recruitment supply which adds billions to UK GDP. 

What we can take from this is that there is appetite in the House of Lords to simplify employment status and improve the lot of disenfranchised individuals who have contracts imposed on them that mean they are self employed without employment or worker rights. Whilst there is no indication at this stage that the government supports change in this area, this bill could indicate a direction of travel that the recruitment supply industry should be wary of. Any proposal to change the law in this area should be better balanced, consistent with maintaining a flexible workforce.