Imply what you want

James v Greenwich Council

Over the years, the courts have agonised about the circumstances in which agency workers can claim to work under an implied contract, giving them employee status. The Court of Appeal has now said in James v Greenwich Council that tribunals cannot imply contracts if the express contracts already fully explain the relationship between the parties.

Basic facts

Although originally a full timer with the Council, Ms James went back as an agency worker in September 2001. In 2003 she changed agencies to get a higher rate of pay.

Her new Temporary Worker Agreement stated that she was a self-employed worker in relation to each assignment and that she had no contract of employment with the “end user” (in this case the Council) of her services.

When she returned to work after being off sick in August and September 2004, she was told she was no longer needed as the agency had sent a replacement. She claimed unfair dismissal, arguing that, as she had worked for the Council for more than a year, she had an implied contract with them.

Tribunal and EAT decisions

The tribunal, however, disagreed saying it could not imply a contract based on “the conduct of the parties and from the work done”. The Council did not pay her, nor did it provide her with any benefits. She was not subject to their disciplinary and grievance procedure, and when she was off sick, she did not have to tell the Council, as the agency provided them with another worker.

And the EAT agreed (see weekly LELR 6) emphasizing that “the mere passage of time is not sufficient to require any such implication”. It said that tribunals should only imply contracts in situations where there is evidence entitling them to do so. If a tribunal thought it should, then it had to be able to point to “some words or conduct” to show that the worker was working “not pursuant to the agency arrangements but because of mutual obligations binding worker and end user which are incompatible with those arrangements.”

Decision of Court of Appeal

And the Court of Appeal agreed. It said that the tribunal was entitled to conclude that there was no express or implied contractual relationship between Ms James and the Council. Instead, “her only express contractual relationship was with the employment agency, as she recognised when she changed agencies rather then employers in order to obtain a higher wage. The Council's only express contractual relationship was also with the agency.”

Nor was there any need for the tribunal to imply a third contract between Ms James and the Council as the express contracts fully explained the relationship between the two. Basically, that the Council had provided work for Ms James for several years, but was not under any implied obligation to do so “any more than it generated a legal obligation on her to do the work”. There was therefore no need “to imply the existence of another contract in order to give business reality to the relationship between the parties.”

The Court also commented that another Court of Appeal decision in Dacas v Brook Street Bureau (LELR 88) was “not authority for the proposition that the implication of a contract of service between the end user and the worker in a tripartite agency situation is inevitable in a long term agency worker situation. It only pointed to it as a possibility, the outcome depending on the facts found by the ET in the particular case.”

In conclusion, it said that the question of whether an "agency worker" is an employee of an end user must be decided in accordance with common law principles of implied contract and, in very extreme cases only, by exposing sham arrangements.