February 27, 2008
Courts Should Not Imply Employment Contracts in U.K.
When is someone who works for an employer an "employee"? The question can be significant in the U.K., where "employees" have certain rights that "agency employees" do not. Agency employees are those who work for employment agencies, who in turn provide the workers to the ultimate employer. Under the law, employees get protection from unfair dismissal when they are "employed under a contract of service, express or implied." The question thus becomes when should a court imply a contract with the end user of the services if they are performed under an express contract with an employment agency?
In a recent decision, James v. London Borough of Greenwich,  EWCA Civ 35, the Court of Appeal held that courts should not routinely imply a contractual relationships for such workers. In the case, Merana James signed a "temporary work agreement" with an employment agency, which then found her a job working for the Borough Council. Her contract plainly stated that she was not an employee of the Council, but rather was an employee of the agency. She worked for the Council for several years, before being replaced by another agency worker. She claimed unfair dismissal, and argued that she should be considered an employee of the Council.
Not so, said the court. Under some circumstances it might be necessary to imply a contract with the end user if that were the only way to make sense of a particular transaction. If the conduct of the parties could only be explained by the existence of a contract with the end user, there would be an implied contract. But here, said the court, the conduct of the parties was fully explained by the agency contract signed by James and the contract between the agency and the Council. It was thus irrelevant that James thought herself an employee of the Council and that others thought of her as an employee. Lord Justice Mummery noted that the question of whether protection should be given to agency workers was an important one, but not one for the court to decide:
The courts and tribunals are fully aware of the current controversy about the absence of job protection for agency workers, who do not have an express or implied contract of employment. While this appeal and this judgment were pending articles appeared in the newspapers under such headlines as "The slow death of the Real Job is pulling society apart", "Agency Workers could get full-time rights" and "Temps may get full work rights under EU Law." A Private Members' Bill was introduced to reform the law. It was doomed to failure for lack of support from the Government and failed to get a reading. There is no current government proposal to introduce legislation giving agency workers similar rights to those enjoyed by employees. There are negotiations about the possible regulation of agency workers through the medium of an EC Directive to member states on agency/temporary workers.
The courts and tribunals are also well aware of the nature of the arguments for and against a change in the law, but it is not for them to express views about a change or to initiate change. This is a matter of controversial social and economic policy for debate in and decision by Parliament informed by discussions between the interested parties- the Department for Business and Enterprise, the TUC, the CBI and other employers' organisations and the European institutions and governments of member states. The questions for discussion, negotiation and decision are not legal questions susceptible to adjudication or appropriate for comment by a court or tribunal. The questions are outside their province and competence.
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