The case of Tilson v Alstom Transport demonstrates the near-insurmountable difficulties faced by agency workers seeking to establish an employment relationship. Even long-serving agency workers who are deeply integrated into the client business are unlikely to acquire rights under the Employment Rights Act 1996 equal to those of an employee in the same role.
Tilson v
Alstom Transport
The application of the ordinary
tests of employment is not simple when it is the status of an agency worker in
question. The case of Tilson v Alstom[1]
serves to demonstrate that the approach currently taken by the judiciary in
determining the status of an agency worker is to apply the same tests of
employment as for an ordinary worker, but to give different weight to the
results. This approach is motivated on wide grounds of public policy, and leads
to the treatment of agency workers as a separate ‘species’ of workers, in order
to facilitate the modern framework of agency work.
In this case the services of agency
worker, Mr Tilson, were supplied through two intermediary parties in a complex
quadripartite agency arrangement involving three contractual relationships:
The first was an
arrangement between the worker and Silversun Solutions Ltd, which was described
by the employment judge as a “payment mechanism, nothing more”[2].
The second contract
was between Silversun Solutions and the agency, Morson Human Resources Limited,
for the provision of Mr Tilson’s services by Silversun Solutions to the agency.
Clause 3.1. states that:
“neither
the company [Morson] nor the client [Alstom] shall be entitled to or seek to
exercise any supervision, direction or control over the contractor [Silversun]
or the operatives [Tilson] in the manner
or performance of the project”.
The third contract
was between the agency and client for the provision of a range of services,
including that of Mr Tilson.
Subsequent to his engagement, and
contrary to the provision of clause 3.1. (above), Mr TIlson was subject to the
control of his line manager and, in return, exercised control over subordinate
employees. He worked for Alstom for two years, attaining a managerial position
and by doing so achieved a considerable degree of integration within the client
company.[3]
After some time, Mr Tilson was
offered a permanent position of employment at Alstom which he declined.
The question before the Courts was
whether the relationship between Alstom and Mr Tilson created, either expressly
or by its implication, a contract of service. The case turned on two points:
(i) should the intention not to create an employment relationship contained
within clause 3.1 be upheld by the court?; and (ii) if the express contract
does not create an employment relationship is it possible to imply one?
(i)
Analysis of the express contractual relationship
The court had to consider two
submissions by counsel for Mr Tilson. Firstly, the wording of clause 3.1.,
promising no exercise of control over the worker, was argued to be a sham on
grounds that it diverged from the reality of the arrangement and was intended
solely to avoid creating an employment relationship.
Secondly, and if the first
imputation was correct, counsel argued that the effect of the sham term would
be to render the entire contract void.
The tribunal should “adopt a robust
and sensible view in order to prevent the substance of the relationship being
undermined by form[4].
Elias LJ looked at the implications
of such a sham term at length. He found that it was a term agreed between the
two intermediary parties and was not operative between the parties before the
Court. Therefore, Alstom was not at fault for this misrepresentation[5].
The Court of Appeal decided that,
although clause 3.1. might be fictitious, it would not render the remainder of
the contract void. It is difficult to see the reason for which the court
diverted much of its attention to this point as, whatever the outcome of the
analysis, the case would still fall to be decided on the implication of a
contract.
(ii)
Implication of a contract
Following the principle in James v Greenwich London Borough Council[6],
Elias LJ recognised the narrow scope that exists for the implication of an
employment contract: “a contract can be implied only if it is necessary to do
so”[7].
In doing so, the Court of Appeal sustained a strong line of precedent stemming from
the judgment of Bingham LJ in The Aramis[8]
in which he observed that a contract could be implied where it is required to
give business reality to an arrangement.
The degree of integration of Mr
Tilson into the company suggests the existence of more than a simple agency
relationship. The Court acknowledged that there was a significant degree of
integration of the worker into the organisation, but concluded that this is
“not at all inconsistent with the existence of an agency relationship”[9].
It went on to justify this conclusion by saying that it is not uncommon for
agency workers to be heavily integrated into, and subject to the control of,
the client business. Indeed, such integration and control is often necessary
for the worker to provide any “satisfactory service”[10]. As
a result the court gave little weight to the integration test of employment as developed by Lord Denning in Stevenson, Jordan & Harrison Ltd v
Macdonald & Evans[11].
The fact that Mr Tilson was
required to apply to a line manager before taking annual leave was given as an
example of this. Once again, Elias LJ concluded that such a degree of control
is not necessarily inconsistent with an agency relationship.[12]
By doing so he gave greater weight to the intentions of the parties than to the
control test. He said that it would
not “be sufficient to imply a contract on the principle of necessity in
circumstances where this was inconsistent with the stated intentions of the
parties or, in some circumstances at least, one of them”.
In his concluding remarks, Elias LJ
summarised that he had considered the above points cumulatively and found there
to be no legitimate basis on which he could imply a contract. He therefore
dismissed the appeal, after which the other two presiding judges concurred.
The effect
of this judgment
This case shows that only in rare
cases would an agency worker, even a longstanding one with many hallmarks of a
contract of employment, be able to establish an implied contract of employment.[13]
The court adopted the integration test and the control test as the main tools in its
assessment. It was able to answer both tests in the negative by providing an
alternative explanation for the results it found. For example, when it found Mr
Tilson to be substantially integrated in the client’s business, the court
explained this by observing that such an occurrence is not uncommon in agency
work. A similar approach was used to explain the degree of control exercised
over Mr Tilson.
This approach may be
justified in the furtherance of public policy as it supports the current
framework of agency work. However, it has the side effect of creating agency
workers as a separate species to ordinary workers; a separate species upon whom
the tests of employment status act with less tolerance.
Criticism of this approach is that
it would not be detrimental to the current framework work if heavily integrated
and controlled agency workers do achieve employee status after a significant
period of service (after two years for example). If the purpose of the Employment Rights Act 1996 is to provide
workers who have devoted a considerable portion of their lives with recourse
against an employer then s.230 should be interpreted via the mischief rule to
include long-term integrated agency workers and so combat the mischief at which
the act is addressed. To maintain the balance of the current framework there
would still be a greater proportion of agency workers in ordinary un-integrated
agency work who do not achieve employment status.
Finally, the Court of Appeal did
not explore the mutuality of obligation
test at length. Elias LJ decision omitted analyses on a number of points
and therefore he could not have concluded that a jury could only arrive at one
result. For this reason the case should have been remitted to Tribunal.
It is very likely that an
industrial jury will not find there to be a contract of employment, but the
decision of the Court of Appeal in this case sets a precedent rendering it near
impossible for any future agency worker to be classed as an employee. A
precedent which must be followed by every Employment Tribunal and Employment
Appeal Tribunal in the land.
[1] [2010] EWCA Civ 1308
[2] [2010] EWCA Civ 1308 [18]
[3] (ibid) [3]
[4] Protectacoat
Firthglow Ltd v Szilagyi [2009] EWCA Civ 98 CA
[5] Tilson v
Alstom Transport [2010] EWCA Civ 1308 [46]
[6] [2008] ICR 545 Per Mummery LJ: “in order to imply a
contract to give business reality to what was happening, the question was
whether it was necessary to imply a contract of service between the worker and
the end-user”
[7] Tilson v
Alstom Transport [2010] EWCA Civ 1308 [8]
[8] [1989] 1 Lloyd’s Rep 213
[9] Tilson v
Alstom Transport [2010] EWCA Civ 1308 [44]
[10] (idem)
[11] [1952] 1 T.L.R. 101
[12] Tilson v
Alstom Transport [2010] EWCA Civ 1308 [48]
[13] Ian Smith, ‘A final shot across the bows’ [2010]
160 NLJ 7446, 1737-1739
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