Is it correct that a contract can only be implied between an individual worker and an end-user where it is necessary to do so?

It is generally accepted that, where a worker is supplied to work for an end-user through a recruitment business, a contract can only be implied between an individual and the end-user where it is necessary to do so in order to give effect to the reality of the relationship (James v Greenwich LBC).

The concept of when it might be “necessary” was tested by the EAT in the case of Smith v Carillion.  In this case the Claimant claimed he had been dismissed by the end-user because of raising health and safety concerns in his capacity as shop steward and the union health and safety representative.  He had been placed on a construction blacklist as a result of his TU activities.  He tried to bring claims against the construction companies who ended his assignments but he needed to show that he was an employee.  He argued that the reality of the relationship meant that it was necessary to imply a contract of employment, and this included the following factors: that he had been interviewed before one assignment; the significant degree of control over him by the end-user and that he had been fully integrated into the managerial set-up; the assignments were intended to be long-term; the end-users either brought about the dismissals or directed them; and there were no concluded written terms between him and the recruitment businesses.

The first instance tribunal rejected his claims on the basis that he was not an employee of the end-user and it was not necessary to imply a contract.  The EAT upheld this decision that no contract could be implied.  The EAT agreed that the tribunal had been right to dismiss the five factors on which the agency worker relied to infer a contractual relationship.

Note:  Since 2 March 2010 it is unlawful for employers and employment agencies/businesses and others to compile, supply or use a blacklist of trade union members or activists for discriminatory purposes, including employment vetting.  It is unlawful to refuse to employ someone for a reason which relates to a prohibited list or for an employment agency/business to refuse to offer its services for such a reason.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 020 7404 0606 and ask for your usual Goodman Derrick contact.