In the Employment Appeals Tribunal (EAT) case of Kalwak & others v Consistent Group, the ongoing saga of whether an agency worker can gain employee status was considered.
The EAT has decided that the agency had entered into contracts of employment with the workers despite having got them to sign contracts ostensibly describing the workers as self employed. This was despite the fact that the end user company exercised control over the actual operation of the work, normally a sticking point in deciding whether a worker is an employee or not.
If the government would decide to legislate that agency staff were to receive the same rights as other workers all this constant litigation to clarify the law and the exact meaning of contracts between agencies, workers and end user companies would be spared.
It is surely time for clarity from a government that is otherwise only too happy to legislate. Millions of agency workers should be spared further years of exploitation and discrimination against them.
Polish workers who had a limited command of English were recruited whilst still in Poland. They were accommodated by the agency in a hostel and were transported to their work.
Such practices by agencies normally ensure that their workers remain isolated from the wider community and ignorant of the few rights accorded to them (although for obvious reasons it is not alleged that the agency did so in this case). Polish workers as seen here do however have a proud tradition of organising themselves into trade unions and are maybe a less soft target for those unscrupulous agencies/employers who ruthlessly exploit migrant workers.
It is notable however that the tribunal Chairman declared the contract as a 'sham'. The fact is that this sham could not have been proven apart from the case brought because the company decided to stamp on the trade union organisation by dismissing the workers. Only after documents were disclosed did the nature of the contracts come out, proving that the agency workers were not free at all, but just cheap labour. Unions should bring this cheap labour to the top of the agenda as it affects all workers in the UK, being paid cut price wages and thus bringing an overall downwards pressure on wages. Such labour is of course in the main non-unionised.
The outcome of this case should give hope to agency workers who sign contracts that purport to show their self-employed status, when the reality is that they are treated just like any other employee except for being used as cheap non-unionised labour, to be dispensed with at the whim of the employer without fear of any action over unfair dismissal and the absence of normal employment rights etc.
The workers who worked for a subsidiary of Grampian Foods argued that they had been dismissed for proposed trade union membership or activities contrary to s152 of the Trade Union and Labour Relations (Consolidation) Act 1992; that they had been denied notice pay in breach of contract; and that there had been unlawful deduction from wages.
The employment tribunal chairman found that the claimants were employees of the agency. It followed that they were also workers within the statutory definition.
The workers signed contracts with the agency on 2 May 2007 and started work with Welsh Country Foods on 6 May. Money was deducted for accommodation and cleaning charges. This amounted to some £56.40 per week. Ms Bachorska was refused time off work when she requested it. The claimants sought to join the Transport & General Workers' Union they allege that they were discouraged from doing so and were subsequently dismissed.
The contract which they entered with the agency was entitled "Self employed sub-contractor's Contract for Services" and purported to be the "entire agreement between the parties" which could only be varied in writing by both parties.
The contract offered to the Polish workers described them as self employed. Just to make sure that the workers were in no doubt of their status, they were later given a document 'explaining' their self employed status. The judge rejected the agency's attempt to use this to amend the signed contract although agreeing that it could possibly be some evidence of what the parties intended the contract itself to mean (as per Carmichael v National Power plc [2000]
The contractual relationship between the agency and Grampian is of interest.
"You [the second respondents] will be expected to provide a minimum of 48 hours work a week for each of our staff."
"All staff introduced by us shall remain employed by us and may not work at your hotel through any other medium (e.g. self-employed, employed directly or employed through another agency)".
The expectation of 48 hours' employment hardened into an obligation (under "The Client's Obligations"):- "The client shall provide a minimum of 48 hours' work per full week (or pro rata) for each of the staff".
Further:- "The client shall be responsible for providing to the staff day-to-day instructions relating to the services required …"
The relevant legislation was the Employment Rights Act 1996 that defined 'worker', 'employee' and "employer" (s 230)
The Employment Tribunal (ET) argued that if rights normally afforded to workers were to be removed from them then the contractual provision must be clear and unambiguous. In this case it was not as on the one hand the contract signed with the workers denied any mutuality of obligation (or control of the workers necessary for employee status) and yet the contract with the company assured 48 hours of work. As we see below from the Et Chairman's comments on the contract, the agency treated its workers as employees to all extent and purposes save as to giving them any rights.
The ET considered that there was sufficient personal obligation to create the relationship of employee. Once the employee had accepted a particular engagement he was obliged to work when he was able to do so.
The agency told the claimants what to do and where to go and they provided transport for those purposes. Furthermore, the contract between the agency and the end user stated that the agency was the employer of the relevant staff:
"Any staff introduced by us shall remain employed by us and may not work at your hotel through any other medium, e.g. self-employed."
The Chairman observed that the agency could not claim the advantage of being employers in their relations with the end users and yet seek to contend that the staff was self employed in their relations with them. Similarly, he put weight on the fact that there was an obligation on the clients to provide 48 hours a week and inferred from this that there must be an implied obligation on the agency to provide work to the claimants.
The Chairman concluded that in practice there was significant control over the claimants' working lives; that the denial of their employee status was ineffective as a matter of law; and that the written terms did not truly reflect the relationship between the parties.
The Chairman found that there was significant control over the claimants' working lives; that the written terms denied the true relationship between the parties:
"There were parts of the written contract that indeed set out the actual terms under which the claimants worker - those, for instance, as to wages or, indeed, the obligation to work. But I noted the frequency with which the first respondents in the documents sought to emphasize the absence of rights - holiday pay, fringe benefits, and the right to complain of unfair dismissal.
These were their real concern. They in practice retained a firm measure of effective control over the claimants' working lives. They told them when and where they had to work, they might deny them days off, they provided them with transport and accommodation (taken away, as it proved, without notice). They ensured further economy in the claimants' employment by charging them for domestic services that were not provided. Here were seekers after work who could not adequately speak English, newly arrived here, for whom any purported freedom to work or not work, to work for more than one employer, were unreal. They were discouraged from union membership. The first respondents wanted to constrain them so as to retain them as compliant people through whom they could meet the demands of their clients. But they did not want people with expensive and troublesome rights.
The provisions as to the right not to accept work or to work for other employers were a sham inserted into the documents to give the appearance of relieving the first respondents from the burdens of being employers, not seriously to reflect the actual
relationship between the parties. The respondents, in effect, wanted employees, but did not want to pay the necessary price."
In dealing with the agency's appeal, the judge asked whether there existed a duty of personal service? Yes, because the worker had to "honour a specifically agreed period of engagement" so there was a contract in place at least during that period. The judgement of Byrne Brothers (Farmwork) Ltd v Baird [2002] was quoted, that even if there was a limited or occasional right to delegate, that was not inconsistent with the contract to perform work personally.
McFarlane v Glasgow City Council [2001] and James v Redcat (Brands) Ltd [2007] were also quoted in that the ability to delegate work when the worker was unable to work himself was not consistent with being self-employed, where a person could of his own volition choose to hire someone else to do his work.
The agency's barrister quoted supplementary self employment document used to support the contract that stated, "You can refuse to do the work for any reason". Quoting his own judgement in James v Redcat the judge rejected this argument as not affecting the status of the worker when at work.
Ms Bachorska found what workers often find out, that whatever was written in the contract did not count for very much, as she was indeed refused time off when she sought it.
According to MR JUSTICE ELIAS "It follows that the basic duty personally to perform services is established. There is a power of delegation, but it is limited and not inconsistent with that duty."
The Circumvention clause prevented workers for the duration of the contract from providing services to any other person if the agency believed it would interfere with the ability to provide services to them. This meant that the agency could prevent a worker working elsewhere whilst the contract remained in force. If he refused a particular offer of work he could be prevented from earning elsewhere during that period. In order to work he would have to take the work offered by the agency.
According to the Chairman the right to refuse work or to work for someone else was a sham, as they were in no position to do so.
As regards agencies writing unrealistic contracts supposedly allowing the worker to refuse work or provide a substitute, Peter Gibson LJ in Express and Echo v Tanton [1999] said "Of course, it is important that the industrial tribunal should be alert in this area of the law to look at the reality of any obligations. If the obligation is a sham, it will want to say so."
This means that no matter what the contract says, if the nature of the work, and all the expectations are that a worker will work like an employee and not as a self employed person, then an employee is what he will be recognised as in law.
© Workrep 24 / 05 / 2007
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