The news that one of the most eagerly anticipated Court of Appeal hearings of 2016 is not now going ahead leaves end user hirers and agencies with a decision to make.
Two years ago the Employment Appeal Tribunal decision in the case of Moran v Ideal Cleaning Services Ltd and Celanese Acetate Ltd highlighted a loophole in the Agency Worker Regulations 2010 (AWR) that drove a coach and horses through its very purpose.
The facts in the case were that a group of cleaners were employed by an agency (Ideal Cleaning) and supplied to the agency’s client, the hirer (Celanese). The cleaners worked for Celanese for between 6 and 25 years and the arrangements between the agency and Celanese had no specific end date – they were open ended. The cleaners were eventually made redundant by Ideal Cleaning, after Celanese reduced its cleaning budget.
The cleaners’ claims against both Ideal Cleaning and Celanese that their rights under the AWR had been breached were unsuccessful.
Under the AWR an ‘agency worker’ is defined as a person who is
- supplied by a temporary work agency; and
- works temporarily for and under the supervision and direction of the hirer; and
- has a contract with the temporary work agency which is either a contract of employment with the agency or any other type of contract to perform work/services personally.
The AWR only protects workers who are temporarily assigned at a client undertaking. The AWR does not protect those who are assigned permanently.
The fact that the cleaners were supplied on an open ended basis meant that they did not meet the definition of temporary agency workers. According to the EAT, there needs to be an assignment for a fixed period, or alternatively for a specific project.
The shock decision was followed quickly with confirmation that an appeal had been launched and that the Court of Appeal would be asked to overturn this narrow interpretation. However the Court of Appeal office has now confirmed that the appeal hearing which was listed for March 2016 will not be going ahead because the parties have settled.
The Employment Appeal Tribunal judgment is significant because it is binding on the first instance Employment Tribunals. Thousands of assignments are caught by the judgment meaning that there may be hundreds of hirers and agencies paying a premium in respect of AWR rights that do not exist.
Is this a green light to ignore AWR? I would urge caution. If hirers and agencies deliberately engage workers on an open ended basis to avoid AWR, but in the knowledge that it will only run for a fixed period or last for a specific project, those workers may well be temporarily assigned even under the Moran decision.
Leaving aside issues of deliberate avoidance, my experience is that hirers and agencies have generally worked well since the legislation came into force, and hirers will pay the extra pay where necessary (or Swedish derogation will be used). The publication of the Moran decision a couple of years ago did not lead to a change in practice.
If hirers and agencies change their approach and refuse to apply AWR to open ended workers, they risk reputational damage. There is also the possibility that a different case could be litigated to the Court of Appeal (or possibly the European Court of Justice) with a different outcome being reached, leading to significant liabilities under AWR.
In conclusion, I’d let somebody else lead the revolution. Business as usual is the sensible approach.