Agency Workers and the ‘Necessity’ Test

28 June 2011

A recent case in the Court of Appeal (Tilson v Alstom Transport) dealt with the application of the ‘necessity’ test for implying a contract of employment between an agency worker and the end-user business where the worker is fully integrated into the organisation.

Mr Tilson brought a claim for unfair dismissal after he was sacked by Alstom Transport. He had occupied a managerial position with the company and was subject to its supervision and control. For example, he had to apply to his line manager if he wished to take holiday leave. He had twice rejected Alstom’s invitation to become an employee, choosing instead to continue to work as a contractor under a somewhat complex, quadripartite arrangement whereby he was paid by Silversun Solutions Ltd., less a 3 per cent service charge. There was no formal written contract regarding this arrangement. Silversun provided Mr Tilson’s services to Morson Human Resources Ltd. under a contract which contained a clause stating that neither Morson nor Alstom was entitled to ‘seek to exercise any supervision, direction or control’ over Mr Tilson. Finally, there was a general contract between Alstom and Morson under which Morson undertook to provide a wide range of services to Alstom, including the provision of individual workers, but there was no specific documentation relating to Mr Tilson’s assignment.

In deciding if the working arrangements meant that it was necessary to imply a contract of employment between Mr Tilson and Alstom, the Court of Appeal found that the parties would have acted in exactly the same way in the absence of a contract. A significant degree of integration of a worker into an organisation is not inconsistent with the existence of an agency relationship and is a factor of very little weight when considering whether or not a contract of employment exists. Just because someone looks and acts like an employee does not automatically mean that they are an employee. The fact that Mr Tilson had to apply to his line manager before taking annual leave was not sufficient to justify the implication of a contract of employment.

The Court also found that Alstom had at no time given any contractual undertaking that it would not seek to control Mr Tilson’s activities. Whilst the degree of control that existed was inconsistent with the clause in the contract between Morson and Silversun, Alstom was not a party to that contract and there was no evidence that the degree of control was not consistent with the conduct of, or any undertaking given by, Alstom. Furthermore, Mr Tilson had chosen to work under those conditions.

Lastly, Mr Tilson’s refusal of the offer to become an employee of Alstom illustrated that there was no contract of service in place and was a powerful factor militating against a finding that it was necessary to imply the existence of such a contract.

For more information on this subject or any other legal matter,
please contact us:

Tonbridge: 01732 770660
Sevenoaks: 01732 747900
Email: marketing@warners-solicitors.co.uk