The Court of Appeal has confirmed today in Smith v Carillon that an employment contract between an agency worker and an end-user client will only be implied where it is necessary to do so.
Mr Smith provided services through an employment agency to a number of construction companies, including Carillon. He was an active member of a trade union and took on the role of shop steward or health and safety representative at a number of building sites. From around 2001 a number of Mr Smith's engagements were terminated early and he was unable to find further work in the construction industry.
It was subsequently discovered that Mr Smith had been secretly blacklisted because of his trade union and health and safety activities and Carillon conceded as much to the Employment Tribunal and accepted that its actions had caused Mr Smith a detriment. Under the legislation in force at the relevant time, "employees" have the right not to suffer detrimental treatment on grounds of trade union or health and safety activities.
Notwithstanding the "genuine injustice" Mr Smith had suffered, he was not successful with his claim as he was not able to establish that he was an "employee" of Carillon or had any contract governing his relationship with the company. The Court of Appeal confirmed the Employment Tribunal and the Employment Appeal Tribunal decisions that a contract of employment between an agency worker and an end-user client will only be implied where this is necessary to give effect to the reality of the relationship.
The Court of Appeal, in refusing to imply a contract between Mr Smith and Carillon, confirmed that if the facts would be equally explicable without the implication of a contract of employment, it is not permissible to imply one. Although there were a number of characteristics supportive of implying a contract between Mr Smith and Carillon, such as to outward appearances he would have been perceived as an employee of Carillon and the fact that he was fully integrated into the company's management team, it was not necessary to do so as Mr Smith's relationship with Carillon could equally be explained as one where he was supplied to Carillon as an agency worker.
The Court of Appeal considered that even if Mr Smith had been able to establish a contract between himself and Carillon, i.e. whereby although maybe not an employee, he would still be a "worker" of the company, his claim would still fail as the relevant legislation at the time only afforded protection to "employees". Mr Smith had argued that the Court should interpret "employees" as to include "workers". This was on the basis that part of the relevant legislation in force at the time was found be in breach of article 11 of the European Convention on Human Rights and was subsequently amended to substitute "worker" for "employee" in relation to acts, or failures to act, on or after 1 October 2004. However, the Court of Appeal rejected this argument, finding that all of the acts which were the subject of complaint occurred before the Human Rights Act 1998 came into force in the UK and could not properly be described as continuing acts.
This decision, although not unexpected, will be a welcome relief for companies that engage agency staff. Although Mr Smith found himself in a very unfortunate situation whereby he suffered a "genuine injustice" but for which, at the time, there was no legal recourse, it is worth noting that new legislation was introduced in 2010 which makes it unlawful for employers, employment agencies and others to compile, supply or use a blacklist of trade union members or activists for discriminatory purposes such as employment vetting.
The Court of Appeal has confirmed today in Smith v Carillon that an employment contract between an agency worker and an end-user client will only be implied where it is necessary to do so.Mr Smith