A neat summary of the situation at present:
The question of whether a claimant in an unfair dismissal case is or is not an employee within the meaning of the 1996 Act is increasingly litigated before employment tribunals in unfair dismissal cases, particularly those brought by workers on the books of employment agencies. This is not surprising in view of recent developments: the length of the qualifying period for protection has been reduced to 1 year making it possible for more “temporary workers” to qualify for protection; the maximum award of compensation for unfair dismissal has been substantially increased making it more worthwhile for claims to be brought and providing employers with an additional reason for resisting claims; and, most important of all, there has been an explosion of numbers in the workforce (estimated at 1.3m) engaged to work under arrangements with employment agencies.
This case in the Court of Appeal, James v London Borough of Greenwich, has caused no end of grumbling in employment law circles at the failure of the court to lay down specific guidelines as to when an agency worker will become an employee of the end user. God knows why, previous EAT cases had made it simple enough. The hysteria that followed Dacas never made any sense – a bit of obiter chucked in that it would be possible in some cases to imply an employment contract in those circumstances wasn’t controversial.
What was controversial, when you take a step back, was the idea that this possibility was ever going to upset the statutory restriction of unfair dismissal rights to employees (unlike, for example, discrimination law), and the normal rules of interpretation of contracts.
Rights for agency workers is a real political hot potato, and change is needed, but frequent finding of employment relationships in genuine agency arrangements could cause huge economic upheaval. The courts were never going to do it lightly: they haven’t the balls, and it doesn’t make sense anyway.